Giles Gibbons

Good Business - Sustainability | Strategy | Impact

January 27, 2023

1. Send in the accountants

Corporate carbon footprint disclosures are not new. It has been over five years since the (FSB Task Force on Climate-related Financial Disclosures (TCFD)) launched their recommendations for how companies should report on climate change. The CDP, the world’s leading disclosure system for voluntary climate reporting, was founded in 2000.

Many companies have, for some time now, been calculating and reporting carbon footprints. Crucially, however, they have for the most part been doing so voluntarily and with limited scrutiny. This will not continue. Markets around the world are moving towards mandated disclosure of audited climate (and other sustainability) data, with plans already in place in the US and EU.

Increased rigour in climate and #ESG data collection is a good thing – it means that companies will have more and better information with which to set targets and make plans. It also means that more stakeholders within the business will be involved in tracking climate metrics year-round, strengthening oversight of emissions-generating activities and engaging more of the workforce in climate action. And it is reasonable to assume that once consistent disclosure is in place, and comparisons can be made, improvements and progress will follow.

But collecting this data in a manner that meets the exacting standards of third-party assurance will be a monumental challenge for businesses. Most climate data collection is done within sustainability divisions, many of which lack the resources or controls to collect high-quality well-documented data. These systems must be strengthened, with checks and processes akin to those used for producing financial statements. Some businesses may find that it makes sense to shift the entire process to accounting departments to take advantage of their expertise in this domain. 

Regardless of the approach they choose, all companies should be looking ahead and planning for better ESG data collection. Those who don’t will find themselves on the back foot – or, worse, the wrong side of regulations. 

2. You can’t manage what you don’t measure

16% of the global population experience a significant disability, and yet their representation and experiences within the workplace are largely unaccounted for. Despite a growing culture of non-financial KPI reporting, data on disability inclusion remains notably absent from the conversation, either because companies don’t have the data, or because if they do, they’d rather not publish it.

A White Paper on #disabilityinclusion, published last week at the World Economic Forum by Value500, responds to this issue, emphasising the consequences of obtuse workplace policies that exclude disabled employees, as well as the significant lack of data provided by companies on disability inclusion. And it showed how the two feed each other; if an employer doesn’t know how many disabled people they employ, or what their experience is like at work, then it makes implementing effective change difficult.

The White Paper suggests 5 KPIs that companies should begin to implement, ranging from the provision of disability inclusion training for employees, to publishing workforce representation data. The intention is that by publicly disclosing their performance, companies would be benchmarked across a comparable baseline that would hold them accountable to action. It would also mean that the topic would feature more heavily in investor dialogue, which would highlight commitment toward disability inclusion.

Employing over 22 million people, the companies that make up the Value500 hold vast potential to drive change and set the tone for disability inclusion in the workforce, and more broadly, across society. But providing transparent and comparable data forms the first step to pushing forward change.

You can access the full White Paper here.

3. The fight for forests

The voluntary #carbonoffset market has come under fire again. Last week, an investigation revealed that over 90% of certified rainforest offset credits were found to have no positive impact for the climate. This raises questions about the climate claims of big-name brands such as The Walt Disney Company, Gucci, Netflix and Shell. But will this force them to re-consider their climate strategies? And should it?

High-quality certified #offsets should (in theory) lead to additional reduction or removal and permanent storage of #greenhousegasemissions from the atmosphere. However, we already knew that offsets can be a controversial mechanism for addressing climate change, enabling businesses to avoid making any meaningful changes to their high-emitting operations and products.

Verra, the largest offset certifier, which was the focus of this investigation, has since responded justifying the use of forest offset credits. It dismissed the investigation’s findings as “outlandish”. But it is hard to ignore such a wide-ranging list of negative findings, from the overestimation of project impact to their associated human rights issues.

Ultimately, high-quality offset projects have potential to make the necessary contributions required to limit global temperature rise to safe levels and benefit local communities. Maybe upcoming standards will improve project outcomes and avoid billions more in funding wasted on ineffective offset credits. But, whatever your stance on offsetting may be, this is yet another reminder that businesses must focus on reducing their own scope 1, 2 & 3 emissions to make a meaningful contribution to avoiding the worst impacts of climate change.   

4. Bottling it 

For those of you as interested in plastics and waste as some of us, you will be aware that DEFRA has pushed back the start date for our long-awaited Deposit Return Scheme (DRS) from 2024 to 2025.

Brands often dread more regulation. Having to conform is costly, especially if you haven't put in the time and effort to prepare for its introduction, and it can remove opportunities for leadership, and the associated creation of competitive advantage. Yet there is also often recognition of the fact sometimes it is necessary for governments to enforce policies to create change throughout the system: too often, carrots are not enough if there isn't a stick in sight.

Perhaps most frustrating of all is when regulation looks like it’s coming but then isn’t. For brands that have been investing time and resources into preparing for it and were ready, the question is why delay? Particularly given the scale of the issue the regulation was intended to tackle. The new 2025 start date means the scheme will have taken seven years to turn from idea to reality, after Michael Gove, then environment secretary, first confirmed the plans.

Regulations are costly; delays are frustrating… there’s not much to celebrate in a change that makes the circular economy even more difficult than it needs to be.

The Goods:

During the cold, grey start to the new year, many gloomy Brits look forward to a sunny, summer holiday. It is known as “Sunshine Saturday”, the day when the UK #travel industry gears up for the biggest day of holiday bookings in the year. So it seems like a good moment to think about how you can make your 2023 travel plans more sustainable.

Rail travel is much better for the environment, producing on average just 16% of the CO2 emissions released during a flight. Sleeper trains are making a comeback and the new sleeper train from London to Berlin, launching on 25 May 2023, will allow Londoners to get to the German capital in just 16 hours while sleeping on the European sleeper service.

If you have no choice but to fly, look out for the “Green choices” label on some search results which help you identify flights that have less than average emissions. You may want to look at choosing a sustainable city to visit such as Zurich, Bristol or Copenhagen where local authorities focus on circular economies to create sustainable transport, involve local business and protect their wildlife.

Finally, consider how you can reduce your impact as a tourist. Using public transport instead of renting a car and walking or cycling whilst sightseeing can be a great way to take in the scenery and attractions. You may see that slowing down your tour can be quite enjoyable.

It's time to start enjoying the journey as much as the destination and ensure we consider our impact on the planet while we explore it.

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