Behind the ESG headlines - August 26, 2022

By mathew-loup

While the US Securities and Exchange Commission (SEC) proposals have caught much of the spotlight this summer, the Corporate Sustainability Reporting Directive (CSRD) in the European Union that was agreed to earlier this summer will bring a real crackdown on greenwashing by companies. 

From June 2023, all large companies operating in the EU, or that have listed securities there, must produce wide-ranging new reports on the effects of their business, and of their parent companies, on the environment. This includes mandatory reporting on a broad spectrum of environmental, social and governance (ESG) areas, including greenhouse gas emissions, climate change mitigation strategies, pollution and biodiversity.

Staying on top of this fast-changing ESG arena around the world is a challenge even for the better informed. For those just starting to play catch up, it’s a daunting challenge and one where the majority need help. 

We have designed our education programs to help meet your needs. Our full-length Designation and Certificate programs, as well as our new condensed ESG Lite program, will set you and your company up for success in meeting the new disclosure requirements.

1 – Data gathering. Much of the ESG reporting and data to date has been voluntary, leading to incomplete data and different metrics. A new report from the Center for Impact at UCLA Anderson assesses the public sustainability information of major American organizations. The State of Corporate Sustainability in 300 of the Largest US Companies compares corporate ESG disclosures with the World Economic Forum’s (WEF) stakeholder capitalism metrics framework. The researchers looked at four pillars: governance, planet, people and prosperity, focusing on topics such as greenhouse gas (GHG) emissions, water usage, diversity and inclusion, pay equality and taxes. Some key findings were:

  • Companies are reporting information responsive to almost half (49.6%) of the WEF metrics
  • Disclosure of GHG emissions was high: 81.2% of companies disclosed Scope 1, 78.2% disclosed Scope 2, and 61.2% disclosed Scope 3 emissions
  • Only 9.7% of firms had their reports fully audited by a third-party; 41% had partial audits; and 49.3% had no third-party auditing
  • Not one firm disclosed 100% of WEF’ key metric
  • Of the four pillars, 72.2% of firms disclosed on governance, 53.6% on prosperity, 43.8% on planet and 28.8% on people

2 – Stakeholder fears. Climate change (46%), air quality (36%) and plastic pollution are the top three environmental fears for consumers, according to the new Mintel Consulting Sustainability Barometer 2022. The increasing numbers of extreme weather events such as fires, heatwaves and flooding is encouraging more consumers (58%) to do activities that help the environment. There is an increased use of data by consumers: nearly one in four (24%) say they have researched their annual carbon footprint with an app or online calculator. Mintel surveyed more than 16,000 consumers about their sustainability attitudes, behaviours and purchase preferences across 16 countries for the Barometer.

3 – (Sustainable) diamonds are forever. International jewellery retailer Pandora has launched a new range of lab-created diamonds in North America, made with 100% renewable energy and recycled gold and silver. Pandora Brilliance, this new range, has the same physical standards as mined diamonds and are graded by the same exacting standards. Pandora’s strategic goal is to make all of its jewelry from recycled silver and gold by 2025. If all diamond mining switched to Pandora’s method, it would save six million tons of carbon dioxide every year, the same impact as replacing all cars in New York with electric vehicles. Whatever would Blofeld make of that?

4 – Leadership challenges. A new survey from PwC has highlighted some of the ESG risks and rewards that senior American business leaders see ahead of them in the latter half of 2022. Cybersecurity is top of the table for risks (40%), closely followed by talent acquisition and retention (38%) then rising production costs (34%) and supply chain disruption (34%). Surprisingly, climate change (23%) was ranked much lower. Most executives (83%) are focused on growth, with only 30% seeing recession as a danger. Reputation remains a big factor, with almost two-thirds (65%) of senior business leaders focused on developing or refining their trust with their stakeholders. PwC surveyed more than 700 US executives in six industry sectors for this Pulse Survey.

5 – Green skies. Increasing numbers of airlines are investing in sustainable aviation fuels. In a recent report by Corporate Knights, Professor Bradley Saville, from the University of Toronto’s Department of Chemical Engineering and Applied Chemistry, identified three types that could ultimately reduce the industry’s carbon emissions by 65%:

  • Cooking oils and animal fats
  • Biomass and municipal waste (including algae, crop residues, animal waste, forestry residue and municipal waste
  • Synthetic kerosene (also known as e-kerosene)

Lufthansa, United Airlines, KLM and Air Canada are some of the big-name carriers at the forefront of this investment. The International Air Transport Association (IATA) has established a net-zero 2050 target for the aviation industry.

Mathew Loup is Competent Boards’ Director, Marketing & Communications. Follow Competent Boards on LinkedIn.

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