In this age of globalisation, modern supply chains are only growing more complicated. Guy Courtin, Vice President of Industry and Advanced Technology at Tecsys, describes them as “networks, not linear chains… [that] resemble a Gordian Knot”. In order to manage these supply chains, environmental, social, and governance (ESG) compliance is of the utmost importance. The first step is making a detailed map of your company’s supply chain and comparing it to your ESG goals to see where changes need to be made. Accurate and reliable data is crucial to this exercise, so ensure your data collection methods and the type of data being collected is exactly what is needed. Finally, communicate with your organisation and suppliers to clearly lay out expectations regarding your supply chain.
As the last few years of disruptions have highlighted, supply chain issues can quickly snowball into huge and complicated crises. Competent Boards’ best-in-class ESG and Climate & Biodiversity programs educate participants on supply chain best practices along with a number of other topics such as cybersecurity, diversity and inclusion, and preparing for climate change. Our next ESG Fundamentals Program starts June 8.
1. Morgan Stanley’s climate private equity strategy raises half a billion dollars. Late last year, Morgan Stanley Investment Management announced a new private equity platform with a goal to prevent one gigaton of carbon dioxide emissions between now and 2050 by investing in companies focused on emission reductions and climate solutions. Pension funds and insurance companies throughout Europe have invested in the fund, with most of the funds’ investments focused on companies who have a proven track record of reducing their carbon emissions and intensity, while maintaining strong returns on investment. The fund, called 1GT, has attracted US $500 million in six months. The fund uses a variety of popular ESG strategies such as tying employee compensation to emission reduction goals.
2. ESG investing back in the crosshairs in Washington DC. Last week, members of the House Oversight Committee in the United States House of Representatives held more hearings on ESG investing. As a wave of anti-ESG bills are being proposed at a state level, federal politicians traded barbs over the investment strategy. Democrats such as Rep. Jamie Raskin (Maryland) defended ESG investing, stating that it is in line with the duty of a fiduciary “to be vigilant, watchful and alert to opportunities and risks”, including ESG. Republicans argued that investments should only be made on the basis of profit and returns, without taking other measures into account such as sustainability, diversity, and carbon footprint. ESG was lambasted as “woke capitalism”, with Republicans arguing that considering anything other than return on investment when making decisions was damaging and causing Americans to lose money.
3. High compliance with Europe’s new Corporate Sustainable Reporting Directive. In January of this year, the European Union (EU) adopted new rules on corporate sustainability reporting called the Corporate Sustainable Reporting Directive (CSRD). About 50,000 companies will have to produce their first reports in 2025. According to a survey conducted by Workiva, 94% of public companies in the European Union and United Kingdom intend to comply with the new directive regardless of whether they are required to or not. The CSRD will only apply to large companies in the first stage, but SMEs are getting on board proactively as they anticipate the requirements will be broadened in the future. The CSRD will replace its predecessor, the Non-Financial Reporting Directive, where only 12,000 companies were required to create reports on ESG matters.
4. Freshwater should not be left behind in a blue economy. As momentum for the net-zero transition builds, discussions around biodiversity and water conservation have grown as well. The blue economy is defined by the World Bank as “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs, while preserving the health of ocean ecosystems”. However, this leaves out the world’s considerable and equally as important freshwater ecosystems from lakes to rivers. In a world of rising sea levels and ocean acidification, concern for the marine environment is extremely important, but should not come at the expense of freshwater resource conservation. While the World Bank’s definition is one of the most widely used, the World Economic Forum and European Union’s definitions of the blue economy both involve freshwater. Companies whose value chains rely heavily on marine and freshwater resources would do well to consider both ecosystems in their environmental preservation strategies, as the two are extremely interconnected and one cannot function without the other.
5. Microsoft and Ørsted partner on a new carbon capture and storage project. This week, Microsoft and Danish clean energy giant Ørsted entered an agreement where Microsoft will fund the capture and storage of almost 3 million tonnes of carbon dioxide emissions emitted by Ørsted’s Asnaes Power Station in Denmark, where biomass is combusted to generate electricity. Microsoft has some of the most ambitious corporate climate targets in the world, aiming to remove all historical emissions from the atmosphere by 2050 rather than simply aiming for net-zero emissions. Ørsted received a 20 year contract from the Danish government for this project as well, with capture and storage expected to begin in 2025. It will have the capacity to prevent over 400,000 tonnes of carbon dioxide from entering the atmosphere annually starting in 2026.
Ira Srivastava is Competent Boards Program Coordinator. Follow Competent Boards on LinkedIn.
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