Friday - October 21, 2022 | News & Views | 5 min read
Even as ESG issues climb higher on the priority watchlist of company boards, climate change remains a largely unfamiliar territory inside boardrooms. A recent survey by PwC revealed that although most directors (86%) are confident of their board’s understanding of ESG strategy and 82% are familiar with the company’s ESG risks, only 63% understand the climate change-related risks as they relate to their company, while even fewer (56%) understand the company’s carbon footprint.
Which is why it is critical for senior business leaders and board directors to become as well-informed as possible about ESG and climate change-related topics. Our new condensed but rich ESG Lite program is a great place to start, which opens its cyber doors on October 27. Or sign up for one of our world-class ESG or climate-change Designation and Certificate programs, where you will get an unrivaled learning and networking experience.
Boards’ grip on climate change left wanting The PwC 2022 Annual Corporate Directors Survey assessed the views of 704 public company directors representing a wide spectrum of companies and industries across the United States, and found that just 45% of directors see a connection between ESG and company bottom-line, while only 11% believe ESG expertise is important for the board.
The board’s attitude towards ESG issues also varied with company size: large company boards (revenue greater than $10 billion) are more than twice as likely to have discussed climate change, emissions, and social issues and more likely to understand ESG risks and opportunities, compared to small company boards (less than $1 billion revenue).
The survey findings reinforce the importance for boards to increase their understanding and oversight of ESG issues – particularly of emerging topics such as climate change.
Greenwashing, make way for ‘green hushing’ We have all heard of greenwashing, but a new phenomenon called ‘green hushing’ is catching on as companies, terrified of being accused of greenwashing, try to keep their climate goals out of the public eye. Climate consultancy firm South Pole surveyed 1,200 large companies from 12 different countries and found science-based net-zero targets to be a standard practice among all, with nearly two-thirds of the companies having aggressive decarbonation goals. The surprising part? 23% of them have avoided publicizing their plans out of fear of the greenwashing stigma, which can damage reputation and attract greater scrutiny from regulators and public alike (H&M being a recent example).
But there are concerns about this so-called ‘green hushing’ trend. As more companies stay silent on their climate progress, it becomes increasingly difficult for the outside world to monitor their targets and for industries to engage in knowledge-sharing. “More than ever we need the companies making headway on sustainability to inspire their peers to make a start. This is impossible if progress is happening in silence,” South Pole CEO Renat Heuberger commented on the findings.
Putting the brakes on biodiversity loss As the COP 15 draws nearer, all eyes are on the world leaders who will gather later this year to develop new goals on protecting and halting the loss of wildlife populations. Here are some important facts to catch up on:
· What exactly is COP 15? COP 15 is the shortened form of the 15th Conference of the Parties to the United Nations Convention on Biological Diversity, where 196 member countries will meet to develop new global goals on diversity and advance implementation of the Convention to protect the well-being of human and non-human life.
· When and where? It will be held on December 7-19, 2022 in Montreal, Canada under the presidency of China, from where the conference was relocated due to the pandemic.
· The goal? The countries will negotiate the new Post-2020 Global Biodiversity Framework, which includes a set of goals and targets to guide global action on conservation efforts through the next decade. Some of the more prominent targets include conservation of at least 30% of global land and seas, restoration of at least 20% of freshwater, marine, and terrestrial ecosystems, reduction in pesticide use by at least two-thirds, and elimination of plastic waste discharge.
Sustainable forestry – not so sustainable after all? A new report by Nature Canada and Natural Resource Defense Council has brought into question Canada’s forestry practices and emissions accounting. The federal government claims the industry is headed towards net-zero, but the data cited by the report suggests the emissions are on par with Alberta’s notorious oil sands, at around 85 megatonnes of carbon each year.
“The Government of Canada does not transparently report emissions from the logging industry in its annual national GHG inventory,” the environmental groups claim. The government says it complies with international guidelines when it balances off logging emissions with carbon absorption from forest regrowth.
This is but one example of the many complexities involved in carbon accounting. Different methods of calculating emissions can produce vastly different numbers and allow an entity to skew the figures. In the context of organizations, carbon accounting standards such as the GHG Protocol may help, but as this Harvard Business Review article argues, it is still not a very effective standard because it does not take into account supply chain emissions, which can be 5.5 times higher than direct company emissions.
The injustice of it all Any climate action is incomplete without climate justice. Yet another reminder of this is a report by the European Network on Debt and Development, which highlights the plight of small island nations – home to some 65 million people – in their fight against climate change. Most of these small island developing states (SIDS) spend 18 times more on debt servicing than they receive in climate finance, the report found.
31 of these countries also face a critical debt situation, pushing climate action further down the agenda for their governments. These island nations contribute less than 1% of global greenhouse emissions but are the most vulnerable to climate disasters such as stronger/more frequent hurricanes, which should make their sustainable development a priority for the developed world, according to the report’s recommendations.
Maria Shamim is a research analyst at Competent Boards. Follow Competent Boards on LinkedIn.BACK TO NEWS & VIEWS