Contributions By: Julien Gervreau and Karen J. Burns
Table of Contents
During Climate Week NYC, several key areas were top of mind for attendees, such as aligning strategic priorities between investors and leadership, fostering incentives among suppliers, and the need to unite efforts across various industries and sectors. The proposed solutions and recurring themes included strategies for climate initiatives within organizations, the technical aspects of Scope 3 decarbonization, the importance of prioritizing indigenous communities on the front line of equitable climate action, and more.
For those of us working in sustainability, we are accustomed to experiencing periods of high engagement in collective action and a sense of momentum, as well as moments of searching for the collective will to expedite significant progress in addressing the impending climate crisis.
Members of Sensiba’s ESG and Sustainability practice participated in Climate Week NYC and have outlined some of the key takeaways below.
Integration of Sustainability and Corporate Strategy
There is growing recognition that sustainability goals need to be integrated into corporate strategy. This necessitates a process for incorporating sustainability objectives into the annual planning and budgeting process.
Also, it establishes a formal mechanism for holding employees accountable for driving tangible progress against sustainability goals. Regardless of the position’s title, every organization benefits from having a sustainability lead with a direct line of communication not only to the CEO, but preferably to the board.
Tia Counts, Chief Sustainability Officer at MSCI, presented a useful primer framed as the ABCs of interacting with the CEO/board from the perspective of the sustainability lead:
- Accessibility – Avoid using too many sustainability acronyms by defining what is most important to the company or industry in clear terms.
- Bring people in – Work with your internal team and celebrate their successes. Leverage your subject matter experts to communicate pivotal issues to the CEO and board, giving them exposure and heightening your credibility.
- Context – Tell a broader story by connecting the dots between sustainability and business strategy.
By integrating corporate sustainability into the existing governance committee, ownership is expanded and embedded throughout the organization. This provides your sustainability lead with the requisite architecture to build a successful roadmap, preventing this position from becoming siloed and over-burdened.
Further steps to shape and implement strategy include establishing a formal governance and disclosure process for your sustainability efforts, as well as transitioning from storytelling to sharing investor-related data. ESG metrics should be embedded throughout the organization, reviewed by the sustainability lead, and reported to the board.
Restarting Stalled Climate Action
The topic of climate change has always been susceptible to politicization. Entrenched concepts of individualism in the U.S. have led many to discount the negative effects of fossil-fuel-dependent systems and deny that change is needed.
Mindy Lubber, CEO and President of Ceres, underscored the urgency of tangible actions to address climate change in her keynote session entitled “Driving Change: How Do We Restart Stalled Corporate Climate Action?”
Some key thoughts and quotes:
- We must take into consideration the inordinate damage that will occur to younger generations should we continue to stall.
- “Yes, it’s inconvenient and hard to do. It will be infinitely more difficult the longer we wait.”
- Set interim goals and action plans to begin building momentum against longer-term net zero targets.
- Consumer willingness to pay has increased for products and services from companies performing in alignment with sustainability goals and targets.
So, how do we make changes in an environment where climate and ESG are politicized? The increasing frequency and intensity of global climate-related disasters is becoming harder to ignore. In harnessing the power of storytelling and communication about the impacts on nature and the environment, there’s potential to reach a broader audience instead of focusing the discourse on carbon or technical terminology.
Getting entities involved across sectors and industries, regardless of political affiliations or leanings, may require mandates. Large companies have an opportunity, and perhaps an obligation, to support supply chain transformation, as SMEs frequently lack access to resources on the same scale. Companies that prioritize setting quantifiable commitments and transparently reporting progress and pitfalls stand to benefit from enhanced transparency, trust, and collaboration.
Climate – Emissions Measurement, Mitigation Efforts, and Disclosure
At a panel entitled, “Brands Scaling Scope 3 GHG Solutions,” hosted by Pure Strategies, a focus was placed on addressing issues of alignment, data collection, and management. The panel discussed barriers to overcoming key challenges most companies face when looking to make progress on climate goals.
Key ideas included:
- Alignment – Executive leadership and mandates for action are needed. To achieve buy-in from the finance team, help them understand the material financial risks associated with climate exposure and inaction. In other words, climate risk is financial risk.
- Data – Poor quality, gaps, and inconsistencies can hinder best practices regarding data collection and management.
- Adoption barriers – These include market context, including the regulatory environment and customer demands, that can be alleviated by a focus on catalyzing and elevating the efforts of your suppliers.
Once an entity’s data collection practices are established for climate-related baselines and metrics, significant emissions contributors can be identified for targeted decarbonization initiatives. The top recurring themes for emissions “hotspots” discussed included transportation, production activities, and packaging.
Insightful tactics detailed by panelists from Ben & Jerry’s, Stonyfield, and LUSH Cosmetics included:
- Create an “internal carbon price” so your company can begin setting aside funding to prioritize climate action. Designate this as an ‘insetting’ or ‘slush fund’ and dedicate financial support to addressing Scope 1-3 and engaging with suppliers.
- Explore government funding for technical assistance needed to implement your projects.
- Build your sustainability projects into your COGS and identify cost savings associated with these efforts.
Nature, biodiversity, and climate justice continue to rise in importance and prominence. These impact areas are likely to be formalized in disclosure guidance this year, or early next year, through the adoption of the Taskforce on Nature-related Financial Disclosures (TNFD) framework into IFRS/ISSB standards.
Youth and Climate Justice
Powerful calls to center diverse voices arose from the session, “How Youth Are Setting the Pace for Climate Equity.” Panelists included Isaias Hernandez (Founder, Queer Brown Vegan) and Ziad Ahmed (CEO, JUV Consulting), who embodied the intersectional lens through which solutions to the climate crisis should be regarded.
Gen Z is a growing presence in the workforce and marketplace. They are seeking to invest their time and money in entities demonstrating transparent, credible action against social and environmental impact goals.
Accounting for Good
What is an accounting firm’s role in climate action? ESG and sustainability-related regulations are emerging and evolving. They’re providing growing opportunities for the profession to provide holistic risk assessments that incorporate financial and climate-related risks and identify related value-creation opportunities.
The methodological discipline and rigor of financial accounting lends itself readily to a need for more refined GHG accounting practices, as well as assurance for GHG inventories.
Emissions footprints, sustainability metrics, and ESG disclosures will soon be mandated and therefore integrated into financial reporting for public companies. This means private companies will also be expected to report on their performance upstream. We all need to be taking strides toward a just transition – not just because it makes good business sense, but because there is no time to lose. To learn more about aligning climate, compliance, and financial risk, contact our sustainability team.
