Crafting a corporate environmental impact outline
In the face of growing global concern over climate change and the need to limit the rise in temperature due to global warming to within 1.5 degrees, as emphasized at the COP26 meeting in October 2021, sustainability reporting has become increasingly crucial for businesses.
Sustainability reporting standards, such as LEED and BREEAM, are used to rate corporates on their greenhouse emissions reduction targets in line with the Paris agreement. These standards can be helpful in thinking through the various options for sustainability reporting.
When choosing an appropriate sustainability reporting standard, key factors to consider include the reporting objectives and audience, materiality perspective, scope and coverage, regulatory and geographic applicability, industry specificity, reporting requirements and assurance, alignment with existing frameworks, and the company’s maturity and capacity.
For instance, the ISSB standards focus on disclosing sustainability risks and climate impacts relevant to enterprise value, appealing particularly to investors. On the other hand, the CSRD emphasizes double materiality and value chain impacts, covering the full environmental, social, and governance (ESG) factors comprehensively. SASB provides industry-specific guidance primarily in the US.
Emissions reporting is becoming increasingly crucial for businesses due to factors like regulatory compliance, investor pressure, and risk management. Sustainability ratings provide an independent, standardized performance indicator for easy comparisons across organizations and over time. ESG ratings measure the quality of disclosure along ESG dimensions.
Companies reporting on the UN Sustainable Development Goals (SDGs) can use SASB or IIRC. Companies can also issue green bonds certified by the Climate Bonds Initiative for financing projects.
Dubai's Sustainable City developed a matrix to classify various reporting standards and ratings, focusing on the most critical challenges and communicating the message of combating climate change. The matrix classifies standards into a matrix of scope vs audience, with narrow and broad groups.
To present finance-related impact, companies can choose between the CDSB (narrow) or TCFD (broad) standard. CDP can be used to report on the impact of emissions, while GRI or WEF can be used to report on social and environmental impact.
Senior executives need to understand various reports and actively participate in decision-making regarding sustainability. Designing a company's sustainability report can help ensure compliance, respond to stakeholder expectations, and lead to superior sustainability performance.
EcoVadis assesses corporate performance for rating suppliers on a broad range of environmental and social impacts. With many ESR reporting options developed over the last decade, companies must make informed decisions to maximize the benefits and minimize the challenges of sustainability reporting.
In the context of corporate sustainability, home-and-garden companies might consider adopting sustainable-living practices and reporting standards to align with growing environmental concerns. For instance, when selecting a sustainability reporting standard, home-and-garden businesses could consider EcoVadis, which evaluates corporate performance on a broad range of environmental and social impacts. This approach could help these companies not only present their finance-related impact using standards like the CDSB or TCFD, but also report on their social and environmental impact using platforms like GRI or WEF. By doing so, they may improve their sustainability performance and respond to increasing stakeholder expectations.
