Sustainability & ESG insights April '22: Earth Day and Mandatory ESG Disclosures.
This content was originally posted on 4/28/2022 via LinkedIn
Via this monthly newsletter, we'll try something new to share more knowledge and content about what's arguably the most important domain of our generation: Sustainability and ESG. The format might change over time, but the goal is clear from the start: inspire and share insights so each and everyone of us can make a difference in the Environmental, Social and Governance domain we call Sustainability.
For those who are following my journey with Sustaira, know that I went back to my roots launching this Sustainability software start-up. My internal drive and intrinsic motivation. The bigger picture. I asked myself, what am I ultimately going to leave behind and how will I actually have an impact with the people around me? Realizing that what you leave behind, goes above and beyond monetary value. Experiences and having a meaningful impact on others and future generations to come, is what truly counts. To read more about about this, please have at look this blogpost: https://www.sustaira.com/blog/hello-sustainable-world-sustaira-is-live.
Here we go...
Valuable ESG and Sustainability news of April '22
Earth Day 2022: Invest in our Planet. This year, Earth Day’s theme on the 22nd of April, is “Invest in our Planet.” This theme is focused on changing the business climate, the political climate, and learning about how we can take action to preserve and protect our health, families and livelihood. The first ever Earth day occurred in San Francisco in 1970 after a Senator of Wisconsin, Gaylord Nelson, announced the idea of a teach-in on college campuses to raise awareness of the environmental issues the world was facing at the time. According to Earthday.org, Gaylord had been concerned about the environment for a very long time and had felt inspired by the student antiwar movement and the growing consensus that air and water pollution was a massive problem. Over the following decades, Gaylord Nelson teamed up with congressmen, activists, and various other groups to make Earth day a global movement and holiday. April 22nd 2022 marked the 52nd anniversary of this event.
The number of Chief Sustainability Officer positions is growing rapidly. According to research by PwC, companies appointed about as many CSOs in 2020-21 as in the prior 8 years combined. Companies in the consumer goods and products sector boasted the most formal CSO roles – perhaps not surprising given the high-level media and social media focus on sustainability issues in the food and apparel sectors, to name just two. Companies in the chemicals and oil and gas sectors also had a high percentage of formal CSO roles – an indication of just how much ESG scrutiny investors, regulators, governments, the media and NGOs in particular apply to their operations. The engineering and e-commerce sectors had the lowest representation in terms of formal CSOs. Although this trend of more organizations creating a role specifically driving Sustainability initiatives this research also suggests that too few CSOs have sufficient access to the board, because roughly half of all CSOs are two or more hierarchy levels below the C-suite and therefore lack the influence to shape the sustainability transformation. Enabling and empowering Sustainability Directors to make a difference and lead by example will make all the difference moving forward to gain more momentum...
Mandatory ESG disclosures are continuing to rise, locally as well as globally. Canada will require banks and insurance companies to provide disclosures on their climate-related risks and exposures beginning in 2024, according to the federal government’s newly released Budget 2022. The US SEC's proposed rules as announced in March '22 and the UK rules shared in 2021 are all just the beginning to get the necessary transparency. In terms of the US SEC proposal, this means that those who meet that criteria would be required to dive deeper into their organization’s carbon footprint, including scope 1, 2, and even in some cases, scope 3 greenhouse gas emissions using widely accepted frameworks such as the TCFD and Greenhouse Gas Protocol. In terms of risk, organizations would need to disclose climate related risks and how they might manage those risks, along with how those risks could affect the organization over time in terms of materiality. This goes even deeper into requiring how those risks may affect strategy, business model and outlook. Last but not least, these rules would require disclosures around the impact that climate related events may have on the financials of the organization. You can read the full overview here.
As shared via ESGToday.com, Consulting and advisory firm Boston Consulting Group (BCG) and leading business school INSEAD announced the release of ‘The BCG-INSEAD Board ESG Pulse Check,’ a study examining the role corporate boards are playing in overseeing ESG. While the report found that approaches for this rapidly emerging area are still developing, and while directors recognize the need to prioritize and increase focus on sustainability topics, it also revealed that most directors report not being highly effective at integrating ESG into strategy, and many lack the tools for ESG oversight. Despite the increased ESG focus, many respondents indicated that boards often lack the necessary tools for effective ESG oversight, with around 70% of directors reporting being only moderately or not at all effective at integrating ESG into company strategy and governance. There's work to do, to say the least. Innovative software will make the difference.
Produced by MIT Technology Review Insights in association with Morgan Stanley, Citrix, and Iris Ceramica Group, The Green Future Index 2022 is the second annual comparative ranking of 76 countries and territories on the progress and commitment they are making toward a green future by reducing carbon emissions, developing clean energy, and innovating in green sectors, as well as the degree to which governments are implementing effective climate policies. Based on research conducted between October 2021 and January 2022, the interactive Index shows which countries are progressing fastest in global efforts to decarbonize and limit global heating.
Sixteen of the "Green Leaders" are from Europe: Iceland and Denmark still hold the number one and two spots, respectively, and third and fourth places are now held by the Netherlands and the UK. The UK (ranked 17th last year) has become particularly aggressive in directing investment toward its clean energy transition: nearly 36% of the country's power came from clean sources toward the end of 2021, and Britain intends for that percentage to be 100% by 2035. New entrants to the top-ranked cohort include South Korea, Japan, and the United States.
Of course there are many more insightful articles, so share your thoughts and recommendations in the comments below.
As always, we're open to feedback. If you have any ideas of content or want to collaborate, please do reach out. Please also like, share and subscribe so we can truly make this impactful.
