Welcome to this month’s cinema-themed Sustainability Summary, where we round up the key sustainability developments that have taken place in recent weeks in the worlds of financial services, technology and professional services.
This month, the spotlight stays on greenwashing, seeking clarity on ESG investments, stern words from regulators, more green bonds, reporting and insight initiatives, and new net zero commitments. We also look ahead to COP26 and a no fuss guide to its significance, challenges and opportunities.
GOVERNANCE AND POLICY: Mission Impossible?
*WARNING: MAY CONTAIN STRONG LANGUAGE
A new Green Claims Code from the UK Competition and Markets Authority (CMA) has been welcomed for clamping down on “sustainability bullshit”.
The CMA has warned businesses they have until the New Year to make sure their environmental claims comply with the law.
To help businesses understand how to communicate their green credentials while not misleading shoppers, its Green Claims Code highlights six principles based on existing consumer law.
They include the fact that firms making green claims “must not omit or hide important information” and “must consider the full life cycle of the product”.
John Brown, the leader of the activist creative agency Don’t Cry Wolf, told Campaign it is about time competition watchdogs clamped down on greenwashing.
“We know the British public has had the wool pulled over its eyes. The Public Relations and Communications Association’s Misinformation in Climate Crisis group found that over half of the public had been misled when it came to the climate crisis. So, the CMA shining a spotlight on sustainability bullshit is absolutely critical. While of course the spotlight will be directed towards industries such as fashion and food and drink, it's imperative it also looks at energy, aviation and other big businesses.”
The CMA is concerned about people being misled by environmental claims and also wants to ensure that businesses feel confident navigating the law.
The Code is part of a wider awareness campaign the CMA has launched ahead of COP26.
The CMA intends to carry out a full review of misleading green claims, both on and offline at the start of 2022.
It will prioritise which sectors to review in the coming months, but where there is clear evidence of breaches of consumer law, the CMA may take action before the formal review begins.
Andrea Coscelli, Chief Executive of the CMA, says, “More people than ever are considering the environmental impact of a product before parting with their hard-earned money. We’re concerned that too many businesses are falsely taking credit for being green, while genuinely eco-friendly firms don’t get the recognition they deserve.”
Minister of State for Energy and Clean Growth, Greg Hands, says, “Millions of UK households are rightly choosing to switch to green products as they look to reduce their carbon footprint. But it’s only right that this commitment is backed up by transparent claims from businesses.
“The competition regulator’s new code will help to ensure this with advice on how best to communicate and understand environmental claims.
“Government is also currently reviewing green energy tariffs to ensure consumers can be confident they are choosing companies that make a conscious choice to invest in renewable energy.”
The Green Claims Code has been published following extensive consultation with businesses of all sizes and consumer groups. Businesses should check their green claims against the Code and seek legal advice if they are unsure whether their claims comply with the law.
Rachael Kinsella, editor at iResearch Services, says, “Strong words! This is not the first time that ‘sustainability bullshit’ has been called out, however, and it will not be the last. Through our own research, we have found that “Greenwashing” is clearly a big issue in financial services and indeed pervades other sectors, such as technology and retail. But plain speaking can focus the mind on important issues for business and the planet. The CMA Green Claims Code – referencing the 1970s Green Cross Code British road safety campaign – is a welcome initiative, as the CMA looks to crack down on misleading environmental claims. The principles stand for all sectors.”
The Force is strong with this one
Fun Fact: Dave Prowse, the actor who physically played Darth Vader in the original Star Wars films, featured in the Green Cross Code TV advert in the UK in the 1970s. Prowse sadly passed away in November 2020, but his legend lives on globally, not just in a galaxy far, far away. Meanwhile, back to reality…
Talking of Greenwashing…
Our research that showed more than half of financial services professionals in the UK believe the practice of greenwashing is rife within the financial industry was referenced in a report on this new code in City AM in September. We highlight other initiatives from national regulatory bodies later in this summary, continuing to explore the issue of greenwashing and how to tackle it in our regular research-led content.
Gurpreet Purewal, Vice President of Sales – Thought Leadership, at iResearch Services, says, “One of the aims of iResearch Services is to help our partners generate headlines, so it’s good to see yet more coverage in the media of our sustainability survey. As we touch upon in this newsletter, there is widespread concern about greenwashing among the industry and investors and as we continue to conduct surveys, it will be interesting to see whether these lessen or remain.”
€250 billion EU Green Bonds to be auctioned in October
The largest green bond sale in the world, the NextGenerationEU green bond programme, worth up to €250 billion, will begin in October. The European Commission will seek to raise up to 30% of the €800 billion NextGenerationEU funds through the bonds and use the proceeds to finance green policies. To be able to proceed with the first issuance in October 2021 (subject to market conditions), the European Commission has adopted an independently evaluated Green Bond framework organised around four main pillars. These are:
- Use of proceeds: The funds will be used for nine broad categories of expenditure, including energy efficiency, clean energy and climate change adaptation.
- Process for expenditure evaluation and selection: The investments will be identified based on the 37% climate expenditure of the Recovery and Resilience Plans – the spending roadmaps under the Recovery and Resilience Facility at the heart of the NextGenerationEU recovery instrument.
- Management of proceeds: The Commission will track the relevant spending.
- Reporting: Two types will show how funds have been spent (allocation reporting) and what they have achieved (impact reporting).
The framework is aligned with the green bond principles of the International Capital Market Association (ICMA), which is a market standard for green bonds. In line with standard practice, it has been reviewed by a second party opinion provider, Vigeo Eiris, part of Moody's ESG Solutions. The evaluator has confirmed that the framework is aligned with the ICMA’s Green Gond Principles, is coherent with the EU’s wider Environmental, Social and Governance (ESG) strategy and will provide a robust contribution to sustainability. EU Budget Commissioner Johannes Hahn says, “It has to be proved that investments have a positive ecological impact. The member states’ determination to promote a sustainable transition matches growing market demand.”
EU prudential regulation report may bring tighter conflict of interest rules
A new EU prudential regulation report says some standards should be made compulsory and board accountability increased. The lengthily-titled, Development of tools and mechanisms for the integration of ESG factors into the EU banking prudential framework and into banks' business strategies and investment policies was conducted on behalf of the European Commission by investment management specialist, BlackRock. It concludes that to harmonise ESG product classification, compliance with certain standards, such as the EU Green Bond Standard or the EU Taxonomy, could be made compulsory and measures aimed at increasing accountability at executive and board level could be introduced.
The study explores the integration of ESG factors into banks’ risk management processes, business strategies and investment policies, as well as into prudential supervision. It provides a comprehensive overview of current practices and identifies a range of best practices for the integration of ESG risks within banks’ risk management processes and prudential supervision. The report finds that a common and granular definition of ESG risks among banks does currently not exist. Few banks have developed a detailed list of ESG factors with a mapping to specific sectors, geographies, and client segments, to understand their relevance as drivers of risk, it says.
Most banks plan to assess ESG risks through both financial materiality and the material impacts of their activities on environmental and social issues (“double materiality”), which is the perspective advocated by civil society organisations. It also says that banks have not yet developed a clear mapping of how different ESG factors feed into financial risk types.
Dutch regulator wants improved sustainable investment fund credentials
The sustainability credentials of many investment funds are questionable, with prospectuses lacking detail and specifics of sustainable objectives and risks or environmental and social characteristics, says the Netherlands Authority for the Financial Markets (AFM). The Dutch regulator studied around 540 sustainable Dutch funds. The AFM says some investment funds were unclear whether and how ‘good governance’ is guaranteed and monitored. Fines or other measures could be imposed if improvements are not made, the AFM warns. Under the EU’s sustainable finance disclosure rules funds must have an exclusive focus on sustainability or publish granular disclosures on their sustainability characteristics.
New government bond with climate risk adjustment
New UK fixed income government bond indices that combine climate considerations and the carry factor have been launched. The FTSE Climate Risk-Adjusted Carry and Roll Down (CaRD) Government Bond Index Series (FTSE Climate CaRD GBI Series) allow sovereign debt investors to lower their portfolio’s overall climate risk while optimizing carry and roll down, says investment manager FTSE Russell. The index series measures the performance of fixed-rate, local currency, investment-grade sovereign bonds, as well as incorporating a tilting methodology that adjusts index weights according to each country’s relative climate risk performance.
Australian regulator warning over misleading net zero claims
The Australian Securities and Investments Commission (ASIC) has warned it will monitor net zero statements in fundraising documents and the market and take regulatory action over misleading claims. It has already intervened in an unnamed energy company’s initial public offering to remove net-zero statements that inferred near-term implications. It says, “We continue to monitor ‘net zero’ statements in both fundraising documents and in the market generally. We will take regulatory action where warranted.”
Commissioner calls for Modern Slavery Act to cover financial portfolios
Financial portfolio reporting should be included in the Modern Slavery Act, either by legislation or voluntarily, says the UK Independent Anti-Slavery Commissioner. Dame Sara Thornton has published a new report, The role of the financial sector in eradicating modern slavery: CEOs respond to the Independent Anti-Slavery Commissioner. She recommends,” Until the government legislates to extend Section 54 of the Modern Slavery Act to cover financial portfolios, I suggest that business covers these areas voluntarily in their annual modern slavery statements. The financial services sector should ensure that it integrates modern slavery and human trafficking risk across all its business processes, in the same way that it has approached environmental risk.”
The report concludes there is a commitment from many to reinvigorate the internal response to anti-slavery initiatives, but more needs to be done. “It is encouraging to see so many financial institutions renewing or revitalising their commitments to the anti-slavery agenda. However, given the hidden nature of the crime, and the complexity of global supply chains, these initiatives are only scratching the surface of a pressing global problem. More than 60,000 organisations are regulated by the Financial Conduct Authority in the UK alone.
Concerted action, focus and leadership will be essential for ensuring that anti-slavery considerations become an integral part of everyday business for all institutions, regardless of their subsector or size.” The report follows a year-long partnership with financial crime consultancy Themis and the TRIBE Freedom Foundation which set out to demonstrate modern slavery’s links to the financial services industry, map out levels of awareness and anti-slavery activity in the sector and promote best practice.
iResearch Services Chief Executive Yogesh Shah, says, “You might not put the financial industry among the first that you would link with modern slavery issues, but it does touch every part of an organisation and so has a major influence on how business is conducted. Dame Sara Thornton highlights how anti-modern slavery initiatives are only scratching the surface and that more work is required. Many companies have modern anti-slavery resources in place, but there is much more we can do, both working separately and together, to press for action.”
FINANCIAL SERVICES: Wall Street (Money Never Sleeps)
Capital markets embrace ESG on improving returns, says HSBC
Capital markets have undergone a powerful shift to embrace Environmental, Social and Governance (ESG) issues, the HSBC 2021 Sustainable Finance and Investing Survey reveals.
Three-quarters of the 2,000 capital markets issuers and institutional investors taking part in the survey say the pandemic has sharpened their focus on ESG and half say it can help boost returns, says Dr Celine Herweijer, Group Chief Sustainability Officer at HSBC.
“Our fifth annual global survey of 2,000 capital markets issuers and institutional investors not only shows that they are actively addressing these areas, but that they are doing so due to a powerful combination of values and financial rationale. Indeed, some 51% of our respondents this year say that paying attention to social and environmental issues can help them improve their returns or reduce risk – the highest percentage in three years. This shows that the financial benefits of protecting our environment are becoming increasingly obvious.”
The percentage of those that care about ESG for its effect on returns and risk, is up from 39% last year and is at 54% among issuers (up from 33%) and 48% among investors (no change.)
Capital markets participants are more engaged than ever in making a positive impact, with 61% of issuers and investors saying their view of their responsibility to society has changed.
An astonishing 94% of companies expect to move away from environmentally- and socially challenged business models in the next five years. Companies are transforming their business models and capital allocation in response to climate change and this will accelerate: 70% of issuers are considering ramping up business activities that might benefit from climate change or starting new ones.
Half of issuers say that climate change is already affecting their business or activities – up from 37% last year and a three-year high. Four in 10 (41%) of issuers need a lot of financial help and investment to meet their sustainability goals, up from 23% last year.
Around two-thirds (64%) of Americas investors are very worried about greenwashing and think it is a serious problem – the highest percentage of any region.
Hitanshu Dhingra, Associate Vice President, Investment Research at iResearch Services, says, “The HSBC survey shows that progress is being made, as capital markets continue to recognise the importance of ESG and adopt practical measures. As iResearch Services has seen, backed up by research, increased profit can be a significant driver for businesses to become more sustainable. But no matter the reason that businesses embrace ESG, the important thing for climate change is that they do.”
- Gone with the Wind
In other HSBC news, the international bank has signed an agreement with renewable energy investment manager Capital Dynamics to buy renewable electricity for 15 years, generated by a 12.6-MW wind farm being built in Scotland. (Renews.biz)
Taking the temperature of financial portfolios
A Celsius warning system is being applied to show how close companies, portfolios and funds with global climate targets are to net zero. Implied Temperature Rise from MSCI ESG Research compares the current and projected greenhouse gas emissions of nearly 10,000 publicly listed companies across all emissions scopes. It provides a reading in degrees Celsius to help investors build climate-aligned portfolios, set decarbonization targets and identify companies on climate risk. An implied temperature of 1.5°C, for instance, indicates that a company is projected to remain within its share of a carbon budget that would keep warming this century to 1.5°C. The generally accepted target is to keep warming this century well below 2 degrees Celsius (2°C). Fewer than 10% of the world's listed companies had an implied temperature of 1.5°C or less, and fewer than half were aligned with a 2°C temperature rise as of Sept. 8, 2021, the latest analysis by MSCI ESG Research finds.
Greenwashing in climate investing
A new study from EDHEC Business School, called Doing Good or Feeling Good? Detecting Greenwashing in Climate Investing suggests that traditional climate investing strategies do not live up to the promises of their promoters. Even though investors and managers communicate extensively on the use of climate data to construct their portfolios, this data represents at most 12% of the determinants of portfolio stock weights on average. “This low percentage very clearly means that the construction of climate indices remains essentially guided by purely financial considerations,” the study states. “To tackle this inconsistency between the stated climate objective and the reality of their investments, the authors suggest that when climate considerations represent less than 50% of the determinants of the weight of the stocks in a portfolio, then this portfolio should be considered to be at significant risk of greenwashing and should not be permitted to claim that it is climate-friendly or aligned with net-zero ambitions.”
Sustainable Fitch launches ESG investment insight
Rating agency, the Fitch Group has launched a new Sustainable Fitch website, offering insights, tools and data for the ESG financial community. It will later be expanded to cater for the entire fixed-income investable universe. The assessment is backed by clear methodologies, with source data derived using the same trusted principles and platforms that underpin Fitch credit ratings. Sustainable Fitch's capabilities will include ESG-integrated credit research and analysis via existing ESG Relevance Scores, Climate risk assessment through its existing Climate Vulnerability Scores, Pure ESG analysis and reports via the new ESG Ratings and ongoing sector and thematic ESG research. Coverage is not limited to the Fitch credit ratings universe or the existing universe of green or sustainable-linked bonds.
Andrew Steel, Managing Director, Global Group Head of Sustainable Finance, says, “Investors want transparent, cross comparable ESG ratings that look beyond labelling or targets to assess ESG fundamentals. Sustainable Fitch will provide investors with best-in-class ESG Ratings, supported by data and analysis backed by the key tenets of consistency, comparability, coverage and granularity." The ESG Ratings suite has three major pillars: an ESG Entity Rating, an ESG Instrument Rating and, for labelled or KPI-linked debt instruments, an additional ESG Framework Rating.
- Days of Future Past
Want to know what might happen to ESG reporting in the next five years? Take a look in Responsible Investor’s crystal ball.
Europe leads sustainable investment
Europe has been working longer on sustainable investment options than other continents, so its Limited Partners are “well ahead of the rest of the world in investing their assets into sustainable strategies. That’s the overriding conclusion of the Sustainable Investment Survey 2021 from PitchBook. One in two (49%) said that at least half of their current fund managers have a sustainable investment approach incorporating ESG factors and/or impact, compared to 27% of respondents in North America and 27% in the rest of the world. For respondents of all regions, environmental concerns, improved long-term investment results, and social concerns are top of mind for those developing sustainable investment programs. Almost two-thirds (63%) of respondents have implemented sustainable practices at their own organisation, a much higher proportion than those who have implemented such practices in their investments, says the survey.
JP Morgan Chase issues US$1 billion green bonds
Major bank JP Morgan Chase has issued US$1billion inaugural green bonds to support environmentally friendly projects. its debut issuance may be used for the financing or refinancing of projects related to green buildings and renewable energy and lending to clients for eligible green projects. Marisa Buchanan, Head of Sustainability at JPMorgan Chase, says, “We are thrilled to offer our inaugural green bonds, which build on JPMorgan Chase’s leadership in the global green bond market and expands on the Firm’s efforts to address climate change. This is an important step in our sustainability journey, and we look forward to continuing to advance sustainable solutions that protect the environment and help facilitate a transition to a low-carbon economy.”
Investors worth US$2.35 trillion back Paris net-zero commitments
The Paris-Aligned Investment Initiative’s Net-Zero Asset Owner Commitment is now backed by 40 investors with combined assets under management of US$ 2.35 trillion. The investor-led global forum supports investors in aligning their portfolios and activities with the goals of the Paris Agreement. New joiners include HESTA – the first Australian signatory – as well as several Danish pension funds, Railpen, Tesco Pension Investment and Elo Mutual Pension Insurance Company. Investors commit to achieving net-zero portfolio emissions by 2050 or sooner and increasing investments in climate solutions. Stephanie Pfeifer, CEO of Institutional Investors Group on Climate Change, says, “As momentum grows approaching COP26 and the focus on climate-related issues intensifies, we are pleased to see more asset owner investors making net-zero commitments.”
How is private equity fighting climate change?
Most private equity firms agree climate change is an urgent issue about which they should take greater responsibility, but less than half measure their own carbon footprint or that of their portfolio companies. Of the 358 private equity leaders taking part in an Apex Research’s survey, What is Private Equity Doing in the Fight Against Climate Change, 81% said their company and their portfolio companies should be taking greater responsibility for their carbon footprint. This was topped by respondents from Germany (90%) compared to only 58% in the United States. Only 44% of all Private Equity firms measure their own carbon footprint, while 48% measure that of suppliers and 50% measure the carbon footprint of their investments.
Diversity and inclusion responsibility shifting to business chiefs
In “a seismic shift”, diversity, equity, and inclusion (DEI) leadership is moving from being centred in Human Resources to business heads, supported by expert DEI leads. The key finding is revealed in the Accelerating Change: Diversity, Equity, and Inclusion in Investment Management report, published by the CFA Institute, a global non-profit organisation that provides investment professionals with finance education. The report says, “The seismic shift we record and reflect on is that DEI leadership is moving from human resources (HR) to business leaders—from a nice to have to a need to have—because over 90% of XPs’ leadership believes that DEI will lead to better business outcomes.”
The CFA Institute aims to promote the standards in ethics, education, and professional excellence in the global investment industry. The report analyses data from 41 investment organisations in the United States, Canada and Australia taking part in the Experimental Partners Program. Together, they represent $26t in assets under management and more than 230,000 employees. Key takeaways are provided on foundational aspects, communication, talent acquisition, measurement and accountability and more.
Natural Asset Companies to trade on NYSE
New York Stock Exchange (NYSE) has created a new market for Natural Asset Companies (NACs.) NACs are sustainable enterprises that hold the rights to ecosystem services produced by natural, working or hybrid lands. Globally, natural assets produce an estimated $125 trillion annually in ecosystem services, such as carbon sequestration, biodiversity and clean water. NYSE is part of Intercontinental Exchange, Inc. (IEG). Douglas Eger, CEO of IEG, says, “This new asset class on the NYSE will create a virtuous cycle of investment in nature that will help finance sustainable development for communities, companies and countries. Together, IEG and the NYSE will enable investors to access nature’s store of wealth and transform our industrial economy into one that is more equitable.” IEG has developed an accounting framework to measure ecological performance to complement GAAP financial statements.
Other classics you may have missed…
- The Green Hornet
Following our own findings on greenwashing, another study suggests that it is a risk for a quarter of UK equity funds.
- Good Advice
Insurance company Aviva is launching a new tool to help advisors assess ESG themes in client portfolios. The free tool, set to launch in October, will examine climate change, waste, water security, women leadership, deforestation and human rights. (Money Marketing)
Learn how the World’s Largest Infrastructure Asset Manager Set a Net Zero 2040 Goal and is on track to be carbon-neutral after a shift in strategy. (Nomura)
- The Life Aquatic
Multinational financing group ING has joined over 150 shipping industry leaders in backing the Global Maritime Forum’s (GMF) Call to Action for Shipping Decarbonization. It urges governments to deliver the policies and investments needed to reach critical tipping points in decarbonising global supply chains.
- Perfect Storm
Decarbonisation in the shipping sector is not plain sailing, say analysts (CitywireSelector)
- The Wolf of Wall Street
ENERGY: Back to the Future
Investors’ group set Net Zero Standard for oil and gas sector
More than 20 global investors with assets of US$10.4 trillion have set out standards for net zero transition plans in the oil and gas sector. The Net Zero Standard for Oil and Gas, published by the Institutional Investors Group on Climate Change (IIGCC), outlines actions that oil and gas companies should be taking and how they should be reporting so that investors can evaluate progress. The standard stresses the need for comprehensive and absolute emissions reduction targets, which cover all material emissions, as well as alignment of capital expenditure and production plans with a net zero target. It acknowledges ‘winding down as a legitimate strategy, as well as diversifying energy offerings or working through a company’s value chain to re-shape demand.
The standard will now be piloted with a core group of leading oil and gas companies, including BP, Eni, Repsol, Shell and TotalEnergies to trial implementation and prepare for wider adoption across the sector, and consider integration into the Transition Pathway Initiative (TPI) and Climate Action 100+ analysis. TPI is a global initiative led by asset owners, which is aimed at investors and assesses companies’ preparedness for the transition to a low-carbon economy, supporting efforts to address climate change. “While a number of companies within the oil and gas sector have set net-zero targets and started developing transition plans, analysis by TPI and others has highlighted significant variation in the extent and scope of these commitments,” says the report.
Stephanie Pfeifer, Chief Executive, IIGCC says, “The past 18 months have seen enhanced climate ambition from a number of leaders within the oil and gas sector, with many suggesting that their targets are consistent with ‘net zero’. However, analysis shows that for many there is still work to do to get on track to achieve net zero by 2050 and meet the goals of the Paris Agreement. This net zero standard is intended to support investors in understanding the credibility of companies’ commitments and transition plans so that they can engage effectively with the sector, especially those companies that are lagging behind. It offers a reset moment for investors and oil and gas companies alike to get behind a shared understanding of what needs to be included in a transition plan within the oil and gas sector in order to allow for effective comparisons of investor evaluations.”
Renewables key to lower UK energy prices
Amid talk of a “UK energy crisis’, non-profit think-tank Ember says renewables are the key to lower prices. That is because 86% of the rise in electricity prices during 2021 are due to burgeoning natural gas costs, it claims. UK power prices have almost tripled year-on-year from August 2020 (£36/MWh) to August 2021 (£107/MWh) – a jump of £71/MWh. The fossil gas cost component alone has soared by £61/MWh (from £14/MWh to £75/MWh). Generating electricity from existing UK fossil gas power plants is three times more expensive than from new onshore wind and almost twice that of new solar. “The only way to avoid the volatility of fossil gas is to accelerate the transition to clean electricity,” Ember states.
Andrew Newby, Operations Director, iResearch Services, comments, “With power and fuel availability and pricing dominating UK headlines, it’s good to hear renewables can help significantly reduce prices. It’s yet another reason to step up its introduction in businesses and homes but needs to be tackled in an equitable way.”
UK suppliers request emergency support
Amid the crisis caused by surging gas supplier costs, the UK’s largest energy suppliers have requested multibillion-pound emergency support. Among suggestions is the creation of a ‘bad bank’ to offset unprofitable clients from smaller challenger suppliers who are in danger of collapse in record wholesale costs. Business and energy secretary Kwasi Kwarteng has held emergency talks with regulator Ofgem. Benchmark European gas prices have already tripled this year.
- The Cloverfield Paradox
Citi, Bank of America and Commerzbank are lead arrangers for an inaugural USD offering by one of the world’s largest exporters of sea-borne thermal coal, despite having all made 'Net Zero' pledges, reports responsible-investor.com.
Big firms make waves with water stewardship promises
Tech giant Google has pledged to replenish 20% more water than it consumes by 2030 and to support water security in communities where it operates. The promises come in a Water Stewardship document and follow promises by Facebook and PepsiCo to become water positive and return more water than they consume by 2030. Google is focusing on three areas, what it calls Advance Responsible use at its premises, benefitting watersheds - land that drains into a stream, lake, or river - and communities and supporting water security with technology. The company says it will work tirelessly to achieve the goal. “We’re doing this by deploying innovative solutions to responsibly source and manage water in our existing operations. We are supporting the communities in which we operate, making significant investments around the globe to replenish every drop of water, and more.”
Questions over carbon-sucking seaweed
Billions have already been invested in carbon removal solutions, including growing giant bladder kelp. One entrepreneur, Arin Crumley says huge fleets of semi-autonomous vessels growing kelp could suck up around a trillion tons of carbon dioxide and store it away in the depths of the sea, effectively reversing climate change. “With a small amount of open ocean,” he says, “we can get back to preindustrial levels” of atmospheric carbon dioxide. But MIT Technology Review senior editor, James Temple, says, basic questions over scalability, reliability and risk still need to be answered.
Start-up WasteShark sells “Roomba for water” that eats up plastics (ClimateTechWeekly)
“If the reefs go, if, you know, if sea level rise happens, the cost of that will be astronomical. You can try and hold the sea back, but the amount of money that you're going to put into that, and, you know, we need that biodiversity. It's ironic that we go up into space, we put all that money into space tourism, yet we don't actually understand what's in the sea. And, yeah, we have to understand our oceans better, we have to give them more priority. You know, it's only because we've named the planet that it's called Earth. It would be planet water. It will be Aqua. It's blue, seven tenths blue, we are seven tenths water.” – Chris Hines, A Grain of Sand: Sustainability and Social Value.
Hear more from Chris Hines in conversation with iResearch Services’ Kevin Anthony in The Thought Leader’s Voice Podcast: Paving the way for People and Planet alongside Profits.
The Truth Is Out There
CPOs want technology to deliver ‘central source of truth’
Chief Procurement Officers (CPOs) want cutting-edge procurement technology to deliver a ‘central source of truth’ about every supplier engagement for immediate visibility of the organisation's spend and obligations. So says David McGonigle, Director of Financial Services Powered Procurement at KPMG in the UK. “Taking away the burden of administration is also important, so that procurement can be much more strategic and value adding. They also want a streamlined user experience for their teams on any device at all times, so that they can make the most of the software. It’s really important to CPOs that this is all sustainable and will stand the test of time as the business changes.” In many cases, organisations have a long way to go to meet these expectations, says The Path to Procurement of the Future booklet from KPMG and Coupa Software cloud technology platform.
1.21 gigawatts! Great Scott!
AT&T ‘to help cut gigaton of global carbon emissions
Telecoms giant AT&T aims to help businesses eliminate 1 billion metric tons of greenhouse gas emissions by 2035 through its Connected Climate initiative. It will work with Microsoft, universities, and other alliances to unleash the power of 5G and other broadband technologies. A gigaton equals around 15% of U.S. greenhouse gas emissions and nearly 3% of global energy-related emissions in 2020. “With our newly formed Connected Climate Initiative, we plan to convene the brightest minds from leading technology companies, AT&T Business customers, universities, and non-profits to identify best practices, develop innovative new products and use cases, and scale the innovations of startup partners building tomorrow’s 5G and other broadband-enabled climate solutions.”
Kevin Anthony, Associate Director of Thought Leadership Sales at iResearch Services, says, “This is another example of thought leaders, businesses, academia and technology working together to reduce carbon emissions. And a gigaton is a significant reduction. Walmart also has a project to reduce 1 billion tons of greenhouse gas by 2030 with help from suppliers. More are needed, as a reduction of around 20 gigatons might be needed to reach the 1.5°C Paris agreement goal.”
DATA AND REPORTING: The NeverEnding Story
ESG data capture struggles
Two-thirds of respondents (65%) are struggling with data capture for ESG reporting and half say they are just getting started, a new survey on the State of ESG Reporting and Performance suggests. Six out of 10 respondents are still using spreadsheets to report and organise data, according to sustainability software provider enVizi. Three-quarters said that the same team managed reporting and emission performance improvement. The survey author says, “This bodes very well for the next stage of the decarbonization journey for organizations, which is how to move beyond reporting to performance improvement. Regarding performance improvement, it was pleasing to see that 80% of respondents cited operational energy efficiency as a key initiative in their decarbonization journey.”
Prepare for ESG standards to go global
Businesses should prepare for globally scaled ESG standards, says Scott Flynn, Audit Vice-Chair at professional services network, KPMG. “Momentum is palpable towards globally scaled standards,” he tells financialexecutives.org. The Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) have recently merged to develop a more harmonized global standard. The International Financial Reporting Standards (IFRS) Foundation is preparing to launch an international Sustainability Standards Board at the UN’s COP26 climate summit. In the United States, the Securities and Exchange Commission (SEC) is expected to soon reveal more about its approach.
Mr Flynn says, “With standards and frameworks proliferating across the globe, KPMG supports the development of a baseline global ESG reporting standard to reduce complexity and achieve greater relevance, consistency, reliability, and comparability in ESG reporting. We believe that the development of a global reporting baseline will simplify disparate activity occurring in the market among standard setters.” Today, 84% of the top 250 companies globally report using some standard, framework or guidelines. Leaders should begin understanding the various standards, scenario plan for different outcomes, and begin tackling the implications. Understand context to truly own your story and benchmark peer reporting to understand evolving expectations.
LEADERSHIP AND THOUGHT LEADERSHIP: Big Business
More than 200 firms sign Climate Pledge
A total of 201 global businesses have now signed The Climate Pledge to reduce carbon emissions, including mobilizing their supply chains to tackle climate change. Another 86 signatories have joined initial signatories to The Climate Pledge, including Nespresso, ASOS, Procter & Gamble, HP, and Salesforce, say organisers Amazon and Global Optimism. They include three new signatories from India – UPL Limited, Greenko Group, and GODI. Signatories have pledged to meet the Paris Agreement’s goals 10 years early—and achieve net-zero carbon by 2040. Climate Pledge signatories are expected to mitigate 1.98 billion metric tons (BMT) of carbon emissions from a 2020 baseline. This is equivalent to 5.4% of current global annual emissions.
Businesses are making efficiency improvements, reducing materials, investing in renewable energy and more. They agree to neutralize any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial offsets to achieve net-zero annual carbon emissions by 2040. David S. Taylor, chairman of the board, president, and CEO of Procter & Gamble, says, “Addressing climate change effectively requires collaboration across industries and credible science-based actions. P&G has made significant progress over the past decade and we know we must do more. The task ahead is urgent, difficult, and much bigger than any single company can solve alone. P&G is proud to join The Climate Pledge as we work together to preserve our shared home for generations to come.”
What’s in store for the environment in 2022?
Discover what global thought-leaders think the world will look like in 2022, and what changes may be coming to the environment, economy and society. Sign up for free to the REUTERS NEXT virtual global conference from 1-3 December 2021/ Speakers include Dr Anthony Fauci, Chief Medical Advisor to the President of the United States, Kristalina Georgieva, Managing Director, International Monetary Fund and Kristen Siemen, Chief Sustainability Officer, General Motors.
PRACTICAL HELP: Practical Magic
Blues Brothers: Blueprint for a commercially smart climate transition
How do companies move from climate change intentions to commitments and action? The Oliver Wyman consultancy, in partnership with The Climate Group, provides help through its Blueprint for a Commercially Smart Transition. After interviewing 27 corporations across various industries, it shares their experiences, success stories and best practices and focuses on how to manage Leadership, Business Systems, Customers and Finance.
Braveheart: How to get involved in COP26
Sustainability website Giki has written a practical guide on How to take part in COP26, the UN Climate Change Conference, which takes place in Glasgow in November. It explains in simple terms why the conference is so important, what the main aims are and how people can get involved. It also advises how to create incentives for the financial sector to invest in low carbon technologies and projects and encourage investors and banks to finance low carbon solutions.
The Doors: Profile of a sustainability leader
Want to know what it takes to be a small business sustainability leader? Find out why Rochdale-based Crystal Doors was voted UK small business champion in the edie sustainability leader awards. Also discover why, crucially, Crystal Doors is proving that sustainability means profitability. The judges said, “Crystal Doors is a shining example of what is possible for all SMEs. Through a well-thought-out and fully integrated sustainability plan, the business achieved an impressive reduction in CO2 within a year after making a climate emergency declaration and setting a bold target to become carbon-neutral by 2022.”
OTHER SUSTAINABILITY STORIES YOU MAY HAVE MISSED: Confessions of a Shopaholic
- As concerns rise over empty supermarket shelves, food supply chains are in the news. Read more about investment in resilient food chains. (TriodusIM)
- Multinational consumer goods company Unilever has asked suppliers to commit to its new Climate Promise. They are urged to set a public target to halve absolute GHG emissions by 2030, report openly on their progress, and share their emissions and footprint data.
EVENTS: The Greatest Showman
Climate Week, with events around the world, took place from 20-26 September. The theme of the week is Getting It Done and many discussions on action to advance net-zero targets across all sectors took place. Among high-profile speakers were European Commission President, Dr Ursula von der Leyen; Bill Gates, Founder, Breakthrough Energy; John Kerry, US Special Presidential Envoy for Climate, Nicola Sturgeon, Scottish First Minister; Inger Anderson, Executive Director, United National Environment Programme and Dr Faith Birol, Executive Director, International Energy Agency. The event was organised by international non-profit, theClimateGroup, which aims to combat climate change fast. The World Climate Forum North America and Asia were held online during the week. World Climate Forum Europe took place in June during London Climate Action Week.
- Register for a free webcast on Thursday 7 October on why consumers are choosing more eco-friendly brands (GreenBiz.com)
- Nine out of 10 marketers believe their department can make a difference to their organisation’s sustainability drive. The Chartered Institute of Marketing (CIM) is offering a new four-day Sustainable Transformation Programme. It is held in two parts, starting on Wednesday 6 October, and is open to non-members and business leaders and marketers at all levels who want to lead the way businesses respond to sustainability challenges
- Following the UN Climate Change Conference, COP26, businesses can anticipate a growing focus on the role of financial disclosures in tackling climate change. To find out what to expect from COP26, KPMG is holding a live digital event on ESG reporting and assurance on Thursday 14 October.
- The 2021 Good Money Week from SRI Services & Partners will be held on Zoom and is free to attend for financial advisers, financial services intermediaries and related retail financial services professionals. The event on Wednesday 6 October offers a deep dive for intermediaries to better understand how sustainable, responsible, ESG and ethical funds work and why. The keynote speaker is Mark Manning of the FCA. A drinks reception follows on 13 October.
- Responsible Investor Canada is holding a Live and Free to Air Deep Dive from 27 September- 1 October examining Canadian investors & the global ESG opportunity. It will explore how Canadian investors are assessing climate risk and other ESG concerns.
- Investors cannot achieve net-zero using long-only strategies, says Christopher Palazzolo AQR Capital’s head of responsible investing (Responsible Investor. Registration required)
- The last webinar in the COP26 Investor Action on Climate Series covers How can business and the investment sector come together to achieve global decarbonisation? It takes place on Wednesday 20 October and is part of the PRI Digital Conference. PRI (Principles for Responsible Investment) is a United Nations-supported international network of investors. It features David Schwimmer, CEO of LSEG, Julia Hoggett, CEO of London Stock Exchange and more top speakers
- With the B Corp movement gaining momentum – managing purpose and profit - register for a one-hour webinar on Thursday 7 October from 2-3pm BST to hear from the inspirational leaders and experts who have gone through the certification process and are making business a force for good among workers, suppliers, communities, and the environment. (edie)
Hooray for Hollywood! Need support with research and new thinking on sustainability? Get in touch with the iResearch Services team to create your own movie magic.
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