Public and investor demand is setting the stage for a whole new level of tracking and reporting requirements for companies. New climate reporting regulations in the European Union and the U.S. will dramatically impact non-financial reporting for publicly traded companies. All Asian stock exchanges have already implemented Environmental, Social, and Governance (ESG) reporting. While these developments are positive trends for verifying environmental claims, they are also bringing to light the fact that many businesses are still at the beginning stages of their sustainability journeys.
While this public clamor for transparent carbon reporting is underway, few industry standards are in place to guide those in charge of creating, tracking and sharing sustainability project progress. There have been credibility gaps as companies try to position themselves as environmental leaders. These reports often feature exciting, aspirational visions instead of verified specifics about the many steps it can take to make sustainability an embedded value. In some egregious cases, companies claim environmental stewardship while in reality, they are causing increased greenhouse gas emissions through false carbon offsets or creative ledger accounting.
Creating a realistic roadmap for sustainability requires an intensive audit of current carbon loads within the corporation, while also looking outward to downstream and upstream pipelines’ energy use. This kind of 360-degree approach is a significant component to support practical planning, execution, and reporting of sustainable projects. Listening to and getting a full understanding of an organization’s customers, partners and suppliers is integral to this 360-degree approach. Suppliers who are further along in their sustainability journey should be prioritized as their carbon use will affect a company’s greenhouse gas (GHG) score.
Many companies are still relying too much on manual processes for gathering this critical information. Creating a foundational report of an organization’s carbon use is only one part of the equation – adding in carbon expenditures of external sources adds a new layer of complexity.
Technology investments can help address problems in data quality as digital compilation replaces manual reporting processes. And, as reporting standards and KPIs evolve, regulations will help standardize how companies report.
Setting out a well-defined path at the onset and using hardware and software specifically designed to support sustainability can assure success. Keeping the following questions in mind can help ensure companies are on track and capturing everything relevant to their carbon reduction goals:
- What processes and tools are used to track resource usage?
- Where is the low-hanging fruit that will provide relatively quick returns, such as automating lighting systems and HVAC, for example?
- What tool sets are best equipped to handle mass quantities of data?
- Where can companies find ways to be transparent and ensure compliancy?
- What projects are gaining traction to further build on successes?
- Are investment decision-makers fully aware of progress, and are they supportive?
The Druckerian adage, “you can’t manage what you can’t measure,” is on target as ever and should be applied to sustainability projects at any stage. Poor data or unknown factors are impediments to progress; data quality issues affect every stage of their journey. An extensive survey of facility, energy and sustainability managers within organizations that identified as advanced (41%), in the middle (44%), and at the beginning (39%) all reported that data-related challenges continue to be barriers to successful implementation.
To get ahead of pending legislation and to enhance an organization’s sustainability credibility, incorporating automated data collection and monitoring software provides an advantage. Factoring scopes 1, 2 and 3 is a hugely complicated task. Sustainability teams who get out of error-prone spreadsheets and manual data gathering and use technology tools that continually analyze massive amounts of relevant data will find significant time and cost savings.
Sustainability managers can look to voluntary reporting frameworks from organizations including the Global Reporting Initiative and the Task Force on Climate-Related Financial Disclosures to help them understand reporting requirements. Collaborating with third-party certified standardization programs like the World Resources Institute’s Science Based Targets initiative (SBTi) and the International Sustainability Standards Board will help organizations develop clear, compliant reporting messaging.
The good news is that 400 corporations from 35 countries have signed The Climate Pledge, a commitment, “to take collective action on the world’s greatest crisis.” This pledge sets out an ambitious goal to reach net-zero carbon emissions by 2040, a decade ahead of the Paris Agreement. These public commitments require reporting, and to this end an impressive 96 percent of the world’s top 250 companies and 79 percent of the Nasdaq 100 are opening up their books to auditors and reporting on their progress. As more clearly defined, data-driven sustainability projects are showcased in these reports, they hold the promise of fueling innovation and ambitious goals for further projects.
Lauren Scott is Vice President of Marketing & Sustainability at Acuity Brands’ Intelligent Spaces Group. Scott specializes in translating climate initiatives into meaningful action to deliver on commitments to the building and renewables sectors.