Businesses across the world are becoming more conscious of their environmental impact, following growing worldwide concerns about climate change, biodiversity loss, and the unsustainable use of resources. As a result, many companies are making significant investments in mapping, assessing and reducing their environmental and social impacts. Yet bold claims of carbon neutrality, in the absence of independent verification or audit, can simply leave organisations open to accusations of greenwashing. This can result in damage to the brand, business reputation, and the integrity of the sustainability movement.
Investors are also increasingly concerned about the scope and quality of environmental disclosure. This January, BlackRock CEO Larry Fink’s 2020 letter to CEOs carried the stark phrase – “Climate risk is investment risk”. Moreover, in recent years, the Taskforce for Climate-related Financial Disclosure (TCFD) has gathered increasing traction in both financial and non-financial companies, while the Climate Action 100+ movement has grown in strength and now represents over 450 investors managing over $40 trillion in assets worldwide. Yet there is still a need for these good practices to become mainstream, a fact recognised in the Global Resource Initiative’s recent call for financial institutions to carry out and publish environmental and social ‘due diligence’ into their lending, investment and advice activities
ESI Monitor is a Channel Island-based business. Our mission is to instil a consciousness of sustainability through the process of business accreditations; a desire for improvement through comparative data and the social influence of kite-marks; and to provide products and services that feed creative ambition for sustainability to thrive. We support organisations who have a genuine desire to transition toward sustainability today, and we help them work through the following steps on their journey.
It is well known that businesses can’t manage what they can’t measure. It is obviously important to measure impact on the environment, but the most credible businesses will follow a measurement standard (such as the Greenhouse Gas Protocol or British Standards). For example, this could mean disclosing not just Scope 1 emissions (direct emissions from a site, building or vehicle), but also Scope 2 & 3 (power purchases and supply-chain emissions). With a business’s environmental footprint measured to a standard, organisations need to be clear on what they have, and have not included. Finally, whatever is measured should be independently audited to ensure it passes scrutiny, and so the organisation can show it is trusted.
Before considering things like carbon offsetting, businesses must develop a practice of minimisation. There are many steps that can be taken to improve environmental performance, and many will also improve an organisation’s profitability. For example, energy and water efficiency practices will save carbon and scarce resources, but also reduce costs. Organisations should aim to minimise emissions as much as possible before considering offsetting, in line with published best practice. Once again, minimisation should be done to a standard and audited.
Having measured and minimised their impact, businesses should embed sustainable practices and culture into all aspects of the business and actively manage incremental ongoing improvement. This goes beyond having a separate ‘sustainability’ manager or function (although this dedicated expertise can also be helpful), and ensures that all employees and stakeholders have a say in building more sustainable and responsible businesses.
Having taken the steps above, an organisation will still have a residual carbon footprint. At this point, carbon offsetting becomes a real option. Organisations considering carbon offsetting should look for quality schemes and consider getting guidance on options. Different schemes offer different benefits, such as the location, type and timescale of offsetting projects sponsored. When deciding how much to offset, make an allowance for the carbon you have not been able to measure and look to estimate that and add to the known number. Then you are ready to offset – or at least you were pre Covid-19.
Life will return to ‘normal’, but attitudes will no doubt change. As we have witnessed Venetian waters clear, so we will see them murk over; as we have breathed cleaner air, we will begin see it smog; and as we have watched wildlife return, so too could we see it leave. We have been removed from normal life, and when we return we will see it with a fresh pair of eyes. We must ask ourselves if simply carbon offsetting is enough given the threats. What about cumulative carbon footprints from centuries of emissions? What about the environment where you are based – how are you supporting or restoring this? What positive action are you taking to help endangered species our actions have jeopardised from consumption and supply-chains overseas?
So what does good look like? All the above – but, in the future, even more. Setting out on the journey and carrying out part of the above is a great first step, but be cautious about overstating your commitment and carbon neutrality. If claims do not stand scrutiny, then reputational damage and accusations of greenwashing are sure to follow.
