Business

Business is about to change

From big names like Greta Thunberg to events like the COP26 summit, discussions about sustainability, the environment and climate change have arguably become more visible than ever before.

As the 2020s approaches, corporations around the world are trying to polish their sustainability credentials by announcing goals and plans to reduce the environmental impact of their operations.

While there is a significant degree of skepticism about many of the company’s sustainability claims—specific details are often hard to come by, and the timeline for achieving these goals is sometimes decades away—the fact that they are making them at all is instructive. indicates a change in the thinking of some investors.

During a recent panel discussion chaired by CNBC’s Steve Sedgwick, Judy Kuszewski, chief executive of sustainability consultancy Sancroft International, spoke on the above issue.

“One of the most exciting and perhaps the most unexpected developments that we have seen over the past couple of years is that climate change is actually a topic that investors are now carefully looking at,” she said.

They were “actually asking questions about the company’s strategy and its future ability … to cope with the inevitable changes that lie ahead of us,” she said.

Examples of investors focusing on topics such as climate change, sustainability and the environment include Follow This, a Dutch organization that describes itself as “a group of responsible shareholders in oil and gas companies.”

Slowly but surely the influence of such groups is beginning to be felt in the boardrooms. In May 2021, for example, Chevron shareholders voted on a proposal put forward by Follow This to “encourage” the oil giant to cut emissions.

That same month, ConocoPhillips and Phillips66 shareholders also voted in favor of similar proposals put forward by Follow This.

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Another member of the CNBC panel, Jos Delbeke, was keen to highlight how attitudes have changed since the 2015 Paris Agreement, a landmark agreement that aims to “limit global warming well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.” period.” levels.”

Delbequet, former director general of climate action at the European Commission, said: “I think the pressure that was originally placed on public authorities has now, after Paris, gradually expanded … to involve the private sector and in particular … to deal with risk and look for opportunities.

“There was a lot of work ahead of us,” said Delbeke, who also holds the European Investment Bank’s Climate Chair at the European University Institute.

He went on to note that the general public is “very wary of greenwashing,” a term that the environmental organization Greenpeace UK calls a “PR tactic” used “to make a company or product look sustainable without significantly reducing its environmental impact.” Wednesday.”

For Delbeke, the key was to seize the moment. “We have this trust that is now expressed in relation to the public and private sectors,” he said.

He argued that this needed to be developed, while continuing to recognize that greenwashing could generate backlash. “I think there is a lot at stake here: companies aiming for zero sales can… demonstrate very convincingly that they are going to go to zero,” he said.

Referring to European Union emissions trading systemDelbeke said that “monitoring and compliance was extremely important in building … trust in the system.”

“It’s good to have the concept of setting a price on carbon, but… is it done reliably?” that’s what the general public is asking about.”

During the discussion, Sancroft International’s Kuszewski emphasized that while there are uniform standards for evaluating the performance of companies, they are not consistently applied.

“There really is no need for new standards,” she said. “There needs to be consistent application of the standards that we already have, whether they relate to sustainability reporting and indicators – by far the most used of these is the Global Reporting Initiative, which is used by 10,000 companies every year.”

As Kuszewski explained, the GRI includes the GHG Protocol, which in turn defines Scope 1, 2 and 3 emissions. These refer to direct greenhouse gas emissions; GHGs associated with electricity generation purchased and used by the firm; and all other “indirect” greenhouse gases.

“There is a good consensus around the world about what should be… structures and measurement protocols,” Kuszewski said. “It’s about application.”


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