The Executive’s Guide to Business Carbon Reporting

Why sustainability is becoming a Governance-level issue

As New Zealand works towards a zero-carbon future, carbon measurement and reporting is increasingly relevant to all levels within an organisation. Due to growing regulation, the perception of sustainability as a strategic element, and the opportunities and risks associated with executing a sustainability strategy, these issues are now crucial to tackle at a Governance level.

Sustainability for directors is about risks and opportunities

Issues associated with sustainability are emerging rapidly, with shareholders, customers, investors and regulators demanding greater accountability every year. However, with every risk, there is an equal opportunity beyond simply mitigating that risk.

Risks

• Climate-Related Financial Disclosures in New Zealand and the Task Force for Climate Related Disclosure (TCFD) regime internationally have increased the expectations for – and in some cases mandated – sustainability reporting.
• Businesses are starting to run procurement processes with sustainability metrics equal in importance to quality and price.
• Laggards will find it increasingly difficult to operate even if they aren’t directly affected by mandates due to the trickle-down effect of legislation.
• Half-hearted efforts that lack true robustness run the risk of accusations of greenwashing.
• Financing is increasingly dependent on sustainability reporting. Top tier funders are setting end dates on lending to high emissions industries. For example, several funders are requiring farms to report.

Opportunities

• Leadership on climate and sustainability can generate valuable market differentiation in the eyes of consumers and investors.
• For publicly listed companies, the flow of funds into ESG has significantly increased capital availability for compliant companies.
• Many investors in private companies are also screening for sustainability credentials – a strong sustainability story could be the difference between winning and losing an important deal.
• GHG emissions/carbon is a perspective on operational efficiency that can yield opportunities for performance enhancement, allowing the business to make and do more with less.

Now more than ever, sustainability is fundamental to business success, and the acceleration of change is only increasing. Directors must take ownership for how their organisation creates value for their business and for society.

Suggested Sustainability Framework for Directors

The ESP team has years of experience and expertise creating services that make a meaningful difference to the environment and business performance. Our suggested framework looks like this:

Directors don’t need to be experts in all these areas. Dedicated sustainability managers and teams are common. However, at the Governance level it’s up to directors to drive initial change and champion sustainability values from the top down.

Let’s drill down into the specifics of the Governance items.

What are you aiming to achieve?

It’s important to be clear at the outset why you are doing this. Are you truly ready to change your business to reduce carbon emissions or do you just want to gain a better understanding of what’s involved at this stage?

You also need to have realistic expectations. You’ll need to take on board a range of opinions within your organisation when goal-setting, e.g. do you want to aim for net zero carbon? Why? Is it possible for your business and industry, and if not, what are the alternatives?

When you’re working out what you want to achieve, remember that it’s always better to take a proactive approach rather than reactive. Establish a bias towards action.

What do you want to initially include in your sustainability strategy?

Sustainability is a broad term. Different companies in different industries will adopt varied approaches. With that said, quantification of your GHG emissions/carbon reporting is a broad requirement, so you must work towards an initial understanding of where carbon reporting fits within your organisation.

Many companies frequently align with the UN Sustainability Development Goals (SDG), with the objective of working towards some, but not all of the UN SDGs. That doesn’t mean bypassing local labour and environmental regulations; these need to be kept in mind as well.

We mentioned realistic expectations earlier, and this applies here as well; you can’t expect immediate alignment, but you do need to get everything on the table. Continually review your objectives as your sustainability strategy progresses and matures.

Who has overall accountability?

This is a key issue for directors. You must establish a team with a focus in leading your organisation’s sustainability efforts, and ensure that they maintain momentum. The team should include people from across your organisation, so that a range of viewpoints are represented. A major part of their work should be around engaging the company in sustainability best practice, and managing priorities. This might include:

• Operations managers
• Property/facility managers
• Sustainability managers
• Executives (CEO, CFO, CTO and COO are common sustainability stakeholders).

What are your initial goals?

First and foremost, aligning expectations is sensible. From there, goals can shift as your organisation raises its level of awareness. We recommend following the Climate Leaders Coalition and Sustainable Business Council standards – publish your goals and policies, as this will help keep you accountable.

When can you expect a report back?

The team you’ve put together needs to establish a reporting process. Decide if you want annual, six-monthly, quarterly or more frequent reports. The more often you want to see reports, the more time and resources will be required of your team, but you will be able to react faster to changes and identify trends more quickly.

Decide what form these reports will take; are you just looking for a progress update, or do you want to put a formal reporting process in place? Make it clear to the team what information you’re expecting on a recurring basis.

These are the key areas for directors on a governance level. Let’s take a look at those on a management tier.

Management items

Your management team needs to define the systems, people, policies and procedures areas of your framework. At the outset, it may be worthwhile to review at a high level as a means of checking initial alignment.

Systems:

• Does the person with accountability have the tools they need?
• Do other managers and the broader team have frequent information to make decisions?
• Is there a rough plan of action?
• How are you going to proceed?
• Is the plan in line with resource availability?

People:

• Who are the key stakeholder groups?
• How will you engage your management teams?
• How will you engage all staff?
• How will you engage your supply chain?
• Policies & procedures
• Sustainability policy
• Procurement policy
• Other policies that may need to be amended, e.g. cars and travel

Your management team has a key role -and a responsibility – to make sure your organisation manages these items for your overall sustainability strategy. The more mature their processes become, the better chance you have of turning your strategy into a competitive advantage.

Getting started with Carbon QuickStart

The route to a carbon footprint and climate action plan can be complicated; high-intensity resource can be required. That’s why it’s better to partner with the experts, those with the experience, expertise and technology to help you rapidly generate an accurate carbon footprint, and build an actionable emissions reduction strategy.

That’s where we come in. We are the experts, and our solution – Carbon QuickStart – is the foundation from which your future strategy can grow. Initial carbon footprint, then a plan made for future reporting/monitoring

QuickStart will help you:

• Establish your carbon footprint
• Set realistic targets
• Identify initiatives to reduce emissions
• Develop an integrated plan

We’ve helped organisations avoid over 61,000 tonnes of carbon emissions, while saving over $81 million, with our cutting-edge software and market-leading environmental performance. We’ve got everything you need to start your sustainability journey.

Sustainability is a journey, an evergreen process that needs constant monitoring. That means you can take your first steps without having determined your destination. Your approach should be biased towards action and authenticity – you need sustained momentum while being open and honest about your progress and challenges. Start small and keep building.

We are client-obsessed. We will understand your needs and challenges to pioneer great experiences and value-based services, with leading edge technology to bring the highest levels of productivity. Book a meeting with us today.