Whether you’re a multi-billion-dollar international venture, or an individual providing simple services, we all have an impact on our environment and a responsibility to not only be aware of that impact but also to take steps to reduce negative interactions at every level. With more than $44tn of economic value moderately or highly dependent on nature, strategic planning, and impact awareness is a business critical development that ties into every aspect of a responsible business – from employee culture and behaviour to material sourcing, construction, and beyond.
The Taskforce on Nature-related Financial Disclosures framework was first published in 2017, and provides guidance for companies on how to disclose their exposures to risk linked to nature-based issues, and although it’s not a mandatory reporting process, it has been largely agreed as ‘best practice’ and the principles have been used to develop similar reporting rules (such as the International Standard Setting Board [ISSB] and U.S Securities and Exchange Commission).
New frameworks have also expanded on agricultural commodities and farm produce, and Thomas Maddox, Global Director of Forest and Land for CDP believes the guidance is, “more comprehensive and relevant to more of the value chain.”
Policies and frameworks to reduce nature loss are becoming more of a global standard across multiple industries, and inevitably this will have an effect on global supply chains as processes evolve, adapt, or are removed.
The Supply Chain and Transport sector is the most at risk from disruptions related to biodiversity and nature loss in cities, and it’s estimated that disruptions to economic activities resulting from this will affect a significant share of GDP in cities and urban centres.
Being aware of this effect (and how it influences both your own business and those you interact with), and monitoring your own environmental impact, is crucial for long-term business health and profitability and in mean that you are running a responsible business.
Focus on Sustainability
In November 2021, leaders of 140 countries joined together at the COP26 Climate Conference and put their names to a landmark pledge to reverse forest loss and land degradation by 2030. This is a positive move towards protecting the environment and undoing damage before it becomes permanent, but there is still much more to be done, and this pledge alone is by no means enough.
External factors, such as the COVID-19 pandemic, the cost-of-living crisis, and economic instability have had a huge impact on choice and opportunities available to consumers, and there has been more innovation to spend less – this has led to an increase in sustainable adoption, as people and businesses look for more durable, reusable products.
Internally, by reducing business costs with more innovative and effective processes that focus on sustainability can lead to new customer engagement (with those specifically looking for eco-friendly businesses), marketing opportunities, and investor support.
Environmental, Social, Governance reporting allows a company to fully evaluate the impact it has both internally (with staff, suppliers, and materials) and externally (environmental, and with consumers).
Having clear information and factual data means that you’re taking a difficult, somewhat nebulous topic, and putting it into a quantifiable format.
This is beneficial not only for convincing investors, board members, or interested parties who might be sceptical about implementing change, but also provides a solid benchmark so you know where you’re starting, which areas require the most improvement, and can generate short, medium, and long-term strategies to develop the company.
Harvard Business Review previously conducted studies on sustainability initiatives and corporate performance, and from these 200 studies discovered that:
- 90% conclude that good ESG standards lower the cost of capital
- 88% show incorporating good ESG practices lead to better operational performance
- 80% show a positive correlation between stock price performance and sustainable business practices
It makes clear business sense from operational, organisational, and consumer directions to make sustainability a key-factor and core component of your company.
SIGN UP TO OUR NEWSLETTER
We do not sell our lists, and you can easily unsubscribe if you so wish.
Starting with ESG
Like so many other aspects of business, ESG Reporting isn’t as simple as it could be – there are different frameworks, standards, and associations offering advice, as well as the option to develop a new structure of your own.
The most popular framework is the Global Reporting Initiative (GRI), which has 25 years of development and growth behind the process. If you’re looking to focus on specific areas, then other frameworks may be more appropriate – such as the Carbon Disclosure Project (CDP), Climate Disclosure Standards Board (CDSB), or International Integrated Reporting Council (IIRC), just to name a few.
Taking the time to carefully review, understand, and develop a strategy to reduce nature-loss, increase sustainable practices, and encourage a more eco-friendly corporate structure is business critical, and if you’ve not already started, you need to get moving!