At our summer virtual conference, certified expert Brad Micheel, Senior Solutions Strategist, conducted the session “Inter-Relationships of Sustainability Reporting Programs,” where he identified key requirements of sustainability report frameworks and standards, highlighted the differences and similarities, and reviewed best practices for developing sustainability programs that satisfy standards and frameworks.
Read the summary below. You can also watch it on-demand and view the slide deck at your convenience!
Sustainability Reporting History
Sustainability reporting began in the 20th century with sustainable development, which is defined as keeping the “developing world” from making the same mistakes as the “developed world.”
Today, there is a massive consideration in financial markets, including investors demanding Environmental, Social, Governance (ESG) information. Additionally, there is mandatory reporting being established in the United Kingdom, New Zealand, and the European Union.
Sustainability Reporting Programs
- Greenhouse Gas (GHG) Protocol establishes comprehensive global standardized framework to measure and manage GHG emissions from private and public sector operations, value chains, and provide mitigation actions. In 2016, 92% of Fortune 500 companies responding to the CDP used GHG Protocol directly or indirectly. Their corporate accounting and reporting standard focuses on emissions. It includes Scope 1 (direct emissions), Scope 2 (indirect emissions), and Scope 3 (emissions as consequences of company activities). GHG Protocol does not require that you communicate your emissions information back to them.
- Science-based Target’s initiative (SBTi) helps to clearly define a pathway for companies to reduce GHG emissions. Targets are considered “science-based” if they are in line with what the latest climate science deems necessary to meet the goals of the Paris Agreement. There is an Excel-based tool for determining targets. SBTi is based on three methods: absolute emissions contraction, sectoral decarbonization approach, and economic intensity contraction.
- Task Force on Climate-related Financial Disclosures (TCFD) aims to develop recommendations for more effective climate-related disclosures that could promote more informed investment, credit, and insurance underwriting decisions. It is committed to market transparency and stability. It helps to identify several categories of risk, including changing weather patterns, and opportunities related to climate. This tool is adoptable by all organizations regardless of industry.
The Session Q&A
Q1: Does the future hold a single global standard, or will this continue to be a world with many different standards to choose from?
A1: I think it will continue to be a world with multiple different standards, however there will be some consolidation. There has already been consolidation with SASB and Value Reporting Foundation. Because it’s voluntary reporting we may see some alignment in terminology, but there will always be nuances that different organizations want to emphasize.
Q2: Is the US moving to any mandatory sustainability reporting?
A2: There is nothing mandatory yet. Nothing has been proposed in the Federal Register. What we are seeing is that any movement in the US is mostly coming from the Securities and Exchange Commission (SEC) as opposed to the EPA or OSHA.