Sustainability in Focus: Assessing Your Journey

Key Takeaways

Who Shapes Corporate Actions on Sustainability?
Varsha Doshi kicked off the webinar by describing how stakeholders, predominantly investors and customers, are shaping corporate action on sustainability and climate risk. Doshi noted that institutional investors like BlackRock and State Street are incorporating ESG factors into their investment strategies and require robust ESG data from the companies they invest in. Furthermore, customers are also driving sustainability efforts within companies, with demands for disclosures on greenhouse gas emissions or transition plans.

Doshi also emphasized that global warming is impacting businesses across sectors, and that “understanding climate risk is all about future-proofing the business and managing risk.” She pointed out that daily headlines on ESG, sustainability, and climate underscore the urgency of action, and that Walmart and Amazon’s recent commitments to reduce emissions indicate a growing need for robust sustainability reporting.

Sustainability Reporting Drivers
Doshi also outlined that governments worldwide are recognizing the role of accountability and transparency in fostering more responsible business practices, with the US and the EU taking the lead in implementing sustainability disclosure regulations.

"Earlier this year,” says Doshi, “we saw the Federal Supplier Climate Risks and Resilience rule proposed under the Biden administration, where any major supplier or federal contractor to the federal government would be subject to publicly disclosing their greenhouse gas emissions and climate-related financial risk and setting emission reduction targets aligned with climate science.”

She continues to point out that, forthcoming regulations have been top of mind in conversations with customers and that they are driving companies to better understand their ESG performance and disclose this information in a comprehensive and accurate manner.

Doshi added, "Whether you're a public company or a private company or even a company preparing for an IPO, having that ESG sustainability story really helps position you in terms of just preparing for the forward-looking risk and opportunities, better positioning in terms of building trust and investor confidence with the investors and other stakeholders."

Challenges In Sustainability Reporting
In a poll to audience members, Patrick McDonald observed that data collection and availability as well as understanding reporting frameworks were the primary challenges faced when starting their sustainability reporting journey. McDonald noted that materiality assessment and quantifying scope 1 and 2 emissions were also among the challenges noted by audience members, but to a lesser degree.

According to McDonald, the poll results echoed what he’s seeing among his customers. “Over the past 12 to 18 months, we’ve seen public companies starting to report more on things like greenhouse gas emissions. They're starting to look at things like Scope 3 as well. But we've also noticed that many private companies are starting their journeys, maybe as a result of questions from their largest public customers or suppliers - or maybe they view sustainability as a big pillar of business continuity.”

But, similarly to the audience members, many companies are finding that it’s not easy. “They want to do the right thing,” McDonald explained, “but there's an area in the marketplace where companies are struggling to start their sustainability reporting journey.”

McDonald went on to say that these challenges present opportunities for companies to assess and improve their ESG performance, but that there are common mistakes to avoid. He suggested companies should consider the complexity of data and that they should engage various stakeholders within the company to drive the process, and ultimately ensure they use the right methodologies and data sources in quantifying emissions.

Sustainability Reporting Is a Journey, Not A Destination
McDonald emphasized that companies need to keep evolving their sustainability efforts and reporting to meet changing stakeholder demands and regulatory requirements. The S&P Global Sustainability Starter Pack, is a holistic solution that enables companies to identify, measure, and disclose industry-specific and financially material environmental, social, and governance issues. Companies can report and track sustainability performance on quantitative and qualitative metrics to inform various sustainability initiatives, identify areas for improvement, and generate value for stakeholders.

The Sustainability Starter Pack includes:

• A Materiality Assessment informed by a Stakeholder Survey
• Quantification of Scope 1 & 2 Emissions
• Quantification of selected Environmental and Social KPIs 
• A data-rich report
• Access to our Peer Practices Database

“What we're trying to do here is solve for the companies that might not know where to start or how to start,” said McDonald. “And what we're creating is ending up on company websites, helping them answer those questions they're getting from stakeholders, and ultimately helping them meet any necessary regulations.”

Wrap-up

At the end of the webinar, Doshi and McDonald took questions from the audience, touching on data accuracy when calculating gas emissions, common pitfalls when getting started on reporting, sustainability for private and pre-revenue companies, and more. Tune into the on-demand webinar replay to hear their insights and more!