ESG (Environmental, Social, and Governance) regulations have increased by 155% over the past decade and 647% since 2000. Yet only 7% of global companies are on track to meet their net-zero targets by 2050. ESG factors have been increasingly important for companies in terms of reporting and overall business strategy, even more so as financial penalties for ‘greenwashing’ are real! Here are some potential ways ESG could affect big companies’ reporting:
1. Integrated Reporting: Companies may adopt integrated reporting frameworks that combine financial and non-financial performance indicators, including ESG metrics. This provides stakeholders with a more comprehensive view of the company’s overall value creation.
With Sustain360°™ customers are provided with integrated ESG LCA (Life Cycle Assessments), and in the future Climate risk, providing a single lens to your carbon footprint.
2. Stakeholder Engagement: Companies may engage with a wider range of Stakeholders, including shareholders, employees, customers, communities, and NGOs, to understand their ESG concerns and incorporate these into reporting and the decision-making process.
With the use of Sustain360°™ knowledge graphs, users and stakeholders can collaborate on ESG metrics, ensuring review, validation, and visibility across the organization.
3. Sustainability Targets and Goals: Companies may set specific targets and goals related to ESG performance, such as carbon neutrality commitments, diversity and inclusion targets and waste reduction goals. These will be reported on and tracked over time.
Sustain360°™ provides granular visibility from the company level down to individual materials and chemicals, ensuring that sustainability targets are met based on evidence-based analysis.
4. Supply Chain Transparency; Reporting may need to include more detailed information about supply chain practices, including efforts to reduce environmental impacts, improving working conditions, local and ethical sourcing.
Scope 3 emissions account for 60-70% of a company’s carbon emissions. Sustain360°™’s core strength lies in its unique ability to automatically identify and classify Scope 3 emissions across the supply chain.
5. Incentives and Compensation: Executive compensation structures may be linked to ESG performance metrics. This aligns the interests of executives with the company’s sustainability and social responsibility goals. This again will drive the need to have robust ESG reporting tools in place.
6. Brand and Reputation Management: ESG reporting will continue to play a crucial role in shaping a company’s brand and reputation. Positive ESG performance can enhance brand value and customer trust.
7. Involvement of Legal Teams: Failure to adequately report or address ESG risks could lead to legal and reputational consequences for companies. California is once again leading the charge in environmental legislation. The state’s Assembly recently passed a ground-breaking bill requiring large companies to disclose their full value chain greenhouse gas emissions. This development could have far-reaching implications for businesses not just in California but across the United States. Therefore, robust ESG reporting, and risk management can help mitigate potential liabilities.
The Sustain360°™ platform offers a unique approach to sustainability, integrating ESG reporting, with lifecycle management and climate risk modelling. It is a comprehensive AI enabled platform that reduces carbon emissions by an average of 38% at product design, halves implementation time, and reduces total ownership costs by threefold. Sustain360°™ ‘s embedded AI suggests materials with lower carbon footprints and empowers sustainability teams to delve deep, even to the molecular level, to find substitutes and remove harmful chemicals.
To learn more, sign up for a demo to see how Sustain360°™ can help transform you approach to sustainability.