Data, Disclosures, and Decarbonization: Top Takeaways from GreenBiz23
March 07, 2023
By Halina Takahashi and Danielle Barrs
GreenBiz 23 is an annual three-day sustainability conference held in Scottsdale, Arizona, that brought together leaders, innovators, and activists from various industries to discuss and exchange ideas, strategies, and best practices for building a sustainable future. The conference featured over 150 speakers, including CEOs, policymakers, and thought leaders, who shared their experiences and insights on various topics.
Here are five takeaways from GreenBiz 23:
1. Data paves the way for responsible investing
Responsible investing is becoming increasingly important to investors who prioritize social and environmental impact of their investments. Data is playing a critical role in enabling companies to make informed decisions that align with their environmental, social, and governance (ESG) goals. By leveraging data in this way, companies can identify areas where they need to improve and develop strategies to address those issues.
Automation is also playing a critical role in ESG reporting. As companies collect more data on their ESG performance, it can become increasingly challenging to analyze and report on that data. Automation tools can help streamline this process by aggregating data from multiple sources and providing standardized reporting that meets regulatory requirements.
2. Upcoming SEC climate disclosure rule
21st century investors have doubled down on their conviction that climate risk is investment risk, and the SEC listened. Climate disclosure preparations in the largest capital market are underway. When and how to prepare for the SEC’s proposed climate disclosure rule are numerous, and understandably top of mind.
The proposed rule does not require companies to set emission reduction goals. However, it does require companies with set goals to disclose them. The cause for concern is that this could disincentivize companies from developing new emissions reduction goals, because they would now need to back those up with progress reports in their 10-K.
However, companies are learning they cannot simply refer stakeholders to their 10-K for sustainability information – and some are learning it the hard way. Stakeholders want to understand a company’s sustainability performance and progress – and see it in a digestible way. Whether this is through a voluntary CSR or sustainability report, a TCFD report, or something similar – stakeholders are asking for it.
A major concern among public companies is a liability. "You have fraud liability for whatever you're saying, wherever you're saying it," said Kristina Wyatt, Deputy GC and SVP, at Persefoni. The safe harbor element of the SEC’s proposed climate disclosure rule aims to address this. Essentially, if a company acts in good faith in reporting its Scope 3 emissions, it will have protection from liability if it turns out it didn’t get things quite right.
3. European regulations are taking over
The ESG regulatory landscape is facing new pressures from the latest ESG EU regulatory initiatives. The Corporate Sustainability Reporting Directive (CSRD) which took effect on January 5, 2023, extends well beyond the disclosures recommended by the Task Force on Climate-Related Financial Disclosures (TCFD). As the most comprehensive ESG legislation on the book so far, the CSRD aligns will all four themes of the TCFD and goes further by requiring companies to report on a broader range of ESG issues.
The CSRD covers double materiality, which means that companies must consider the impact of their business on the world, as well as the financial impact of ESG issues on the value of their business. This approach recognizes that ESG issues can have a significant impact on a company’s financial performance and long-term sustainability.
Companies subject to the CSRD will have to report according to the European Sustainability Reporting Standards (ESRS), which are still under development. The ESRS will set our detailed requirements for ESG reporting and aim to create a common language for ESG reporting across the EU. This framework also makes it mandatory for companies to have an audit of the sustainability information that they report. The first companies will have to apply the new rules for the first time in financial year 2024, for reports published in 2025.
The adoption of the CSRD is predicted to have a significant impact on the reporting landscape. The requirement for mandatory ESG reporting will mean that companies will have to consider ESG issues more carefully, and investors will have greater access to comparable ESG data. The ESRS will also standardize ESG reporting, making it easier for investors to compare ESG performance across companies and sectors.
4. Net Zero and the Potential of the Inflation Reduction Act
Among the many pathways that can be used to build to net zero, carbon offsetting is one of the most intriguing and exciting. Carbon offsetting has become a popular tool in the fight against climate change, allowing individuals and organizations to take responsibility for their carbon emissions by investing in projects that reduce emissions elsewhere. In recent years, carbon offsetting technology has advanced, bringing us closer to achieving net zero goals.
One of the most promising carbon offsetting technologies is carbon capture and storage (CCS). This technology involves capturing carbon dioxide emissions from industrial processes such as power generation or cement production and storing them underground. CCS has the potential to significantly reduce carbon emissions from these processes, making it an important tool in the transition to net zero emissions.
The passage of the Inflation Reduction Act (IRA) can help the US achieve net zero. The bill has set aside $369 billion worth of tax incentives and subsidies to boost green technology and energy security in the U.S. This is could potentially lead to a shift in supply chains from the EU to the US, as companies seek to take advantage of these new incentives. The electric vehicles market is expected to benefit significantly from this funding. With the push for increased EV adoption, companies that invest in the development of EV technology and infrastructure could potentially reap significant benefits.
5. Decarbonization of supply chains
Decarbonizing supply chains has become an increasingly hot topic in the business world, as companies seek to reduce their carbon footprint and meet sustainability targets. To achieve this, companies must shift their focus from measuring emissions to taking impactful actions to reduce them.
When it comes to decarbonizing supply chains, companies must identify the areas of their supply chain that are responsible for the largest proportion of their greenhouse gas (GHG) emissions. By focusing on these areas, companies can prioritize their efforts and make the biggest impact.
Companies should create a roadmap with milestones and set ambitious yet achievable targets and regularly review their progress towards them. “As a supply chain leader, it was refreshing to acknowledge the importance of setting ambitious, science-based targets - even when data is still 'messy',” said Melissa Gray, who leads Supply Chain ESG & Corporate services at Equinix.
The transition to decarbonizing the supply chain is a complex process, and it’s unlikely that companies will get everything right the first time. Embrace progress over perfection by simply beginning to take action and continuously improve efforts over time.