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Change is coming to business


The discussions around sustainability, the environment, and climate change have never been more public than they are today, thanks to high-profile people like Greta Thunberg or events such as the COP26 summit.

Corporations around the globe are working to improve their sustainability credentials as they announce net-zero targets and plans for reducing their environmental impact.

While there is a significant degree of skepticism about many of the sustainability-related claims businesses make — concrete details are often hard to come by and the dates for achieving these targets are sometimes decades away — the fact they are making them at all is instructive, pointing to a shift in the mindset of some investors.  

Judy Kuszewski (chief executive at sustainability consulting Sancroft International) spoke on the subject during a panel discussion hosted by Steve Sedgwick of CNBC.

“One the most interesting and unexpected developments that have been seen in the last few years or so has been that climate change actually is a topic that investments are closely considering right now,” she stated.

They were “really asking questions about the company’s strategy and their future fitness to … deal with the inevitable changes that are ahead of us,” she said.

Follow This is a Dutch company that focuses on sustainability, climate change and the environment. It describes itself as “a group responsible shareholders” in oil-and gas companies.

These groups are slowly but surely starting to have an impact on boardrooms. For example, in May 2021 ChevronFollow This proposed a plan to get shareholders to vote in support of the proposal. This was to help encourage oil giants to reduce their emissions. 

In the same month, we also had ConocoPhillips Phillips66Follow This solicits shareholder votes for the same proposals.

CNBC Pro has more information about clean energy

Jos Debeke from CNBC was also on the panel. She wanted to discuss how attitudes have changed in light of 2015’s Paris Agreement. It is a historic deal that seeks to reduce global warming “well below 2° Celsius (preferably 1.5 degrees Celsius) compared with pre-industrial levels.”

Delbeke, who is the former director-general for climate action at the European Commission, said: “I think that the pressure that originally came towards the public authorities has now, since Paris, gradually widened … to involve the private sector and in particular … dealing with risk and looking for opportunities.”

Delbeke said that there was still much to be done. He also held the European Investment Bank climate chair position at the European University Institute.

The general public is “very wary” of “greenwashing,” which Greenpeace UK describes as a PR tactic used to make products or companies appear more environmentally-friendly without actually reducing their environmental impact.

Delbeke believes that it was crucial to capitalize on the moment. He stated, “We have this trust which is now being expressed toward the public and private sector.”

He argued that this needed to be fostered, while acknowledging the possibility of backlash from greenwashing. “I think that is a lot of what is at stake here: that companies going for net-zero can … demonstrate, in a very credible manner, that they These aregoing to net-zero”, he stated.

Refer to European Union’s emissions trading system, Delbeke said that “the monitoring and the compliance was terribly important to create … trust in the system.”

“It’s good to have a concept of putting a price on carbon but … ‘is it credibly done?’ The general public wants to know.

Kuszewski, Sancroft International, made it clear that although there are uniform standards to assess companies’ performance they were not being used consistently.

She said that “there is not really an need for new standard.” “There’s a need for consistent application of the standards that we already have, whether those are around sustainability reporting and indicators — far and away the most used one is the Global Reporting Initiative, which is used by 10,000 companies annually.”

Kuszewski said that the GRI included the Greenhouse Gas Protocol which, in turn, defined Scope 1 and 2. They refer to greenhouse gases that are directly emitted; the GHG associated with electricity production and use by firms; and any other “indirect” GHG.

Kuszewski stated that there is agreement in the area about the appropriate… frameworks or measurement protocols. The application is the key.