I’m currently particularly worried by three global “events”: the war in Ukraine, the climate and nature crises, and the strains on the social fabric of our societies. Of course, these are not the only three challenges we face. There are many more and I have plenty of reason to be worried about many other things as well, but right now these issues are at the top of my mind almost day and night. Thus far, however, I have been lucky enough to find energy in these worries, rather than apathy. In this letter I will comment on how we can react in a more sustainable way to at least two of these global “events” and I will also share some practical steps on how you can make your business a little more sustainable.
Current affairs
According to my inbox the following three sustainability issues are trending right now: Ukraine, biodiversity, and reporting & disclosures.
Ukraine is obviously about more than one issue. In addition to the atrocities committed towards the Ukrainian people and their development, the war has raised interesting discussions around Europe’s dependency on fossil fuel from Russia (and, by extension, whether I as a Swedish citizen have a moral obligation to save electricity so that Germany can do without Russian gas. Personally, I don’t think so but that is for another newsletter).
It has also highlighted questions on how companies ought to trade with or behave towards affiliates in Russia. Suddenly, issues of democratic rights are trending in Board rooms again. Being an investor with a conscience is not necessarily easy but I believe that those who have had serious discussions around sustainability during the past years are a in somewhat better position to address the impact of the war. This may be important for the future as well: imagine the panic in the very same rooms if we were to see a conflict between China and Taiwan –a very material ESG-risk.
Biodiversity. It has been said for some time now, that we need to pay more attention to the urgent threat posed by the depletion of biodiversity, i.e., the loss of plants and animal species. I notice it in my work as more and more companies and organizations are interested in finding out what they can do, and how biodiversity can be measured. However, the war in Ukraine has taken most of our attention, to the extent that I suspect that many people hardly know that there is a conference going on in Geneva regarding biodiversity right now.
This is the last meeting ahead of the coming high level conference that is expected to agree on a new set of goals for nature over the coming decade (COP15, to be held in Kunming, China in about a months’ time). High time to share our attention between these global “events”; a failure in Kunming will come at a high cost.
Reporting & disclosures. As those of you who have read my previous posts would know, there is always something happening relating to sustainability reporting and new regulations regarding disclosures. Now the well-known sustainability framework GRI (which is widely used by companies in their reporting, not least in Europe), and the IFRS Foundation (which in connection with COP26 announced its ambition to establish a global baseline of investor-focused sustainability disclosures) will collaborate and where possible align their standards. Read more here.
Good news, as the plethora of standards and options risks making transparency more difficult than it ought to be.
Four issues all companies and organisations should disclose
What about the four disclosures mentioned at the heading of this article? I believe that reporting doesn’t always have to be difficult, and I also believe that one of the reasons you report, is so that you can learn and improve. By working on these four issues, I believe you will add value to your activities – your business – while at the same time responding to expectations from stakeholders.
- Disclose any significant impact your activities have on nature or people (relevant ESG-factors). The 17 sustainable development goals can be used to structure to the way you report your impact. Using the SDGs often feels meaningful, especially if you involve several people in the reporting process, but using the SDGs is not a must.
- Disclose your CO2 emissions. Large corporations often use the so called GHG-protocol with its Scope 1-3. I think all corporations should have an idea, and should be prepared to report, their direct or indirect emissions, even though they may not refer to the GHG-protocol. Some indirect emissions may be difficult to assess but common sense and a focus on your most significant emissions will take you a long way.
- Disclose your ambition, your goals, regarding sustainability. This doesn’t have to be so formal but when you start formulating and disclose your goals you will also find that it will give your sustainability work some direction.
- Report what you actually do to contribute to the transformation of your company, or the society at large. What steps have you taken and what are you doing to reach the goals that you have?
This may sound difficult and if you are running a big organization, it will take some time and energy. For companies that are obliged to publish an annual report (in the EU, one threshold is large public-interest companies with more than 500 employees) this, and often a little more, is mandatory.
Many smaller corporations and organizations will find that these four areas aren’t that complicated. In fact, often you will find that collecting and disclosing this information will contribute quite nicely with your business strategy and that it will be appreciated by customers, employees, and other stakeholders.
Don’t hesitate to contact me if you have any questions!
Feed-back on this letter is, as always, welcome!