At the One Planet Summit in Paris last week, a kid in the audience asked the question: “Isn’t it too late to make a difference in climate change?” The question certainly resonates.
From the latest flurry of climate conferences and warnings from scientists, we tend to hear a lot of doom. Many say we’re not going fast enough, we’re missing the targets, or “we need action, we’ve had enough talk!”, as summed up Governor of California Jerry Brown at the One Planet Summit, a high-level event organized by French President Emmanuel Macron that convened leaders from all over the world to showcase and find solutions to our greatest problem.
This Summit comes on the 2nd anniversary of the Paris Agreements at COP21 where history was made. Since then, we have witnessed an awakening of sorts. The meetings, media and commitments made there served as an impetus for change towards a 2°C trajectory on global warming. The commitments made thus far, however, only deliver a 2.7°C change (see UNEP’s Emissions Gap Report).
Yes, we need to speed up action, we need to do more – better, faster, together. And while we should all keep this urgency as our speedometer, let us also acknowledge that we are entering a transformative phase for our states, organizations, and businesses. This is just the beginning…we’re taking the first steps.
1+ It takes bold leadership
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How ambitious is your leadership? How bold are your commitments? What resilient legacy are you leaving faced with climate change impacts on valuable resources? Answers to these questions come from leaders who are driving change, those ready to take a leap.
It takes declarations from the C-Suite to convince stakeholders that their business is doing its part. Key actors in the transformation are paving the way by setting Science Based Targets and more. The We Mean Business coalition is also pushing bold commitments on climate change, such as setting SBTs, with the goal to “catalyze business leadership to drive policy ambition and accelerate the transition to a low-carbon economy.”
These major events offer platforms for CEOs to speak up, be bold and lead. At COP23, Danone CEO Emmanuel Faber organized the session “There is hope in soil” and meanwhile confirmed its approval by the SBT initiative, meaning that Danone’s 2015 Climate Policy and targets are indeed aligned with 2°. He also reaffirmed that Danone’s commitment is to broaden its efforts and expand collaboration. One focus area is on regenerative agriculture and soil health – as a lever for carbon sequestration, for example. To learn more about how we worked with Danone to set SBTs, contact Quantis Senior Sustainability Consultant Charlotte Bande.
With such bold commitments from leaders, businesses like Danone will leverage actions in their supply chains where vast opportunities can be seized.
2+ Leveraging climate actions in supply chains
The scope of climate considerations is also key. Leading companies are now getting a deep knowledge of what’s happening beyond their wall and looking into their full supply chain. Here they are identifying the risks and also finding major opportunities to mitigate climate impacts. While many companies are taking this approach, it’s important to recognize that a Scope 3, full value chain-approach is still relatively in infancy across industry. To get companies started, Quantis teamed up with WRI to develop the Scope 3 Evaluator recommended by the GHG Protocol Corporate Accounting and Reporting Standard.
Engaging with your suppliers also unlocks opportunities for increased collaboration for GHG emission reduction and beyond, including the chance to improve efforts on land use change, soil health, biodiversity, water, and more.
Take Mars for example: with stakeholders present in-person, our partners at Mars took advantage of COP23 to organize a panel on “Corporate Carbon Action in Agricultural Supply Chains”. Mars’ Global Sustainability Director Kevin Rabinovitch led a discussion on carbon accounting in agricultural supply chains, encouraging metrics-based frameworks to support corporates in demonstrating the value of supply-chain actions. In this panel, he demonstrated the opportunities in accounting for land use change and agricultural practices, where the goal is to determine how to best account for emissions, reduced or sequestered. Talk to Quantis’ Global Director, Services + Innovation Jon Dettling to hear more about leveraging supply chains.
Quantis supports this with extensive know-how in supply chain accounting and by leading pre-competitive initiatives like such as the Land Use Change Guidance, World Food Lifecycle Database, World Apparel and Footwear Lifecycle Database, among other sectorial initiatives.
3+ Demonstrating performance and preparedness with corporate disclosure
Expect to see transparency become the new norm. Stakeholders (NGOs, governments, the civil society, investors, etc…) expect companies to demonstrate how responsible and committed they are by transparently demonstrating preparedness, status, performance, risks, commitments, and targets achievements.
Investors, specifically, want to know about the physical, liability and transitional risks related to corporate activity (see more below).
While standards and alignments will streamline disclosure, expect more requests on the granularity of disclosure as well as on the clarity of alignment with business strategy.
4+ Finance is accelerating!
Transparency and disclosure are also fueling the discussions around green finance – another key component for your strategic radar. “Finance is not the enemy, it is the means to accelerate climate action” was reiterated at the Paris Summit.
Investors are aligning climate parameters with performance criteria. Moreover, financial players have increased expectations and are now integrating the assessment of climate-related risks into their portfolio profiles. Green finance, however, needs scale and repeatability in order to create opportunities, instead of waiting for these to emerge.
A new and important actor on the scene here is the Task-Force on Climate-Related Financial Disclosure (TFCD), an industry-led group (chaired by Michael Bloomberg), which aims at providing consistent and coherent principles and guidelines on disclosure efforts. The goal of the TFCD is to improve the link between climate efforts and financial implications – just like a financial report gives the best picture of how a business is performing. With that level of transparency, investors will make better informed decisions on where and how they want to allocate their capital. Take note that companies engaged in the climate transition and developing climate-resilient strategies are performing better (see our case study on net environmental contribution metrics for French asset management group Sycomore).
In addition to this thread at the One Planet Summit, the finance topic was also headlining at COP23 and had a dedicated event earlier this week in Paris, the Climate Finance Day: Acceleration!. Quantis France Director Dimitri Caudrelier tells us that the man of the day was environmentalist and ex-Chinese Central Bank Director Ma Jun, who said that by 2020, “China will require listed companies to disclose information on environmental impacts. This information is a prerequisite to let the market determine who is green and who isn’t”.
To merge environmental performance with portfolio assessment, metrics are needed. At COP23, Quantis DACH Director Dr. Rainer Zah was invited to the speak on the panel “Innovative metrics for financing climate action,” organized by our friends at Climate-KIC. Zah says that there was a consensus that metrics-based approaches are a key requisite for bringing the finance sector away from qualitative sustainability scorecards onto a quantitative COP-compliant reduction path. Beate Hollweg, from the German Federal Environment Agency (UBA), went so far as to say that a fully transparent and complete Scope 3 reporting would be enough to activate self-organization for industry players and that the top-down installment of a price on carbon could potentially be avoided.
There is also the expectation that, just as corporates do, the finance community must play its leadership role by stopping investments in stranded assets and directing them to the green economy.
5+ Metrics at the core
Facing these (sometimes overwhelming!) challenges and opportunities, science-based metrics serve as a compass. To make sound decisions on any of the strategic pathways above, you’ll need sound metrics. Whether you are making commitments, setting SBTs, evaluating your Scope 3 value chain, disclosing for stakeholders, or answering to the financial sector, each company needs reliable, robust and quantified information. This data can be used to map risks, identify where the biggest opportunities for reduction can be found, and to demonstrate progress. Metrics are a decision-making tool.
Quantis is known for its science-inside approach to sustainability and environmental performance strategies, projects and communications. We work with some of the world’s most recognized organizations to deliver their compass. Also expect to hear more about environmental performance efforts beyond carbon, such as biodiversity, water, land use change, toxicity, and more.
Talk to us to learn how to define your compass.
We join him in applauding the incremental, yet transformational, success made especially since COP21. Because before we can make that big, bold leap, each of us needs to take those first steps, speed up to a run, seize the momentum then…leap!