Company Climate Action vs. Reporting - This Week in Sustainability

When it comes to organizational climate action, we see a broad spectrum of approaches, motives, and effectiveness. When we’re working with an organization early on, we typically ask a few common questions to better understand their goals so we can design the right approach or solution for them.

One of the most important sustainability truths is the “why” question: why are you doing this?

Is it because your employees are demanding climate action? Your customers? Your founders or executive team? Investors? Regulators? Because you see competitors doing it? Is marketing or communications leading this and it’s really about brand perception and reputation? How much of this is proactive effort versus reactive?

Understanding an organization’s honest perspective on the “why” questions is incredibly important for parsing things like its goals, capacity, stakeholders, and priorities. It also provides a lens into where that organization perceives its greatest short-term ESG risks.

Another reason the “why” question’s so important is because it typically reflects appetite and perspective to drive toward meaningful change. One of the most important sustainability reads we’ve come across in a while is Former Timberland COO Ken Pucker’s recent piece in HBR. Pucker says a lot of important things, but his headline point is the simple acknowledgement that “paying attention” or “working on” CSR or ESG isn’t the same thing as positive progress.

Companies who measure carbon (CO2) and other environmental and social indicators have grown exponentially in the past decade, but there’s little if anything to suggest that *effort’s reduced their emissions.

Corporate Climate Reporting vs. GHG

In fact, energy-related CO2 emissions are projected to increase by 1.5 billion tons this year as the glocal economy rebounds from the pandemic, according the International Energy Agency. 2021 will be the second-largest emissions growth year in world history. That’s terrifying.

How do we reverse the trend?

How do we shift more organizations toward measuring and doing what really matters?

1. Reprioritize Substance Over Optics (and Material Depth Over Breadth)

A classic problem in measurement and analytics in general is measuring anything and everything (because we can) rather than really honing in on what matters. In the startup world, we work best by focusing on “north star metrics:” pick one or two really critical actions or events for your business, and focus on measuring them really well (and thoughtfully).

The same needs to be true in sustainability, CSR, and ESG. Rather than trying to appease dozens of different standards and rating agencies (conforming to external interests), focus on doing a few operationally material things really well — and reducing what matters (like tCO2e). (And yes, that includes Scope 3 emissions.)

We often think about how much time, effort, and cost goes into producing big, detailed impact reports or microsites vs. what an equivalent effort that focused on a material aspect of reducing a product or transportation footprint might yield. Again, is reporting a brand exercise? Or the output of operational practices? Ideally it should be both.

Additionally, material indicators should be designed and reviewed by credible third parties. In corporate accounting, you can’t just produce GAAP financials and say “good to go” - a CPA or accounting firm has to sign off on it. Is carbon accounting any different?

As Pucker notes, “although 90% of the world’s largest companies now produce CSR reports, a minority of them are validated by third parties. As a result, a lot of the input data is misleading and incomplete. By contrast, financial reporting follows agreed-upon standards, and compliance is ensured by a referee (in the United States, the Securities and Exchange Commission).”

The impact report needs to move in the direction of the 10-K, but also focus in on truly material levers and indicators.

2. The Need for Collaborative Climate Measurement

One of the clear leaders and early movers in corporate sustainability is Apple, which has committed to achieving a 100% carbon neutral supply chain for its products by 2030 (v material).

The only problem?

Apple Supply Chain Carbon Footprint

Even as large and influential as Apple is, most of its raw materials suppliers and manufacturers don’t full under the Apple corporate umbrella: they’re happening at other companies. Apple’s carbon footprint doesn’t work at Apple. Apple — and the entire supply chain — need shared visibility, common accounting standards, and collaborative transparency across hundreds of organizations - to achieve their collective sustainability goals.

Apple Supply Chain Carbon Footprint

This is one of the main reasons we’ve invested so much in supporting cross-organizational impact and sustainability collaboration at Brightest. Whether it's impact between a company and its non-profit partners, a foundation and its grant recipients, or a brand working with its suppliers around more responsible sourcing the theme's always the same: it's always some combination of hard, slow, or incomplete picture doing it alone.

Here too we also see some of the negative consequences of globalization: transparency and footprint-shifting. “When I started working at Timberland, the overwhelming majority of our boots and shoes were produced in Timberland-owned factories, almost all located in the United States,” writes Pucker. “Our factory workers were among our customers; social and environmental decisions had local impact. No more. Today at least 85% of the brand’s production is overseas, primarily in Asia. In addition, across the industry, supply chains have become multitiered and contractors have increasingly outsourced to subcontractors; that’s made traceability problematic… [and] failed to stem social and environmental abuses.”

3. Stepping Up to the Complexity Task (and Ignoring the Complexity When it’s Just Noise)

Ultimately, we do need sustainability, climate, and social impact measurement. The challenge (and opportunity) is developing measurement, inventory, auditing, and end-of-life solutions that meet the real needs of today — and tomorrow.

In GHG Protocol terms, we need systems and rigorous methodologies that can start to make sense of Scope 3 Indirect emissions, which typically account for the majority of a company or product’s carbon footprint.

Company & Business GHG Measurement

And without an ambitious recycling, re-use, or upcycling program like Apple’s or Levi’s that’s designed into your business model, it’s incredibly difficult to get, estimate, or forecast end-of-life data for many consumer products (and packaging). The more scale - the more difficult the task becomes.

Supply Chain Sustainability Measurement

When climate complexity matters, we need smarter solutions to understand it. But we also need to ignore complexity when it doesn’t matter or isn’t material. As an industry, we need to measure less, better.

In closing, if you are the type of organization that wants to define tCO2e as your “north star” indicator, measure it holistically across Scopes 1, 2, and 3, do it well, and push for more meaningful change we’d love to hear from you. That’s the type of measurement that matters and the type of partnership we’re looking for — collaboration that truly moves the climate action needle in the direction we need it.

This Week in Sustainability is a weekly email from Brightest (and friends) about sustainability and climate strategy. If you’ve enjoyed this piece, please consider forwarding it to a friend or teammate. If we can be helpful to you or your organization’s sustainability journey, please be in touch.