Evidence shows us that sustainability management can lead to more efficient and profitable corporations. So what exactly is corporate sustainability management (CSM,) and how does it lead to better and more sustainable businesses?
In this article, the GHG emissions management specialists at SINAI explain sustainability management within the context of the corporate world and the benefits of prioritizing it within your organization.
What is sustainability management?
Corporations increasingly devote resources and strategies towards sustainability and protecting the natural environment. Many factors appear to drive companies towards investing in practices and departmental structures that are referred to and aid corporate sustainability management.
In today’s world, practices of corporate sustainability management include ethical questions and dilemmas. For example, the fundamental question of “What does it mean to be sustainable?” asks corporations to reflect on the end goal of sustainability and raises questions of standards, both internally and within the industry, each company operates in. Asking these basic questions seems inevitable because our understanding of what sustainability is and what it is not has a significant impact on how we identify problems and come up with solutions.
Corporate sustainability management is where business meets sustainable practices. It is the activity of managing a corporation’s impact on the three key bottom lines – profit, people, and the planet – so that all three can coexist and flourish well into the future. Sustainability management underpins a corporation’s long-term viability, as it prevents rather than reacts.
A growing number of corporations from a wide range of industries, including transportation, utilities, consumer goods, and real estate, are pursuing sustainable management business goals.
Benefits of prioritizing corporate sustainability management
There are proven market benefits for corporations that prioritize CSM activities, including improving their long-term company value and the capital market response to the disclosure of earnings, in addition to several other benefits. Let’s explore four key benefits of embracing corporate sustainability management.
Investors favor earnings news from the CSM ﬁrms
A recent study found that both the abnormal trading volume and the stock return volatility around earnings announcements for corporations with CSM reporting are significantly higher than those for non-CSM companies, which means that CSM organizations tend to announce earnings news in a timely manner and are more likely to provide initial earnings announcements when compared to non-CSM companies.
Interestingly, the CSM corporation’s earnings quality itself, as represented by earnings volatility, is relatively lower.
Improved corporate performance
From the stakeholder value perspective, this study also sheds light on
the previously unexplored area regarding the link between corporate sustainability management and a corporation’s information ecosystem by highlighting that CSM reporting coincides with an improvement to the earnings disclosure practices. This, in turn, leads to enhanced market response to earnings announcements from CSM corporations.
This research provides consistent evidence that should encourage more ﬁrms across the globe to adopt corporate sustainability management practices if they haven’t done so already.
Mitigate risk with ease
Robust corporate sustainability management also makes it possible to identify and manage risk to the business quickly. In addition, scenario analyses allow CSM firms to assess which assets within the business are most at risk, including throughout their supply chain, if applicable.
To learn more about what corporations should consider when it comes to supply chain decarbonization, read our recent blog on the topic.
Seamless regulation compliance
Depending on what country your corporation operates in and what industry they form a part of, there will be regulations and standards you will need to comply with.
Corporate sustainability management provides businesses with the framework to collect comprehensive operational data and insight for reporting purposes and even set custom emissions factors if, for example, there is a fixed internal carbon price.
Methodological guidance and transparent, auditable calculations included in an emissions factor database can help CSM firms meet EPA, IPCC, and GHG Protocol standards and more with ease.
Future-proof your corporation through robust sustainability management
Cutting-edge technology has emerged to help corporations achieve their corporate sustainability management goals. From seamless compliance of relevant regulations to managing risk to your corporation with ease, a focus on corporate sustainability management can bring substantial benefits to your company.
With clear evidence of the advantage provided to CSM firms when it comes to investor interest and operating a more efficient business, corporations can risk falling behind without a strategy for delivering effective corporate sustainability management.
SINAI offers CSM firms the ability to unlock capital-efficient strategies that reduce your organization’s carbon footprint and help execute competitive transition plans through the planet’s leading decarbonization platform.
If you are ready to accelerate your corporations’ environmental and financial performance, reach out to us today for a demo of our software and see what SINAI can do to help you reach your CSM objectives.
This article was originally published at SINAI Technologies
Featured Image Credits: Pixabay
This month marks a total of 1245 companies signed up to CO2 reduction targets through criteria produced by the Science-Based Targets initiative (SBTi.) 427 corporations have committed to 1.5°C scenarios.
On the other hand, reaching net-zero is a lofty goal for many corporations that requires a truly organization-wide effort through robust decarbonizing operations in order to achieve CO2 reduction goals. So what tangible and meaningful actions can corporations take now to inch closer to reaching net-zero?
From setting meaningful baselines, and setting a robust internal carbon price, to joining a transformative science-based initiative, here are five actions that companies take to reach net-zero from the GHG emissions management experts at SINAI.
Net-zero vs. carbon neutral
Net-zero (short for net-zero emissions) means that a company or individual achieves a balance between the greenhouse gases they put into the atmosphere and those they take out.
Imagine you have an empty sink. You can turn the taps on to add water and pull the plug to allow water to flow out. The amount of water in your sink depends on how much water you allow to run through the taps and how much to let out through the plughole. To keep the amount of water in the sink at the same level, you need to ensure that the input and output remain balanced.
Reaching net-zero follows the same principle, requiring companies to balance the number of greenhouse gases they emit with the amount they remove.
When what we add to the atmosphere is no more than what we take away, we reach net-zero. Reaching net-zero is also referred to as carbon neutral. Zero emissions and zero carbon are somewhat different, as the latter usually means that no emissions have been produced in the first place.
Five actions that help companies reach net-zero
1. Establish Emissions Baselines
Baseline definitions are a snapshot of your company’s greenhouse gas (GHG) emissions from a specific moment in time. Building emissions baselines make it a lot easier to view and analyze historical emissions. Additionally, they’ll help your organization grasp future trajectories and serve as a reference point to evaluate decarbonization projects and business decisions.
Finally, defining your baseline carbon will assist in peer benchmarking and is an integral part of many climate risk disclosure frameworks for reporting.
2. Assess mitigation and adaptation options
Our second suggested action to take is to organize and compare emissions reduction opportunities that exist in your corporation and connected supply chain.
This will help you compare and contrast marginal abatement costs of mitigation options across your multiple business units while helping your company identify the most cost-effective opportunities for adaptation.
It’s possible to generate automatic Marginal Abatement Cost Curves (MAC Curves) and Levelized Cost Curves that are accessible and user-friendly to help you analyze emissions reductions costs, quickly and easily.
3. Align with the Paris Agreement
Consider aligning your CO2 reduction targets with the goals of the Paris Agreement by striving for net-zero emissions by 2050 at the latest.
Science-based CO2 reduction targets are considered the gold standard for corporations setting emissions reduction goals, both within their direct operations and across their supply chains.
Companies can now set targets in line with the decarbonization level required to limit global warming to 1.5°C. These targets are ambitious, but they are achievable and are vital in reaching net-zero emissions by 2050.
4. Set an internal carbon price
Setting an internal carbon price means putting a monetary amount on the carbon emissions your company produces. The cost can be calculated based on your environmental impact of GHG emissions and any low-carbon energy solutions you utilize, among other indicators.
Putting a price tag on your company’s carbon is a powerful and efficient way of incorporating climate risks into the cost of doing business.
In several countries, emitting carbon is now much more costly as a result of carbon pricing. Emerging technologies and products help corporations and individuals calculate, monitor, price, and achieve their CO2 reduction goals.
5. Commit to a science-based initiative
Lastly, companies may be assisted in reaching net-zero faster by committing to ambitious targets set by an external, science-based initiative.
The STBi’s Ambitious Corporate Climate Action is just one of many respected initiatives companies are getting involved in. Science-based initiatives bring together a growing collective of energy-smart businesses with ambitious targets in transitioning to a low-carbon economy.
Additionally, many initiatives generate shared natural climate solutions across the supply chains in specific business sectors by bringing companies together, focusing on the energy, agricultural, and transport industries. These types of initiatives give businesses greater access to resources and communities that can help them develop new low-carbon pathways.
Emissions tracking and management made simple
SINAI can help you achieve your net-zero emissions targets. Contact us today for a demo of our software solution.
This article was originally published at Sinai Technologies
Featured Image Credits: Pixabay
Upon surveying the landscape of organizational climate commitments, it is not uncommon to hear about attention-grabbing goals like committing to 100% renewable energy, setting a science-based target, going carbon neutral or even climate positive. You might be wondering: how do these organizations get started? Looking around your own organization, it may be difficult to imagine how the fragmented efforts that are taking place within different business units and on different timelines can come together to form a coherent story about the opportunity for impact and risk mitigation.
The key to getting started is to establish a carbon baseline.
A carbon baseline is an inventory of sources of carbon emissions from business activities. This is typically a one (or more) year(s’) snapshot that serves as a reference point for organizations to understand and track their changing emissions over time. Building a multi-year emissions baseline not only enables an organization to have a better understanding of its recent historical GHG emissions trends but also enables an organization to grasp the business trajectory and associated potential future emissions. A carbon baseline includes both direct and indirect emissions, also known as Scope 1, Scope 2, and Scope 3 emissions (see image below for detailed categories).
Scope 1: Direct carbon emissions from owned or controlled sources (e.g. fuel)
Scope 2: Indirect carbon emissions from consumed purchased electricity, heat or steam
Scope 3: Indirect carbon emissions from all other business activities (e.g. purchased goods and services, capital goods, production of purchase materials, transport-related activities not owned or controlled by an organization, waste disposal, business travel, use of sold products, etc.)
Source: GHG Protocol
Why establish a carbon baseline?
Just as companies take stock of other types of resources or supplies, it is important for organizations to assess their carbon budget in order to understand which areas of business activities have the greatest opportunities for impact. We’ve discussed the importance of data quality in a previous blog when establishing carbon inventories. Establishing a detailed carbon baseline provides management with the ability to understand carbon emissions across different business units and make data-informed decisions, for example, by having specific fuel type information according to projected business growth, or understanding how carbon-intensive specific regions’ electric grids are going to behave in the future where the company operates. Given the likely volume of data collection and calculations, the baseline inventory data can be much easier to visualize, analyze and synthesize if it is established in a centralized software system.
A secondary benefit to establishing a baseline carbon inventory is for tracking change over time. Since a baseline carbon inventory is only a snapshot in time, organizations need to build their processes for ongoing data collection to evaluate the effectiveness of operational changes. Having a baseline carbon inventory also supports companies in conducting peer benchmarking and evaluating their market position.
So you’ve built your baseline… what’s next?
Establishing a carbon inventory baseline is only the first step to managing organizational GHG emissions. Once an organization undertakes the effort to put together this emissions approach to understanding its impact, the organization can extend the same approach to thinking about risks and opportunities in business decision-making processes. For example, when evaluating capital investments into a new facility, a company can inquire and collect data about the historical operational costs—including energy data—for existing facilities it is considering for acquisition, and/or factor in how “dirty” the electric grid is in the potential regions where a new facility may be sited. Because an organization already has a baseline understanding of its existing portfolio of facilities, the organization can evaluate potential facilities against their own portfolio’s average emissions as well as compare potential acquisitions against each other from a carbon impact standpoint. Siting new facilities in a region with a cleaner electrical grid, or with easier access to cleaner alternative fuels, can be considered alongside other performance and market factors in the capital investment decision-making processes.
Beyond singular business decisions, having an established carbon inventory baseline can facilitate an organization’s goal setting and scenario planning. Companies that have a target year and an established emissions target can draw a line from their established carbon baseline to their designated emissions target to understand the necessary change in their carbon budget over time compared to business as usual (see purple and green lines in the graph below).
Source: SINAI Technologies
Forecasting different projections of possible futures based on the current carbon baseline provides a data-driven approach to stacking individual or decentralized business decisions together to get a comprehensive understanding of the planned emissions reductions, which aggregates the approved project pipeline. The planned emissions reductions can then be compared to the planned emissions gap or the targeted emissions reduction that has yet to be accounted for based on existing company mitigation strategies. Finally, for companies thinking about supporting a 1.5-degree climate scenario, modeling the path from their carbon baseline to the company’s current goal versus what the target emissions would need to be to achieve the 1.5-degree scenario can facilitate an internal discussion around the target emissions gap (shown as the steepest emissions pathway in the graph above).
To understand how SINAI Technologies can support your organization to build carbon baselines, visualize scenario planning and risk analysis, and enable meaningful progress towards your decarbonization journey, contact us for a demo.
1. RE100 campaign. The Climate Group & CDP. https://www.there100.org/. Accessed Friday 27 November 2020.
2. Science-based targets. https://sciencebasedtargets.org/. Accessed Friday 27 November 2020.
3. Carbon Neutral Standard. Natural Capital Partners. https://www.carbonneutral.com/. Accessed Friday 27 November 2020.
4. Greenhouse Gas Protocol. World Resource Institute & WBCSD. https://ghgprotocol.org/. Accessed 29 November 2020.
This article by Serena Mau was originally published at Sinai Technologies