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 recentstudy 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 demoof our software and see what SINAI can do to help you reach your CSM objectives.
This year brought some bad news on the climate change front: researchersfound that ice is melting faster worldwide, and there’s a greater sea-level rise anticipated. The rate of ice loss each year has increased by 60%. A study of the Greenland ice sheet found that there are at least 74 major glaciers that are being severely undercut and weakened.
These statistics are dire for our oceans and the future of the planet. As glacier ice melts, it changes the chemical makeup of the oceans; and, since the oceans directly regulate the weather, changes to our oceans affect our food supply, air quality, disaster preparedness, and more. How climate change affects the ocean is complicated and touches virtually every aspect of our lives. Here’s a quick overview of the relationship between climate change and oceans, and why it’s imperative that we work to reduce ocean climate change.
Climate change and sea-level rise
There’s no question that climate change has caused sea levels to rise. But, sea-level change has increased dramatically over the last 20 years. Since 1880, the average sea level has risen eight to nine inches; a third of that gain has come in the last two and a half decades. Rising sea levels can be mostly attributed to meltwater from glaciers and ice sheets, as well as the thermal expansion of seawater as it warms.
Climate change and sea-level rise are a big deal for coastal communities — and in the US, nearly 40% of the population lives in high population-density coastal areas. Around the world, eight of the 10 largest cities are near a coast. This puts a huge percentage of our population at risk for flooding, shoreline erosion, and storm hazards. Our infrastructure — roads, bridges, subways, power plants, water supplies, and more — are all at risk from sea-level rise.
Flooding isn’t the only danger of higher sea levels. Rising sea levels will impact our drinking water, food supply, and overall health. “As sea levels rise, saltwater intrusion into freshwater increases the salinity of groundwater basins and well water. This reduces crop yields and the availability of safe drinking water. It also increases the risk of hypertension, as well as vectorborne and diarrheal disease,” said one joint report by the Public Health Institute and the Center for Climate Change and Health.
Finally, climate change and sea-level rise will threaten wildlife populations and coastal ecosystems. Trees growing near the coast will struggle to find enough freshwater to grow; even those further inland won’t be able to survive repeated flooding by salty seawater. Wildlife populations that make their home along the coast will struggle to adapt to erosion, flooding, and changes in plant life. Sea birds and sea turtles that make their nests on the shoreline won’t be able to reproduce and will face extinction.
Ocean acidification and climate change
The on-shore effects of climate change are just one side of the story. The chemical make-up and temperature of the ocean are also changing.
Climate change is causing increased rates of ocean acidification. Ocean acidification is a process by which the pH of the ocean is reduced over an extended period of time, making the ocean more acidic. This is primarily caused by an increase in carbon dioxide in the atmosphere.
“The ocean absorbs about 30 percent of the CO2 that is released in the atmosphere, and as levels of atmospheric CO2 increase, so do the levels in the ocean,” explained NOAA. “When CO2 is absorbed by seawater, a series of chemical reactions occur resulting in the increased concentration of hydrogen ions. This increase causes the seawater to become more acidic and causes carbonate ions to be relatively less abundant.”
As we emit more CO2, the ocean becomes more and more acidic. The pH has dropped by 26%over the last century (to become more acidic). What does this mean for climate change and the planet?
First, marine ecosystems will struggle to survive. Acidification particularly impacts shellfish and coral reefs — organisms that need carbonate ions to make their shells and skeletons. Acidification reduces the availability of carbonate ions, preventing these populations from thriving and disrupting delicate ocean ecosystems.
Through Sofar Ocean’s partnership with Aqualink, research teams are able to take advantage of the world’slargest real-time ocean data platform to visualize temperature and other data from coral reef sites around the world. By aggregating data and providing greater transparency to sensor and model data, researchers are able to pinpoint with greater accuracy where ocean acidification and climate change are taking their toll.
It’s not just marine ecosystems that are struggling due to ocean acidification. Warming ocean temperatures are bad for the fishing industry, too. Warmer oceans lead to toxic algal blooms. “Toxic algae produce domoic acid, a dangerous neurotoxin, that builds up in the bodies of shellfish, posing a risk to human health. As a result, many West Coast fisheries have been forced to shut down,” wrote the Union of Concerned Scientists.
Some scientists have linked ocean acidification to atmospheric warming — bringing us to the third impact of ocean climate change.
Ocean circulation and the climate
Ocean circulation regulates the temperature of our planet. It works like a giant “conveyor belt” to bring heat from the Equator to the higher latitudes. “As warm water from the tropics flows toward the poles in wind-driven currents near the surface, it cools, becoming denser and heavier, and eventually sinks. It then begins flowing back toward the equator in a slow journey deep in the ocean,” explained Inside Climate News.
Critically, the Atlantic Ocean’s circulation has slowed by about 15% since the middle of the last century. Weaker currents are at the root of a host of problems: increased rates of ocean acidification, higher sea levels, more extreme temperatures (hotter summers and colder winters), coastal ice jams that impede marine shipping routes, and the collapse of certain aquaculture operations.
The stats on ocean climate change are alarming. We know it’s time to lower our carbon footprint — an effort that starts with better data and more affordable technology to increase the breadth and depth of data collected. As our partnership with Aqualink shows, a unified knowledge base can lead to better strategy and planning to slow down the rate of ocean climate change. It starts with more affordable and more accessible data collection — the driving force behind Sofar Ocean’s Spotter buoys. To learn more, click here.
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.
References:
1. RE100 campaign. The Climate Group & CDP. https://www.there100.org/. Accessed Friday 27 November 2020.
Energy is the lifeblood of all societies. But the production of energy from the burning of fossil fuels produces carbon emissions that are released into the atmosphere on a grand scale. The energy sector accounts for more than 70% of these emissions, which are driving climate change worldwide.
Reducing carbon emissions from the energy sector has a direct and positive impact on climate protection. So there needs to be a transition from the current energy system that relies heavily on fossil fuels to a system that uses renewable energy sources that do not emit carbon, such as wind and solar.
We also need to look at things like the electrification of transport and embrace a circular economy that seeks to reduce waste and the demand for energy. This process has already begun, but we need to speed it up – we’ve been dragging our heels for too long and now things are critical.
This will not happen by itself; it requires policy choices. These must be global, involving all states. It’s no good changing the energies sector of just one country. Energy has long been considered to fall within the domain of domestic policy. Yet international climate action is driving the transition to a low-carbon energy economy, on the basis of scientific evidence that highlights the importance of reducing energy consumption for the climate.
This must be done as quickly as possible. Some countries are more committed than others, but the extent of how much is actually being achieved (or not) must be monitored. This can only happen through the cooperation of all states under international law. Cooperative regulation of energy demands innovative, flexible organization and law-making at the international and the regional level.
Energy action = climate action
The United Nations (UN) is at the forefront of this international cooperation. In 2015, the General Assembly adopted Sustainable Development Goals (SDGs) that set out the progress the global community wants to make by 2030 on the most pressing challenges, from poverty reduction to climate change and energy transition.
SDG 7 relates to ensuring access to clean and affordable energy for all. It contains indicators of progress on renewables, access to electricity, and energy efficiency. SDG 13 relates to urgent action to combat climate change and its impacts. These two goals work in tandem to encourage all states – developed and developing – to collaborate to make energy sustainable (meaning low-carbon), while ensuring access for all in every country by 2030.
That means international climate action equals energy action. The UN High-Level Political Forum is the place states get together to discuss progress on the SGDs, and where consensus is being (re)affirmed continuously.
SGDs 7 and 13 have been established and reinforced through the 2015 Paris Agreement on Climate Change. This is a binding treaty under international law adopted through the UN Framework Convention on Climate Change, by which the UN first addressed climate change in 1992. The agreement is the key international legal framework through which states aim to keep the increase in the temperature of the Earth’s atmosphere to well below 2℃, and ideally limiting it to 1.5℃ by the end of the century.
Signing up to cooperation
Almost all states have ratified the Paris Agreement and so must abide by it. If any intend to withdraw from it, they must abide by the legal rules of the agreement. So the US would only be able to withdraw – as Donald Trump insists – after the next presidential election. In the meantime, his administration continues to abide by the Paris Agreement rules and actually takes a very active role in the negotiations.
Domestic action is necessary to implement the promises of the Paris Agreement. Every state is obliged to submit “nationally determined contributions” that set the scene for the most ambitious climate protection plan at the national level.
These national plans on climate protection have a strong influence on energies regulation at the domestic level. The “Katowice package” (the Paris rule book), adopted in 2018, provides further guidance. For developed countries, the Paris Agreement stipulates that they adopt economy-wide greenhouse gas emission targets. These targets can only be achieved if the entire economy, including the energy sector, is “decarbonized”. That means that the use of fossil fuels has to end and be replaced by sustainable (renewable) energy.
Developing countries receive support under the Paris Agreement so that they too can move over time to economy-wide reduction targets. Only by acting together will the international community achieve the temperature goal of the Paris Agreement.
The 1994 Energy Charter Treaty, driven by the European Union and like-minded states, is emerging as the basis of transcontinental energy governance in Europe, Asia, and Africa. This treaty covers energy investments, trade, freedom of energy transit, efficiency, and resolution of disputes. It is now modernizing to support the energy transition.
Cooperative energy regulation also occurs on a regional level, and that is the case in Europe as well as Asia and Africa. The EU has adopted a frontrunner position with a strategy precisely based on the Paris Agreement till 2080, driving the transition of the continent’s energy system. Called the Clean Energy Package, it will create a transboundary, continent-wide energy system that better integrates renewables, improves efficiency, and empowers consumer choice. Even after Brexit, the UK will likely remain connected to this market, as both the EU and the UK share the objective of achieving net-zero carbon by 2050
If humanity is to achieve its goal of fully and speedily transitioning to low-carbon energy while ensuring affordable access for all, then we must stay focused and committed and continue to cooperate internationally. The future of the generations that follow depends on it.
This article by Volker Roeben was originally published at TheConversation
About the Author:
Volker Roeben is Professor of Energy Law, International Law, and Global Regulation at the University of Dundee, as well as a visiting Professor at the China University of Political Science and Law, Beijing, a docent at the University of Turku, and adjunct Professor at the University of Houston.
Prior to coming to Dundee, he was a Professor at Swansea University and a Senior Research Fellow at the Max Planck Institute for Comparative Public Law and International Law. He has held visiting professorships inter alia at the University of Chicago School of Law, has served as a clerk to Justice Di Fabio of the German Constitutional Court, and advised the Energy Charter, the European Parliament, international organizations, and national parliaments.
Volker’s research combines energy law with public international law, European Union law, and the theory of global law, with several books and numerous articles published and a research monograph on the EE Union in press with Cambridge University Press. He also serves on the board of the Max Planck Encyclopedia of Comparative Constitutional Law.
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