The webinar "The great climate quick fix - an illusion?" featured Professor Katherine Richardson, and Goodwings CEO and founder Christian...
5 reasons to kick-start your climate reporting
Discover the top 5 reasons why your SME should start climate reporting, from consumer demand to securing B2B relationships. Learn why transparency and GHG emissions accounting are crucial for businesses of all sizes.
Goodwings advisor and environmental engineer Douglas Marett gives a quick overview of some of the macro trends driving the demand for climate reporting.
Douglas is an environmental engineer, the CEO of GH Sustainability, and the founder of Enablesus. With his nearly two decades of experience working in climate change, Douglas is an expert in transparency, corporate sustainability, and GHG reporting.
I've had the privilege and challenge of addressing climate change for nearly two decades, for both governments and corporations. This has included GHG emissions accounting & reporting, strategic planning, and financing & implementing real climate actions. In my experience, when it comes to the reporting of climate impacts and actions, there's been a rapid increase in companies’ voluntary reporting in just the last few years.
The green agenda's momentum has grown immensely, prompted primarily by the increased awareness of the climate crisis driven by politicians, activists, and scientists.
The motivation for businesses to take action to reduce their GHG emissions is manyfold, and once motivated the next question I am always asked is ‘where do we start, especially for a small or medium sized company’?
The first step is for the company to know their GHG emissions and their sources. The next step is to report this information and develop a strategy/plan to reduce their GHG emissions over time.
Taking a step back, I should answer the first question that always comes up: ‘what is motivating companies to put in the effort and resources in moving forward with their climate impact reporting and actions?’
Here are 5 factors that are currently inspiring companies of all sizes to start reporting and improving their business's GHG emissions.
1. Consumers are purpose driven
The first factor is that 6 out of 10 consumers are placing a value on the climate impact of the goods and services that they buy, according to a study by enablesus. Consumer motivation has also been reported in a recent study by IBM which found that 4 out of 10 consumers are purpose driven, which means they are making purchase decisions based on their conscious values and disregarding price to a certain extent.
2. The sustainability market is booming
The second factor is that providing sustainable goods and services is actually good business. For example, the enablesus study found that 7 out of 10 consumers in Denmark are buying a greater volume of sustainable goods and services than they did five years ago. This is backed up by a study from NYU’s Stern Business School which determined that half of all the growth in the consumer goods market is now from sustainable goods.
You can read the full enablesus report here.
3. The reporting requirements trickle both up and down the supply chain
The third factor is that current regulations in the EU require that roughly 5,000 listed companies report on their climate risks (including GHG emissions), and new regulations starting in 2024 will expand this to approximately 50,000 companies.
At the same time, the U.S. Securities and Exchange Commission has just published a proposal for similar regulation of companies in the United States. These regulations are important for companies of all sizes because GHG emissions accounting & reporting requires information from both up-and downstream suppliers in a supply chain. This means that many SMEs will need to provide GHG emissions accounting information to their customers.
You can read the full enablesus report here.
4. Securing B2B relationships
The fourth factor of why GHG emissions accounting & reporting are important right now is the reality that consumers and governments understand the concept of value chains and life cycles. This means that they know climate impact does not only come from the supermarket where they buy an apple, but also from the companies who supply the other goods and services that get the apple to the supermarket - such as growing & harvesting, packaging, transport, and waste & disposal. This is what we call ‘Scope 3’ GHG emissions, which are heavily influenced by Business-to-Business relationships. In the study by enablesus they found that 5 out of 10 SMEs are sharing their sustainability data with their B2B customers (or at least customers are asked for it) and GHG emissions data are on the top of the wish list.
5. Employees value climate action
The final factor why climate reporting is important is that consumers are also your employees who value climate action as well. In a study by BBMG and GlobalScan they found that 6 out of 10 employees are more motivated to work for and are loyal to companies that show they are socially and environmentally responsible. There is a lot of social media talk in the business community about this specific topic right now, especially since the shortage of qualified labor is pushing companies to compete for skilled staff in both retention and new hires.
Some words of encouragement before your company beginsThese are five strong motivating factors for all companies to start addressing climate action right now, and the foundation for climate action is transparent GHG emissions accounting & reporting. Here the old adage applies;
“you can not change what you do not measure”.
In the past, it was mostly large energy, transport and heavy manufacturing companies who reported their greenhouse gas emissions, simply because these industries were the first to be regulated. However, now we see voluntary GHG emissions accounting & reporting in many industries, including fashion, retail, food & drinks, and professional services amongst others. If they can do it, your company can too. There are plenty of resources out there to make GHG emissions accounting & reporting easier and cost effective - including using Goodwings when you book your business travel.
Lastly, I should add in this context that the majority of a company’s stakeholders are watching, including your competitors. Now is the time to join the positive movement of GHG emissions accounting & reporting and just as important climate action.
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