While we wait to see what the 26th UN Climate Change Conference (COP26) will have in store next week, many businesses will be reflecting on their own environmental issues. We could see a few big announcements made around green initiatives or ambitions and, more generally, increased press and stakeholder interest in companies’ commitments to Environmental, Societal Governance (ESG).
So with climate change very much in the spotlight, what could businesses be doing now as part of a planned approach to ESG matters? Key areas to consider are:
- It’s important to understand baselines – be thorough in the auditing process and look down the supply chain to ensure that your environmental impacts aren’t being pushed to other regions or countries.
- Examine the natural resources you currently use – this should include looking at how much water is needed to support your operations, as well as greenhouse gas emissions. But think also about forest risk commodities (leather, timber, palm oil, pulp and paper, soya, rubber, beef, soya): Where does it comes from? Is it sustainable? How sure are you?
- Review environmental management systems – are these internationally recognised as being reliable? Are they robust?
- Communication of environmental messages – consider how your environmental story is shared with employees, customers, shareholders and other stakeholders. Does perception match with your messaging and communication aims?
- Reporting – are you reporting on a mandatory basis? If so, are you reporting the right things and meeting the legal requirements imposed on your business? For those reporting voluntarily, consider how much information it is necessary to disclose.
- Benchmarking – it’s important to look at what your competitors are doing and whether there is an industry standard/approach emerging. Either way, you’ll want to ensure you are being consistent and even help to shape that wider approach.
- Keeping the Board informed – are they up-to-speed on all elements of your approach to ESG and the company’s environmental performance? It’s important they have all the details around these aspects of the business and understand the key issues and messages.
- Ownership – who is responsible for each of the steps towards meeting the environmental targets set? Are members of the senior leadership team responsible for key announcements on such matters?
- Finance – a key element of COP26 is about mobilising finance. Is your finance team currently using green finance? Are there ways to make further savings and could there be new financial products available that will benefit your business?
- Beware of greenwashing – in the eagerness to tune up your green dial it can be easy to expose yourself to risk. When positioning your products / services / operations as green, be sure that your claims are sound and evidence-based.
- Continual improvement – while climate change naturally presents risks, it’s clear there are also opportunities. These can be big and small, so be mindful not to overlook the easy wins and see where small changes can be made that will contribute to the bigger, greener picture.
Environmental, climate change and sustainability issues are at the heart of law and policy, impacting every business sector. Our ESG specialists help clients respond to the complex legal issues and opportunities presented as the business and regulatory environment evolves. We await the start of COP26 with interest and will be sharing our thoughts on the key takeaways for business and the public sector.