Spark Newsletter – October 2022
This month’s Spark Newsletter explores topics related to some of the challenges companies face when it comes to tackling climate change, decarbonizing the supply chain and complying with sustainability reporting standards.
This issue examines:
What Companies Need to Know About Circular Economy and ESG?
Moving to a circular economy will be key to creating a more sustainable future. According to research from the Ellen MacArthur Foundation and Material Economics, regenerating farmland, designing to reduce waste and reusing materials could reduce annual greenhouse gas (GHG) emissions significantly. If the principles of a circular economy are applied to the steel, aluminum, cement and food sectors, it could reduce annual GHG emissions by 9.3 billion tons by 2050, which is equivalent to eliminating all emissions from global transport.
As the global focus on ESG continues to grow, the concept of a circular economy can be a useful framework for companies to follow to make their products and operations more sustainable. A circular economy focuses on the sustainable use of materials throughout the manufacturing process, where materials are used for more than one purpose and are recycled at the end of the product’s lifecycle.?
Decarbonizing the Supply Chain: Tackling Scope 3 Emissions?
Tackling Scope 3 greenhouse gas (GHG) emissions continues to be a daunting task for organizations. Sean Daley, Sphera’s North American director of sustainability consulting, joins the SpheraNOW podcast for a conversation on Scope 3 emissions, decarbonizing the supply chain and the associated challenges.
When discussing internal pressures on organizations when it comes to their GHG emissions reporting, Sean notes:
“Stakeholders clearly see GHG emissions tied to risk and reputation. There's more and more scrutiny that companies are coming under, related to this topic. Scope 3 emissions can be the elephant in the room, given that it typically represents the vast majority of a company's overall GHG emissions—anywhere from 60% to 99% of emissions. Scope 3 typically represents the bulk of a company's emissions. It can be a big, scary number to deal with and maybe not something that everybody's excited about publishing. The difficulty of getting accurate data makes it even tougher. More and more companies will be compelled to both measure and report these emissions in accurate, transparent and scientifically sound ways.”
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Why You Need to Understand Physical Risk and Transition Risk?
Risk has always been a fundamental aspect of business. But companies today are dealing with risks that are relatively new given the long history of commerce, and climate change is perhaps the most significant among them. Climate-related risk is also borne by investors, who have called for businesses to measure and report it.
Investor demands are behind a slew of new climate-related disclosure regulations that require business leaders to measure and report that risk, so investors can make more informed decisions. In many cases, disclosures must include an assessment of physical risk and transition risk.
How Could Climate Change Affect the Global Economy??
The impact of climate change is far reaching—from the heatwaves and wildfires impacting Europe, to monsoon rains causing destructive flooding in Bangladesh. Climate change has the potential to impact more than just the environment. The global economy and businesses’ bottom lines are at risk as well.
According to a report from Swiss Re, a provider of reinsurance, insurance and other forms of insurance-based risk transfer, climate change represents the largest long-term threat to the global economy. If net-zero climate targets are not met by 2050, the world risks losing $23 trillion in global economic output.
The ISSB and the IFRS Sustainability Disclosure Standards: Aiming for Comparability in ESG Reporting?
Corporate sustainability officers have a lot on their radar screens, given the many moving parts associated with emerging, climate-related reporting standards. Most recently, the comment period for the International Sustainability Standards Board’s (ISSB’s) proposed standards for sustainability disclosures closed on July 29, and the comment period for the Corporate Sustainability Reporting Directive’s (CSRD’s) proposed standards ends on August 8. In the months to come, relevant bodies will review comments and recommendations as they work to finalize these reporting standards.?