Sustainability & ESG insights November '22: COP27 and a comprehensive study of the state of women in Corporate America.

??Via this monthly newsletter, we'll share more knowledge and content about what's arguably the most important domain of our generation: Sustainability and ESG. The goal is to inspire and share insights so each and everyone of us can make a difference in the Environmental, Social and Governance domain we call Sustainability.

Valuable ESG and Sustainability news of November '22

??In this months’ newsletter:?

• What are the key outcomes of COP27 Climate Summit?
• Women in the Workplaces study - The state of women in Corporate America;
• The EU gives final approval of the Corporate Sustainability Reporting Directive;
• CDP to incorporate ISSB climate-related disclosure standards into the global platform;
• Biden proposes new law Requiring Emissions Disclosures from Federal Suppliers;
• SEC Climate Disclosure Rule: 2024 Start Date?
• UK Unveils Disclosure Framework for Net Zero Transition Plans;
• And more…

What are the key outcomes of COP27 climate summit?

A recap by Fiona Harvey from loss and damage to 1.5C goal and World Bank reform, the takeaways from Sharm el-Sheikh.

Loss and damage Developing countries have been seeking financial assistance for loss and damage – money needed to rescue and rebuild the physical and social infrastructure of countries devastated by extreme weather – for nearly three decades. Finally achieving agreement on a fund is a major milestone. Now comes the difficult part – the fund must be set up, and filled with cash. There is no agreement yet on how the finance should be provided and where it should come from.

1.5C The 2015 Paris agreement contained two temperature goals – to keep the rise “well below 2C” above pre-industrial levels, and “pursuing efforts” to keep the increase to 1.5C. Science since then has shown clearly that 2C is not safe, so at Cop26 in Glasgow last year countries agreed to focus on a 1.5C limit. As their commitments on cutting greenhouse gas emissions were too weak to stay within the 1.5C limit, they also agreed to return each year to strengthen them, a process known as the ratchet. At Cop27, some countries tried to renege on the 1.5C goal, and to abolish the ratchet. They failed, but a resolution to cause emissions to peak by 2025 was taken out, to the dismay of many.?

Women in the Workplaces study - The state of women in Corporate America.

Women in the Workplace is the largest comprehensive study of the state of women in corporate America. LeanIn.Org and 麦肯锡 have published this report annually since 2015 to give companies the information they need to advance women and improve gender diversity. Over the past eight years, they have collected information from almost 600 organizations employing more than 20 million people.

Key findings of the report:

• Companies have a new pipeline problem. Women are still dramatically underrepresented in leadership: only 1 in 4 C-suite executives is a woman, and only 1 in 20 is a woman of color;
• Women leaders want to advance, but they face stronger headwinds;
• Women leaders want to see a seismic shift in the culture of work: Women leaders are about 1.5X as likely as men leaders to have switched jobs because they wanted more flexibility or wanted to work for a company that was more committed to DEI;
• Companies are also at risk of losing young women: More than two-thirds of women under 30 say they care more than they did two years ago about flexibility and company commitment to well-being;
• Remote work has been game-changing for women;
• And more…

EU gives final approval of Corporate Sustainability Reporting Directive (CSRD).

Last month it was announced that the EU was set to become a front-runner in global sustainability reporting standards by formally adopting the Corporate Sustainable Reporting Directive (CSRD). On Monday, the EU Council announced that CSRD was officially adopted and approved. This new directive will expand on the already existing Non-Financial Reporting Directive (NFRD).? The hope is that CSRD will introduce more detailed reporting requirements on companies’ impact on the environment, human rights and social standards.

Now that CSRD has been officially adopted, the rules that will be applied between 2024 and 2028 include the following:

• From 1 January 2024 for large public-interest companies (with over 500 employees) already subject to the non-financial reporting directive, with reports due in 2025;
• From 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive (with more than 250 employees and/or €40 million in turnover and/or €20 million in total assets), with reports due in 2026;
• From 1 January 2026 for listed SMEs and other undertakings, with reports due in 2027. SMEs can opt-out until 2028.

France requires solar panels for all large parking lots.

France’s Senate approved new legislation that will now require all parking lots with spaces for 80 vehicles or more to be covered by solar panels. This legislation expands to both new and old parking lots.?

More specifically, this legislation indicates that at least half of the spaces will be covered with solar panels and parking lots with 80+ spaces have 5 years to comply (Starting in July 2023). Lots with 400 spaces or more need to comply within the next three years. If parking lots are not compliant, they will be fined 50 Euros per parking spot, per month. A parking lot with 80 spaces that does not comply by the deadline would be fined 48,000 euros per year until the car park meets the requirements.?

This law was part of a bigger package but ultimately is a big push towards a renewable future.

More than 100 CEOs and senior executives share an open letter for world leaders at COP27.

• The Alliance of CEO Climate Leaders shares an open letter for world leaders at COP27.
• Alliance members know that limiting global warming to 1.5 degrees Celsius requires significant collaboration and shared responsibility between the private and public sectors.
• Knowing this, the corporate leaders are ready to work side by side with governments to accelerate the transition to net zero.

This letter is being released ahead of COP27 by the World Economic Forum on behalf of the Alliance of CEO Climate Leaders. We call on our peers in the private sector to join us in:

• Setting science-based targets in line with the Paris Agreement, with a clear roadmap that takes sector-specific pathways into account.
• Collaborating within and across sectors and value chains to drive transparency, advocacy and action in alliances and initiatives while working with major industry and trade associations to advance alignment with the Paris Agreement.
• Contributing to the development of internationally harmonized reporting standards.

CDP to incorporate ISSB climate-related disclosure standards into global platform.

This month, CDP and the IFRS Foundation announced that CDP will incorporate the International Sustainability Standard Board’s ( International Sustainability Standards Board (ISSB) ) climate-related disclosure standard into its environmental disclosure program. With 18,700 companies, worth half of global market capitalization, disclosing environmental information through CDP in 2022, this integration means there will be a rapid acceleration of early adoption of ISSB climate data disclosure across the global economy.

Biden proposes new law Requiring Emissions Disclosures from Federal Suppliers.

The Biden administration announced a new proposal that will require federal contractors to disclose environmental data through CDP and set science-based decarbonization targets.?

Within this Federal Sustainability Plan, this new policy that has been proposed outlines that the federal government will now require suppliers to the U.S. federal government to publicly disclose greenhouse gas emissions (GHG) and climate-related financial risk. This is applicable to federal contractors with over $7.5 million in annual contracts to report scope 1 and 2 emissions.? Contractors with over $50 million will report scope 1 and 2 emissions along with relevant categories of scope 3 emissions. It will also ask these companies to take action by setting science-based GHG reduction targets.?

These proposals will leverage the CDP environmental reporting system, which is the global non-profit that run an environmental disclosure system for companies, cities, states, and regions. It will also leverage the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations. TCFD in summary is a framework that provides information to investors about what companies are doing to mitigate the risks of climate change, as well as be transparent about the way in which they are governed. Last but not least, it will also use the Science Based Targets Initiative (SBTi) criteria which are widely considered the most ambitious decarbonization targets available.

“Environmental impact must be a top priority for all powerful economic actors in their decision-making going forward. Just like any large corporation, the U.S. government needs quality data from suppliers to see the full picture of its environmental impact. The Federal Supplier Climate Risks and Resilience Rule will follow the model that CDP pioneered in our sustainable supply chain work, demonstrating the power of procurement by ensuring that federal suppliers disclose vital environmental data and set ambitious decarbonization targets. This will give the White House a comprehensive picture of environmental risks as well as opportunities for sustainability action. Moreover, this disclosure data will be useful in informing the Justice40 implementation, helping all companies, municipal governments and investors make greener, more equitable, smarter decisions about where to invest capital.”?- Simon Fischweicher , Head of Corporations and Supply Chains, CDP North America.

SEC Climate Disclosure Rule: 2024 Start Date Requires Dilution Of Contentious Elements.

An insightful article by David Metcalfe, CEO at Verdantix, on the status of the SEC proposed climate disclosure rule. The article describes

Despite making climate disclosure one of his top priorities, SEC Chairman Gary Gensler has made no public comment on a new start date. This forced delay means that the final rule will be published after the mid-term elections on November 8, thus providing the SEC with clarity in terms of the political context. The contentious elements of the proposed rule will need to be diluted, due to three challenges:?

1. Opposition in Congress;?
2. Litigation;?
3. Weight of comments.

Verdantix also released a survey ‘What are the top spending priorities in 2023 for 400 sustainability leaders.’ According to David Metcalfe , it's an interesting mix:?

• 25% of respondents said supply chain sustainability metrics are their number 1 priority;?
• 22% put analysis of climate change risks to physical assets as the top priority;?
• and 19% said that improving ESG scores with ratings agencies was the most important.?

Spending on carbon management software will grow from $402m this year to a whopping $1.5bn in 2027 at a 28% CAGR. Growth in Europe will outstrip other regions at 33% p.a. as the EU Corporate Sustainability Reporting directive accelerates spending by 11,700 from 2023 to prepare for fiscal 2024 reporting. If interested, see Sustaira's low-code building block app template for Carbon and Emission Accounting.

UK Unveils Disclosure Framework for Net Zero Transition Plans.

As shared by ESGToday.com , the UK’s Transition Plan Taskforce (TPT) announced today the launch of its new framework for companies to disclose their climate transition plans.

According to TPT Co-Chair and Aviva Group CEO Amanda Blanc , the new disclosure framework is being introduced as companies increasingly announce net zero commitments, but many have yet to publish plans to support their targets, with plans that have been disclosed varying in quality, consistency and level of detail. Blanc said:

“In recent years, we have seen a wave of private companies announcing their ambitions to contribute to net zero. We now need financial firms and companies to come forward with high quality plans to show how they will meet their targets.”

??Of course there are many more insightful articles, so please share your thoughts and recommendations in the comments below.

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