Sustainability & ESG Insights September '24: California’s New Climate Laws and AI-Powered Decarbonization

??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 every one of us can make a difference in the Environmental, Social and Governance domain we call Sustainability.

Valuable ESG and Sustainability news of September '24

??In this months’ newsletter:

- Deloitte survey reveals a surge in global sustainability investments

- Sustainability SaaS marketplace goes live from Sustaira

- A guide for European boards for steering sustainability reporting from EY

- Australia publishes net zero ‘sector pathways’ to reach net zero by 2050

- Despite challenges, AI and data mastery are key to sustainable progress

- CSRD, CSDDD & CBAM Guidance and Webinars Recordings

- California’s climate laws: navigating new amendments for a sustainable future

- COP16: A catalyst for change for financial institutions

• And more…

Capgemini Report: Despite Challenges, AI and Data Mastery are Key to Sustainable Progress

Sustaira partner 凯捷咨询 ’s latest report highlights the pivotal role of AI and data mastery in driving sustainability efforts, despite significant deployment challenges. The report underscores the importance of integrating sustainable practices into AI strategies to mitigate environmental impacts.

AI and Data: The Sustainability Drivers:

Capgemini’s report, “Data-Powered Enterprises: The Path to Data Mastery,” reveals a significant shift in how organizations leverage data and AI for sustainability. Key findings include:

• 83% of businesses now evaluate vendors based on sustainability criteria
• 60% of organizations have piloted generative AI initiatives
• 75% face challenges in scaling these AI projects

Generative AI: Promise and Pitfalls

Generative AI is seen as a game-changer for sustainability, offering the potential to streamline data analysis and accelerate progress toward net-zero targets. However, the journey is not without hurdles:

• High carbon footprint: 78% of executives acknowledge AI’s higher carbon footprint compared to traditional IT
• Deployment difficulties: Many organizations struggle with expanding pilot projects to full-scale implementations

Balancing AI Benefits with Sustainability

The report emphasizes the need for sustainable AI strategies:

• Sustainable AI solutions: 57% of data masters ensure their AI solutions are sustainable, compared to 43% in other organizations
• Strategic alignment: Integrating sustainability into AI strategies is crucial to minimize environmental impact and drive innovation

Organizational Readiness and Future Outlook

Capgemini’s report also highlights the importance of organizational readiness in achieving sustainability goals:

• Data-driven innovation: two-thirds of business leaders use data to create new products and services, driving substantial innovation
• Employee empowerment: Capgemini prioritizes sustainability, encouraging employees to take proactive steps towards a sustainable future

Capgemini’s insights underscore the transformative potential of AI and data in driving sustainability. While challenges remain, the integration of sustainable practices into AI strategies is essential for achieving long-term environmental goals.

Read more via the link below:

Sustaira Launches Sustainability SaaS and Services Marketplace to Accelerate Impact

Sustaira launches the Sustaira Sustainability Marketplace with over 150 Sustaira-built and partner solutions, services, partners, and 50+ connectors that accelerate addressing Sustainability data aggregation and disclosure challenges.

Sustaira’s Sustainability Marketplace solutions include GHG-protocol based Carbon Accounting, Sustainability KPI tracking, CSRD disclosures, Suppliers Sustainability, ESG reporting, Materiality Assessments, Scope 3 scenario analysis, and many more. This rapidly growing portfolio includes tools that accelerate (net-Zero) Environmental initiatives and solutions addressing Social and Governance challenges, DEI insights, (supplier) risk monitoring, and compliance tracking.

One of the primary Sustainability challenges companies face is aggregating data from numerous disparate sources. To address this, Sustaira’s Sustainability accelerators include not only out-of-the-box solutions, app templates, services, and widgets but also configurable connectors. Examples of connectors that rapidly collect data include Salesforce, SAP, Microsoft, Oracle, and building and energy software, such as Siemens Building X and Energy Star Portfolio Manager. Although Sustaira has its own flexible Carbon Accounting solution, the company also offers a GHG Carbon Ingestor and Integration Module to directly inject carbon data into the Sustaira platform, extending and unlocking more rigid Sustainability point solutions, such as IBM Envizi, Workiva, Enablon, Sphera, Sweep, Watershed, Persefoni, and Greenly.?

To learn more about the Sustaira Sustainability Marketplace visit https://marketplace.sustaira.com/

Sustaira welcomes new talent, customers, and partners, so be sure to connect with us and learn more via https://www.sustaira.com/introducing-sustaira ?

Read the press release via the link below:

California’s Climate Laws: Navigating New Amendments for a Sustainable Future

California’s latest proposed amendments to its climate laws aim to enhance transparency and accountability in greenhouse gas (GHG) emissions and climate risk reporting. These changes reflect the state’s commitment to leading climate action despite ongoing budget negotiations and deployment challenges.

SB-253 (Climate Corporate Data Accountability Act)

• Mandates GHG Emissions Disclosure: Companies meeting specific revenue thresholds must disclose their GHG emissions.
• No delay in Reporting: Despite earlier proposals to defer reporting to 2028, the current amendments maintain the 2026 reporting requirements.

SB-261 (Climate-Related Financial Risk Disclosure)

• Climate Risk Reporting: Businesses must report on climate-related financial risks.
• Alignment with Global Standards: The amendments aim to align California’s reporting requirements with international standards.

Challenges and Opportunities

While these amendments are a step forward, they come with their own set of challenges and opportunities:

• Deployment Challenges: Many organizations face difficulties in scaling their reporting systems to meet new requirements.
• Budget Negotiations: Ongoing budget discussions may impact the implementation timeline and resources available for compliance.

The Road Ahead

California’s commitment to climate transparency is clear, but the path forward requires careful navigation:

• Organizational Readiness: Companies need to invest in robust data management systems to meet the new reporting standards.
• Collaboration and Innovation: Businesses are encouraged to collaborate and innovate to overcome deployment challenges and achieve compliance.

California’s proposed amendments to its climate laws underscore the state’s leadership in climate action. By maintaining stringent reporting requirements and aligning with global standards, California sets a high bar for transparency and accountability in climate-related disclosures.

Read the details via the link below:

Australia Publishes Net Zero “Sector Pathways” to Reach Net Zero by 2050

Australia’s ambitious goal of achieving net-zero emissions by 2050 is mapped out in a comprehensive new report. This detailed analysis outlines the necessary steps and technologies to transition to a low-emissions economy.

The Road to Net Zero

Australia’s Climate Change Authority has released a pivotal report detailing how the nation can achieve net-zero emissions by 2050. This report is the most thorough analysis to date, providing a clear roadmap for decarbonizing the economy.

Key Sectors and Strategies

Electricity and Energy

• Decarbonization: Transitioning to wind and solar power, coupled with energy storage, is crucial.
• Electrification: Scaling up renewable energy to electrify the entire economy.
• Near-Zero Emissions: Achieving near-zero emissions in the electricity sector is now seen as a near certainty.

Industry and Manufacturing

• Innovation: Embracing new technologies and processes to reduce emissions.
• Efficiency: Improving energy efficiency across all industrial operations.
• Circular Economy: Promoting recycling and reuse to minimize waste and emissions.

Transportation

• Electrification: Shifting to electric vehicles (EVs) and expanding EV infrastructure.
• Public Transport: Enhancing public transportation systems to reduce reliance on personal vehicles.
• Alternative Fuels: Exploring hydrogen and biofuels as sustainable alternatives.

Overcoming Barriers

The report emphasizes the need for a national effort to overcome barriers and seize opportunities. Mature technologies should be quickly deployed while emerging technologies continue to develop. The net-zero goal must become a priority for businesses, investors, and governments alike.

Australia’s path to net zero by 2050 is challenging but achievable. The Climate Change Authority’s report provides a detailed and actionable plan, urging immediate and sustained efforts across all sectors. By embracing this roadmap, Australia can lead the way in creating a sustainable, low-emissions future.

Read more about it via Sustaira's article below!

Steering Sustainability reporting: A Guide for European Boards from EY

A recent insight from EY outlines how European boards are navigating a monumental shift in corporate reporting due to the Corporate Sustainability Reporting Directive (CSRD). This directive offers a unique opportunity to align corporate strategy with sustainability goals, driving long-term value creation.

The Corporate Sustainability Reporting Directive (CSRD) is transforming the landscape of corporate reporting in Europe. With around 49,000 companies affected, the directive mandates the public disclosure of sensitive information about business models, strategies, and supply chains. This shift is not just about compliance but about embedding sustainability into the core of corporate strategy.

Governance and Oversight

• Enhanced Responsibilities: Audit committees now have increased responsibilities to monitor sustainability reporting processes.
• Strategic Alignment: Boards must use sustainability reporting to align corporate strategies with long-term sustainability goals.
• Building Trust: High-quality sustainability information helps build trust with key stakeholders, including investors.

Strategy Alignment and Risk Management

• Double Materiality Assessment: This assessment provides valuable data for better investment decision-making.
• Risk Management: Boards need to reassess how they manage risks and seize new opportunities presented by sustainability reporting.
• Value Creation: Companies that actively address climate change are 1.8 times more likely to report higher-than-expected financial value.

Reporting

• Comprehensive Disclosure: The CSRD requires detailed reporting on sustainability risks and opportunities, impacting business models and supply chains.
• Data Collection and Metrics: Accurate data collection and the use of relevant metrics are crucial for effective reporting.
• Interoperability: Ensuring compatibility with international standards, such as those from the ISSB, is essential.

Stakeholder Engagement

• Transparent Communication: Engaging with stakeholders through transparent sustainability reporting builds credibility and trust.
• Investor Relations: Clear and comprehensive sustainability reports attract and retain investors.

Training and Competence

• Board Education: Continuous training for board members on sustainability issues is vital.
• Competence Development: Developing the necessary skills and knowledge to oversee sustainability reporting effectively.

The CSRD represents a significant opportunity for European boards to transform their business models through sustainability reporting. By focusing on strategic alignment, risk management, and stakeholder engagement, boards can drive long-term value creation and build trust with key stakeholders.

Read more here:

Deloitte’s 2024 CxO Sustainability Report: A Surge in Global Sustainability Investments

Deloitte’s 2024 CxO Sustainability Report reveals a significant increase in sustainability investments among global executives. The report highlights the growing importance of sustainability in business strategies and the innovative approaches companies are adopting to address climate change.

The Rise in Sustainability Investments

• 85% of CxOs have increased their sustainability investments in 2024, up from 75% in 2023
• This surge reflects a broader commitment to integrating sustainability into core business operations

Technological Integration

• 50% of executives are now using technology solutions to achieve their climate goals
• An additional 42% plan to adopt such technologies within the next two years

Business Model Transformation

• 45% of CxOs are transforming their business models to better integrate sustainability
• This shift underscores the recognition of sustainability as a critical component of long-term business success

Global Perspectives

• The report surveyed 2,100 executives across 27 countries
• It highlights the diverse strategies and priorities of business worldwide in addressing climate change

Deloitte’s 2024 CxO Sustainability Report underscores the growing importance of sustainability in the business world. With increased investments, technological integration, and business model transformations, companies are taking significant steps to address climate change and ensure a sustainable future.

Here’s a link to the full article:

CSRD, CSDDD & CBAM Guidance & Webinar Recordings

Sustaira's latest blog posts provide comprehensive guidance on three critical sustainability directives. The CSRD (Corporate Sustainability Reporting Directive) guide offers a detailed roadmap for sustainability leaders to conduct Double Materiality Assessments. This involves evaluating both financial and non-financial impacts, such as carbon emissions, water usage, and supply chain risks. The guide emphasizes the importance of transparency and accountability in sustainability reporting, helping companies align with EU regulations and stakeholder expectations.

The CSDDD (Corporate Sustainability Due Diligence Directive) guide delves into the integration of human rights and environmental due diligence into corporate policies. It outlines the steps companies need to take to identify, prevent, and mitigate adverse impacts on human rights and the environment throughout their value chains. This directive aims to ensure that businesses not only comply with legal requirements but also contribute positively to global sustainability goals.

Lastly, the CBAM (Carbon Border Adjustment Mechanism) guide explains the EU's innovative approach to carbon pricing. It details how the CBAM will affect importers and manufacturers by imposing carbon costs on certain imported goods to prevent carbon leakage. The guide provides strategies for companies to adapt to this new regulatory landscape, including improving carbon efficiency and exploring alternative supply chains.

For more in-depth information, you can read the full guides on Sustaira's blog and watch the webinars:?

CSRD (https://www.sustaira.com/blog/navigating-csrd-comprehensive-guide ),?

CSDDD (https://www.sustaira.com/blog/csddd-guide-duediligence-humanrights-blog ),?

CBAM (https://www.sustaira.com/blog/cbam-guide-carbon-border-adjustment-mechanism-eu ).

The Guides and Webinar recordings can also be accesse via the links below:

EU Achieves Significant GHG Emissions Reduction and Economic Growth

The EU’s latest energy report reveals a remarkable 32.5% decrease in greenhouse gas (GHG) emissions since 1990, despite a 67% growth in the economy. This achievement highlights the EU’s successful integration of sustainability into its economic development strategies.

Key Achievements in Emissions Reduction

• 32.5% Decrease in GHG Emissions: Since 1990, the EU has managed to cut its GHG emissions by nearly a third
• Economic Growth: During the same period, the EU’s economy grew by 67%, demonstrating that economic expansion and environmental sustainability can go hand in hand

Drivers of Change

• Energy Efficiency: Improved energy efficiency standards have played a crucial role in reducing emissions
• Renewable Energy: The adoption of renewable energy sources, such as wind and solar power, has significantly contributed to the decline in emissions
• Policy Measures: Strong policy measures and regulations have been instrumental in driving the transition towards a low-carbon economy

Sector-Specific Insights

• Buildings: Emissions from buildings have decreased by 31% between 2005 and 2021, thanks to higher energy efficiency standards and decarbonization efforts
• Transport: The transport sector has seen gradual improvements, with increased adoption of electric vehicles and cleaner fuels

Global Leadership

• International Impact: The EU’s success serves as a model for other regions aiming to balance economic growth with environmental sustainability
• Future Goals: The EU continues to set ambitious targets for further reducing emissions and enhancing energy efficiency

The EU’s energy report showcases a significant achievement in reducing GHG emissions while maintaining robust economic growth. Through a combination of energy efficiency, renewable energy adoption, and strong policy measures, the EU is leading the way in sustainable development.

Feel free to explore the full report for more details:

BCG Survey: AI-Powered Decarbonization

A new survey from Boston Consulting Group (BCG) highlights how companies worldwide are leveraging AI to significantly enhance their decarbonization efforts, resulting in substantial financial benefits. Despite these advancements, overall progress in emissions reduction has stalled, highlighting a complex landscape of opportunities and challenges.

The Power of AI in Decarbonization

• Major Impact: Over half of the companies surveyed report that AI has a significant impact on key areas of their decarbonization efforts, such as emissions measurement and reporting.
• Financial Benefits: AI usage is a major driver of sustainability-related financial gains, with companies using AI being 4.5 times more likely to see net benefits equal to at least 7% of annual revenues.

Financial Rewards

• Substantial Gains: More than two-thirds of companies reported annual net decarbonization benefits worth at least 3% of sales, with 25% seeing benefits worth at least 7% of sales, averaging approximately $200 million
• Cost Savings: Significant drivers of these benefits include efficiency improvements, waste reduction, rationalization of materials, and increased use of renewable energy

Stalled Progress

• Limited Reporting: Only 9% of companies comprehensively report emissions across Scopes 1, 2, and 3, down from 10% last year
• Reduction Targets: A mere 16% have set emissions reduction targets across all scopes, a decrease from 19% in the previous year
• Achieving Goals: Only 11% of companies are achieving emissions reductions in line with their ambitions, compared to 14% last year

While AI is proving to be a powerful tool in the fight against climate change, helping companies achieve significant financial and environmental benefits, the overall progress in decarbonization efforts remains slow. This highlights the need for continued innovation and commitment to sustainability goals.

Read more about BCG’s findings here:

IFRS Foundation releases guide for voluntarily applying ISSB Reporting Standards

The IFRS Foundation has taken a significant step in promoting sustainability reporting by launching a comprehensive guide for companies. This guide is designed to help businesses voluntarily adopt the International Sustainability Standards Board (ISSB) Sustainability Reporting Standards, ensuring they can meet the growing investor demand for transparent and comparable sustainability information.

Why This Guide Matters

The new guide is particularly valuable for companies operating in jurisdictions where there are no mandatory requirements to apply ISSB Standards. By following this guide, companies can align their sustainability reporting with global best practices, enhancing their credibility and attractiveness to investors.

Key Features of the Guide

• Comprehensive Framework: The guide provides a detailed framework for companies to disclose sustainability-related financial information, focusing on both risks and opportunities.
• Investor Focused: It emphasizes the importance of providing decision-useful information to investors, helping them make informed economic and investment decisions.
• Global Baseline: The guide supports the establishment of a high-quality global baseline for sustainability disclosures, promoting consistency and comparability across markets.

Benefits for Companies

Adopting the ISSB Standards through this guide can offer several benefits:

• Enhanced Transparency: Companies can improve their transparency and accountability by providing clear and consistent sustainability information.
• Investor Confidence: High-quality disclosures can boost investor confidence and potentially attract more investment.
• Competitive Advantage: Companies that proactively adopt these standards may gain a competitive edge in the market by demonstrating their commitment to sustainability.

The IFRS Foundation’s new guide is a crucial tool for companies aiming to enhance their sustainability reporting. By voluntarily applying the ISSB Standards, businesses can meet investor expectations and contribute to a more sustainable global economy.

Read more here:

A World in Balance 2024: Accelerating Sustainability Amidst Geopolitical Challenges

The Capgemini Research Institute’s latest report highlights significant strides in sustainability, focusing on circular economy practices, sustainable design, and biodiversity. Despite geopolitical challenges, companies are making notable progress in integrating sustainability into their core operations.

Companies are increasingly shifting towards a circular economy, adopting practices that minimize waste and promote the reuse of materials. This approach not only reduces environmental impact but also creates new business opportunities and efficiencies. Sustainable product design is also gaining traction, with businesses prioritizing eco-friendly materials and energy-efficient processes to reduce their carbon footprints and meet growing consumer demand for sustainable products.

Effective sustainability efforts hinge on robust measurement and data sharing. Transparent reporting and advanced analytics are crucial for tracking progress and identifying areas for improvement, building trust with stakeholders and driving continuous improvement. Additionally, companies are focusing on water stewardship to manage water use efficiently, protecting this vital resource for future generations. Protecting biodiversity through sustainable land use practices and investing in social sustainability initiatives, such as promoting diversity, equity, and inclusion, are also key trends. Education and training programs are essential for equipping employees with the knowledge and skills needed to implement these sustainable practices effectively.

The Capgemini report provides a comprehensive overview of the current state of corporate sustainability. Despite the challenges posed by geopolitical tensions, companies are making significant progress in various areas, demonstrating a strong commitment to a sustainable future.

Read more here:

COP16: A Catalyst for Change for Financial Institutions

COP16 is set to drive significant and lasting changes in the financial sector by prioritizing nature and biodiversity investments. The conference aims to engage the private sector in making permanent shifts towards sustainable finance.

The upcoming COP16 conference, which is set to take place in Colombia from October 21-November 1, is poised to be a game-changer for financial institutions. Organizers are emphasizing the importance of integrating nature and biodiversity into financial decision-making processes. This shift is expected to create a more sustainable and resilient financial system.

At COP16, financial institutions will be urged to adopt strategies prioritizing environmental sustainability, including investments in biodiversity and natural capital, to make these practices a permanent part of the financial landscape. The private sector is called upon to lead in sustainable finance, enhancing long-term profitability and resilience by investing in nature. The conference aims to instill a lasting commitment to sustainability within the financial sector, developing new financial products and integrating sustainability into corporate governance. COP16 represents a pivotal moment for the financial industry, driving permanent changes that benefit both the environment and the economy.

Read more here:

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