Many are not, but it is coming soon. Here’s what you need to know.
Regardless of your individual stand on corporate responsibility and sustainability, the climate for business is about to change. As soon as next financial year (Yes! 2024-25!) mandatory obligations will require some businesses to disclose their greenhouse gas (GHG) emissions. While this will start with the big players (based on employee numbers, asset worth and revenue), small and medium sized businesses, up and down their supply chain, will also be asked for data. It is clear that this will include many YBM clients.
To keep clients ahead of the game, YBM are working on a number of strategies in order to provide assistance in this rapidly-evolving space. As a starting point, we have put together some blogs to assist our clients, and the broader public, understand what this all means.
In this first article we simply want to introduce some of the terms and their definitions to help piece together the reasons these rules are coming into play.
Our second blog aims to explain the basics of GHG reporting or Carbon Accounting, and which businesses will be impacted first. Click here to jump to this blog.
Our third article introduces the platform that we have chosen to assist clients who are ready to start measuring and reporting.
Corporate Sustainability and ESG
Corporate sustainability, according to the Green Business Bureau, can be defined as follows: ‘The property of being environmentally sustainable; the degree to which a process or enterprise is able to be maintained or continued while avoiding the long-term depletion of natural resources.’ (https://greenbusinessbureau.com/topics/sustainability-benefits-topics/esg-and-sustainability-your-101-guide-for-understanding-corporate-sustainability/)
The term aims to encompass all factors that create long-term value for stakeholders, including environmental, social and financial systems. Arguably, it is a newer, more academic phrase for Triple Bottom Line, or the three ‘P’s’ (people, planet, profit) that some of us were taught through the 1990’s!
ESG (Environmental, Social and Governance) has fundamentally evolved from Corporate Sustainability, aiming to set specific criteria around each system. It follows that data can be gathered within these systems and, in turn, that this data can be reported. Many investors, particularly those who have considered ‘ethical’ investment, would be familiar with ESG. They may also be aware of the concept of Greenwashing.
Greenwashing is the ‘act of providing the public or investors with misleading or outright false information about the environmental impact of a company’s products and operations.’ (https://www.investopedia.com/terms/g/greenwashing.asp) Ultimately, the aim of greenwashing is to capitalise on the increased appetite to invest in environmentally friendly businesses and products.
A global desire to reduce greenwashing, misleading statements and lack of substantiating data, has undoubtably played a role in the upcoming changes to environmental reporting for businesses. Until recently, however, there has been a lack of consistent methodology for GHG reporting. Upcoming rules address this, utilising agreed frameworks and standards to govern such reporting.
If you would like to understand more, please visit our blog page, or contact our office and speak to one of our team about Carbon Accounting.