Sustainability regulations are getting more and more rigorous, and perhaps now more than ever your team has been tasked with the near to impossible, creating a plan and sticking to it. The benefits are arguably very important and obvious to you as a sustainability leader - after all, the planet, education, equity etc. are all more than enough. However, from our conversations the issues with Science Based Targets, Scope 3, and sustainability in general seem to be about business profitability and cost efficiency. After all, the economic climate is what it is, and investments and initiatives are presented to CFOs. In this week’s edition of The Sustainable Breakfast, we’ll look into tangible & data backed business cases for science-based sustainability, and how it’ll help your business in 2023!
Probably the #1 thing any CFO cares about is investments, so next time you're in that board room feel free to present these! Everyone wants to be competitive, which is especially true in today’s economic climate. Arabesque and University of Oxford claim that companies with strong sustainability agendas & transparent practices outperform their competitors in terms of financial performance. We’re talking about roughly 18% higher return of investment in comparison to those that choose to ignore it. Investors are notoriously concerned about the upcoming environmental legislation. Failing to adress climate risks can result in legal liabilities, fines, and reputational damage.
There’s increased emphasis on regulating sustainability reporting and climate risks. The EU’s put in place a transparency framework, the Sustainable Finance Disclosure Regulation. It helps those investors who seek to put their money into companies and projects supporting sustainability objectives to make informed choices. The SFDR is also designed to allow investors to properly assess how sustainability risks are integrated in the investment decision process. The US put together SEC Framework for Climate-Related Disclosures.
We're thinking the same - so many regulations. But the thing is from as soon as January 1st, 2024 things like Scope 3 reporting will become mandatory. Other than avoiding fines there’s a surprising benefit found by MIT Sloan School of Management - which is that companies that proactively manage sustainability issues and comply with regulations experience a reduction of 38% in waste-related costs. But also - compliance with environmental and social regulations helps you build trust with employees, customers, investors and communities. Everyone wins.
Brand reputation & fighting greenwashing
Greenwashing & being known as “not sustainable” is one of the biggest challenges to larger organizations. Because of social media, consumers are becoming more aware of environmental effects. Ethical consumption is the hot topic of 2023. According to Nielsen Global Corporate Sustainability Report, 66% of consumers are willing to pay more for sustainable brands. Transparency & third-party verification also brings in significant impact: 94% of consumers would be more loyal to a brand that commits to full transparency & third party verification. To achieve this, many Fortune 500s are committing to 3rd party verified data.
What can you do?
Next time you're sitting in a board room or talking to a CFO, think of the resources you already have. That's your people. Engaging your people in taking everyday incremental climate actions is the way to beat your competitors, but it also provides quite an easy data entry for your CFO. Over 74% of people feel overall more fulfilled in their jobs if their company's doing something good for the environment. So on top of all the entries we talked about you'll get an extra bonus, and that is employee engagement.
Take Sustainability Upstairs
There are a number of ways to take action relatively soon:
- Food & Drinks
- Car Pooling
- Public Transport & Commutin
These are everyday actions we all can change now, but the beauty of these things is that they count towards scope 3 emissions reductions as well as sustainable thinking. Our climate scientist, Veronique Bugnion also pointed out it is important to try and make these "company wide initiatives giving ALL, including bosses, the opportunity to take part. That way you have transparency and the opportunity to drive action, education, and awareness. This ensures everyone knows their part and understands how this fits into the bigger picture."
How to get employee engagement?
So the 40 million ton question is how do we get employees engaged? Many sustainability, communications, and HR leaders will tell you how difficult this task is. New initiatives are often met with enthusiastic peaks and bursts, followed by demotivating and underwhelming troughs and even flatlines. However there is hope. Afterall employees are people, and people are creatures of comforts and idiosyncrasies. At CO2HERO we turn to behavioral science and here is what the climate scientist had to say:
"Employee engagement is more of a mental game. Were thinking about policy but how do we make it about the employee, how do we make it fun and exciting, how does it fit towards the broader corporate discussions and how can it be relatable. For example commuting emissions have a huge bearing on sustainability". To take this away engagement comes from a mixture of:
- Education - Helping employees to the policy, what is it, why it is there, and what is means to them.
- Structure - How does it fit into the corporate structure and long term survival of the company.
- Measurement - Emissions baselines and reductions in tasks like commuting, then making data available to all.
- Fun - Gamify the experience and make challenges based around them, this drives action.
- Behavioral Science - Invest in understanding your employees, their likes, habits, and driving factors.