Key Sustainability Concepts

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Important Information

  • Carbon Footprint
    .The measurement of Carbon footprint of the organisation is a critical starting point in all sustainable strategies.   The importance of Corporate Carbon Footprint (CCF) measurement:
    • Provides critical data for meaningful strategy
    • Scope 1, Scope 2 and Scope 3 emissions are outlined clearly in granular detail
    • Provides informed carbon reduction initiatives 
    • Allows for progress to be continuously monitored and subsequent comparisons to be made
    • Delivers a total organizational or product-based carbon footprint measurement
    • Provides customers with clear evidence of a sustainability strategy
    • Encourages suppliers to provide carbon measurement on their services and prompts action on their behalf
    • Motivates existing employees – the majority of people want to work in sustainable workplaces
    • Attracts new employees – A clear sustainable agenda is a critical attraction for employment 
    • Provides the basis for the understanding of future potential carbon tax 
    • Becomes the template for regular checking of reduction programmes 
    • Is likely to be increasingly required by public tenders in the very near future
    • EU and National Government reporting of Carbon Footprint will be mandatory for small businesses from 2025
    • Adds to the increased importance of the accountancy function in gathering the data
    • Allows for concrete discussion around Carbon Neutrality or Carbon Zero goals
    • Provides clear evidence that a company is not engaged in ‘Green Washing’ 
  • Awareness of Greenwashing
    Greenwashing is the attempt to convince other people (customers, suppliers and employees) that you are doing more for environmental protection than you are actually doing in practice. The following points assist in ensuring that companies do not engage in greenwashing. 
    • Measure Corporate carbon footprint accurately – avoid use of generic tools
    • Adhere to recognized standards if engaging in offset programmes
    • Make carbon reduction an ongoing and central part of the business 
    • Set realistic targets (from the very outside) that are obtainable 
    • Adopt a ‘less is more’ approach to communication 
    • Be mindful that sustainability is not a marketing strategy but ‘a business practice’
    • Build a system of constant monitoring and checking for Carbon footprint
    • View any offset programmes as only temporary measures whilst reducing 
    • If producing a ‘product’ carbon footprint ensure also at the same time that it is complemented by an organisational wide measurement 
    • Identify ‘Greenwashing’ in your supply chain and seek to address it
    • Acknowledge that employees and customers are not naive in this regard and the reputational damage can be significant
    • Reduce the ‘words’ of sustainability and increase the sustainable ‘actions’
  • Sustainability and Strategy
    It is important to embed sustainability into the strategic fabric of all decision making within an organisation.  Some key points to assist in this process are outlined below.
    • Develop a data driven strategic approach to sustainability
    • Ensure that Carbon footprint accounting sits beside financial accounting
    • Align with the new EU Corporate Sustainability Directive 
    • Integrate sustainability measures board level reporting systems
    • Adopt a strategy that seeks to address Scope 3 emissions in the very short term 
    • Understate and be conservative in marketing communication
    • Build in key performance indicators related to sustainability that can be monitored and rewarded
    • limit strategic investments to carbon aware projects  
    • Develop a short term (3 year) a longer term (>10 years) vision of the key strategic objectives based on ‘today's’ Carbon Footprint assessment 
    • Consult widely within the organization on both visions – 
    • Make sustainability a formal business function that has resources and accountability 
    • Whilst at the same time making it the responsibility of each member of the organisation
    • Strategical align with EU and national sustainable directives and policies
  • EU & National Directives
    EU & National Directives

    Organisations are required to be aware of a number of important directives on sustainability that are expected to be implemented at both the EU and national level over the next short time frame.   Some key points of understanding this process are outlined below.
    • The Corporate Sustainability Reporting Directive is soon to be released
    • It will replace the current Non-Financial Reporting Directive (NFRD)
    • Scope has been extended to many more companies – an additional 40,000
    • Mandatory reporting under the CSRD will start from 2024
    • CSRD is intended to support the European Green Deal
    • Firstly, it will apply to ‘large undertakings’ defined as meeting two criteria of Turnover Euro 40 million or Balance sheet total Euro 20 million or 250 employees on average
    • Exemption for subsidiary companies if contained within the Parent reporting structure
    • non-listed SME’s all outside of the scope but can apply on a voluntary basis
    • Principle of ‘double materiality’ - information on People and the environment
    • Reporting needs to be ‘comparable, reliable and easy for users to find and make use of with digital technologies’
    • European Financial Reporting Advisory Group (EFRAG) will develop the sustainability reporting standards

The credibility of sustainable business practices and reporting to investors can only be achieved by integrating sustainability and financial information

Kevin Dancey, IFAC Read the full article