Sustainability in 2023—Convergence and Harmonization
Sustainability is a moving target, and much changed in 2022. But as trend, what are seeing is convergence and harmonization in policies, planning, training, communication and tools.
HERE’S WHAT WE ARE FOCUSING ON FOR 2023:
INTELLIGENCE—Keeping ahead of the latest policy developments
We have been tracking the development of Sustainability Standards from the rise of the Sustainability Accounting Standards Board (SASB) through to its consolidation with other standards to become the International Sustainability Standards Board (ISSB) under the International Financial Reporting Standards Foundation (IFRS). This development gives sustainability standards a global reach, with ISSB working to define a global baseline of sustainability disclosures. Doing so will create much greater clarity for how company should measure and report their ESG performance.
In Japan, the GX League initiative launched by the Ministry of Economy, Trade and Industry (METI) is meant to give Japanese companies a vision of how they can participate in “economic and social reforms to achieve 2050 carbon neutrality”. Yet, with the suspension of plans to implement a new carbon tax in 2023, which is now put off till 2028 and beyond, much of the large-scale regulatory pressure on Japanese companies will come from international movements, such as the ISSB and regional policies such as the EU Taxonomy for Sustainable Activities, rather than domestic ones.
RtA Support: RTA offers Sustainability Gap Analysis, Industry Best Practice Benchmarking and Strategic Business Intelligence to help you understand how these standards and policies will impact your business, how well you are performing now under sustainability standards, and what you can do to improve. This month RtA are launching a tactical service as well, ESG Assessment and Reporting (ESG A&R), to collaborate with listed companies to meet new Japan Financial Services Agency disclosure requirements for 2023.
RTA Updates: In 2022 RTA provided clients—ranging from top global banks to sustainability-aligned start-ups—with Industry Benchmarking and Sustainable Gap Analysis (SGA) of their organizations. Benchmarking and the SGA give these businesses key insights on how they are performing compared to their peers and what they need to do to improve.
PLANNING—What your budget reveals about your priorities
“Show me your budget, and I’ll tell you what you value” is the old political commonsense. Soon this will become a truism for business as well. The Impact-Weighted Accounts Initiative (IWAI) from Harvard Business School is continuing to develop and promote powerful tools to evaluate the financial impact of businesses’ good and bad behavior. In Japan, the Value Research Center at Doshisha University has created a comprehensive model of all sustainability frameworks that covers every aspect of a companies activities and their impact on seven different stakeholder groups across 81 sustainability dimensions.
As these tools and models are adopted by leading companies to make business decisions, the nature of business planning will shift from a focus purely on revenues and internal corporate health, to one that includes internal and external outcomes that take into account social and environmental as well as financial ones. Where you spend your money will shortly become a proxy for how aligned you are with the greater goals and desires of society at large—to get a preview of where your company is now, check the IWAI’s new database of Total Corporate Environmental Impact.
RtA Support: RTA enables you to make concrete and detailed planning to achieve your organizations sustainability ambitions, such as Net Zero emissions or improved stakeholder relationships. We can collaborate with you on Roadmap Design, Sustainability KPI Development, Materiality Analysis with a Priority Matrix and Stakeholder Surveys and Decarbonization Strategy Development.
RTA Updates: RtA’s Donald Eubank has contributed a chapter for the upcoming anthology “Handbook of Climate Change Leadership in Organisations” from Routledge that covers how businesses that are considering Double Materiality and Impact in their strategy and planning are more resilient, better positioned for long-term success, and are reaping financial rewards today. The chapter, “Sustainable Goal Setting for Climate Action”, includes case studies on DSM, AXA, BMW, L’Oreal and more.
PEOPLE—Tackling the sustainability skills gap
Businesses around the world are doubling down on sustainability pledges, with Net Zero targets now in place at one third of the world’s largest companies. This has driven a tenfold increase in sustainability-related jobs over the last decade. However, the reality is that the global workforce still lacks the necessary skills and experience to drive meaningful sustainability action.
A recent report from Microsoft and BCG highlights this significant skills gap, which is an increasing topic of concern for senior leaders. In response, universities around the globe are actively scaling up their sustainability related courses, particularly in business school programs. Yet, there is always a lag between graduates entering the workforce and their readiness to take on ambitious organizations change programs.
RtA Support: In 2022 RtA launched a partnership with Global Techno to deliver Japanese-language sustainability training. Sessions of our highly successful “SDGs･サステナビリティ研修1日コース～グローバル先進企業の事例と演習” ("One-day SDGs and Sustainability Training Course with Case Studies and Exercises from Leading Global Companies) program are held every two to three months. This summer will see the launch of a second course, “脱炭素戦略の紹介” (“Introduction to Decarbonization Strategies”). Stay tuned!
RTA Updates: RtA is continually enhancing our own understanding of sustainability and ESG so that we can deliver the latest best practices to our clients. This year Trista Bridges will be starting a Doctor in Business Administration (DBA) joint degree program offered by emlyon business school (Lyon, France) and University of Durham (UK) to research how businesses practically transition to sustainable business models.
COMMUNICATION—Walking AND talking the walk
Most attention during Paris Rulebook negotiations are on Greenhouse Gas policies, but at COP27 this year the UN High-Level Expert Group led by Catherine McKenna released a report on greenwashing and week net-zero pledges [PDF]. The report emphasizes that any pledges must be aligned with a 1.5 Celsius degree target and cannot claim to be “Net Zero” if the parties are still investing in new fossil fuel supply or environmentally destructive activities.
To combat such failures in Net Zero commitments, the expert group outlines Five Principals, including aligning commitments with actions, practicing radical transparency, and establishing credibility through science-based plans and third‑party accountability, and Ten Recommendations that go beyond basic actions to include aligning your lobbying and advocacy, investing in just transitions, and accelerating the road to regulation. Companies need to understand not only how to align their activities with this guidance, but how to communicate transparently and in a more two-way manner with clients, consumers and other stakeholders more broadly, to avoid greenwash when touting sustainability plans and achievements.
RtA Updates and Support: RtA has partnered with leading communications experts to roll out new services that help you to identify your authentic assets and blocking points with the highest Materiality to build on or address. We are able to customize a strategic road map to drive your communication transformation from “Where you are” to “Where you want to go”.
TOOLS—Systemizing sustainability with digital platforms
As regulations increase and businesses look to follow through on the many ESG commitments they’ve made, ESG data, management, and measurement is becoming more important than ever. In fact, the second most important Sustainability-related role in a company may be the CIO.
Today company CEOs are looking for ways to gather, synthesize and analyze the myriad of internal and external ESG and sustainability data needed to transform their organizations toward more sustainable operating models. Central to CIOs’ efforts will be solutions that move management of ESG data from paper or Excel to a squarely tech and, increasingly, AI-driven approach. This is a topic that has leapt up the agenda of our clients, which we are supporting through our ESG and Decarbonization technology advisory.
RtA Support: RtA can work with you in sourcing and scoping leading tech solutions, helping clients to identify potential solutions to use, partner with or, even, acquire if they’re looking to expand into tech-enabled ESG SaaS.
RTA Updates: RtA is advising various tech startups that are developing solutions for this space, such as Futureproof, which provides SMEs with a digital platform that helps them become B Corps, report their carbon emissions, set net zero pathways, track suppliers, and design "people" policies. Stay tuned for more announcements from us on that aspect in the coming months
IN SUMMARY—Convergence and Harmonization
Sustainability in the business world is still a rapidly evolving practice. But in the trends we see there is a movement toward convergence and harmonization that will create powerful pressure on companies to more ambitiously adopt sustainable business models. Read the Air can support you along every step of the way, by providing informed, up-to-date advisory on the most complex and quickly developing sustainability, ESG and business issues. From carbon pricing to ESG disclosure, digital sustainability solutions to team awareness and knowledge building, we can help you understand what recent developments mean for your organization.
Thank you again for your partnership and patronage this year. We look forward to continuing to collaborate in 2023 on Intelligence, Planning, People, Communications and Tools.
Trista and Donald