Tag Archives: sustainability

Understanding Scopes 1, 2 and 3 Emissions Together

Understanding Scopes 1,2, and 3 Together

A Guide to Greenhouse Gas Emissions

Understanding the impact of greenhouse gas (GHG) emissions is crucial for businesses aiming to enhance their sustainability practices. Scopes 1, 2, and 3 emissions are categories defined by the Greenhouse Gas Protocol that differentiate the sources of these emissions in an organization’s supply chain. This blog post will explore each scope in detail, their significance, and strategies for managing them effectively.

Scope 1: Direct Emissions from Owned or Controlled Sources

Scope 1 emissions are direct emissions from sources that are owned or controlled by the company. This includes emissions from combustion in owned or controlled boilers, furnaces, vehicles, etc. For example, if a company owns a fleet of delivery trucks that burn diesel, the emissions from these trucks are considered Scope 1.

Managing Scope 1 emissions is often seen as the most direct method for a company to reduce its carbon footprint. Strategies to reduce these emissions include transitioning to renewable energy sources, upgrading to more efficient machinery, and adopting cleaner vehicle technologies. Companies like Google and Apple have made significant strides in this area by investing in electric vehicle fleets and onsite renewable energy generation.

For a more detailed review of scope 1 emissions, please refer to dedicated scope 1 blog post!

Scope 2: Indirect Emissions from the Generation of Purchased Electricity, Steam, Heating, and Cooling

Scope 2 covers indirect emissions from the generation of purchased electricity, steam, heating, and cooling consumed by the reporting company. These emissions physically occur at the facility where electricity is generated but are passed on to the company that purchases and uses the electricity.

The most effective strategy for reducing Scope 2 emissions is by purchasing renewable energy. Many companies achieve this through renewable energy certificates (RECs) or direct investment in renewable projects. This not only helps reduce emissions but can also result in lower energy costs over time. Companies like Microsoft have committed to being carbon negative by 2030, heavily focusing on reducing Scope 2 emissions through these methods.

For a more detailed review of scope 2 emissions, please refer to our dedicated scope 2 blog post!

Scope 3: All Other Indirect Emissions

Scope 3 emissions are the result of activities from assets not owned or directly controlled by the reporting company but that the company indirectly impacts in its value chain. These include emissions associated with the production of purchased goods and services, business travel, employee commuting, waste disposal, etc.

Scope 3 emissions can be the most challenging to measure and reduce due to their indirect nature and the multitude of sources. However, they often represent the largest share of a company’s carbon footprint. Strategies to reduce Scope 3 emissions include engaging with suppliers to reduce upstream emissions, redesigning products to use less carbon-intensive materials, and encouraging more sustainable consumer behavior.

For a more detailed review of scope 3 emissions, please refer to our dedicated scope 3 blog post!

Why Understanding All Three Scopes Is Crucial

It seems as though companies are under a microscope nowadays. So, a ddressing all three scopes of GHG emissions is vital for companies not only to truly understand their environmental impact but also to meet regulatory requirements and build a sustainable business model. Investors and customers increasingly demand transparency in how companies are addressing climate change. Reports on Scopes 1, 2, and 3 emissions can help businesses gain a competitive edge, improve sustainability rankings, and attract eco-conscious consumers.  

Challenges in Measuring and Reporting Scopes 1, 2, and 3

Despite the clear benefits of measuring and managing these emissions, companies face several challenges. These include difficulties in collecting accurate data, especially for Scope 3 emissions, lack of standardization in reporting, and ensuring that all data is up-to-date and relevant.

Advances in technology and increasing standardization of reporting practices are making it easier for companies to overcome these challenges. Tools like carbon accounting software are becoming more sophisticated, allowing companies to track their emissions more accurately and efficiently.

The Future of Corporate Sustainability

As we move forward, the integration of Scope 1, 2, and 3 emissions into corporate sustainability strategies will become the norm rather than the exception. The global push towards net-zero targets and the increasing importance of ESG (Environmental, Social, and Governance) criteria in investment decisions underscore the necessity of comprehensive GHG emissions management.

All in all, understanding and managing Scopes 1, 2, and 3 emissions is not only crucial for environmental improvement but also for corporate survival in the 21st century. By embracing these challenges, companies can lead the way in sustainability, enhance their market position, and contribute to a healthier planet for future generations.

Unveiling the Power of ESG Stakeholders

Who are the stakeholders influencing ESG investing?

Overview

  • ESG stakeholders, including investors, nonprofits, governments, customers, and employees, collectively drive and shape ESG metrics, promoting sustainability and responsible business practices.

  • Investors play a significant role by utilizing ESG criteria and ratings to identify companies that prioritize environmental and social responsibility, while nonprofits and NGOs advocate for ESG regulations and reporting frameworks.

  • Government regulations worldwide, such as those implemented by the EU, encourage companies to embrace sustainability and accurately report their ESG performance. Additionally, customer demand for ethical brands and employee expectations for purpose-driven work further push companies to adopt ESG values.

The Influence of ESG Stakeholders in Driving ESG Metrics

As the importance of environmental, social, and governance (ESG) factors continues to gain traction in the business world, a wide range of stakeholders is playing a crucial role in shaping and driving ESG metrics. From investors and nonprofit organizations to governments and employees, these stakeholders are collectively pushing for a more sustainable and responsible approach to business. This blog post, I will explore the different groups of ESG stakeholders and how they are influencing the implementation and reporting of ESG programs.


Investors and ESG Ratings

There’s a growing question of “are ESG investors underperforming?” With a prevalence of ESG in private markets increasing, a significant rise in the number of private equity firms signing the Principles for Responsible Investment (PRI) and raising $2.5 trillion in capital has also increased. However, there is limited data on ESG fund performance, and analysis shows no significant performance differences between PRI signatories and non-signatories. Bloomberg Intelligence predicts that the market size of ESG investments will reach $50 trillion by 2025, nearly three times the level in 2014. And with this in mind, investors are playing a significant role in driving ESG metrics. After all, many do utilize ESG criteria and ratings to identify companies that prioritize environmental and social responsibility. Raters and score providers are also amplifying the impact of ESG leaders by spotlighting purpose-driven companies through their sustainability rankings and reports.


Nonprofits and NGOs as Catalysts

Nonprofit organizations and non-governmental organizations (NGOs) are at the forefront of advocating for ESG regulations, standards, and reporting frameworks. Organizations like the International Financial Reporting Standards (IFRS), Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB), and Global Reporting Initiative (GRI) are working towards establishing consistent and transparent ESG guidelines. Through their research, advocacy efforts, and collaborations, nonprofits and NGOs are shaping the ESG landscape and encouraging businesses to adopt sustainable practices.


Government Regulations

Governments worldwide are recognizing the need for ESG regulations to protect human rights and the environment. Countries such as Germany, the United States, the United Kingdom, Canada, and the European Union (EU) have introduced new ESG disclosure requirements and due diligence standards. The EU, in particular, has taken significant steps by implementing various regulations, including the General Data Protection Regulation (GDPR), Directive on Corporate Sustainability Due Diligence, EU Taxonomy, Corporate Sustainability Reporting Directive (CSRD) and European Single Electronic Format (ESEF) reporting, and Sustainable Finance Disclosure Regulation (SFDR). These regulations create a legal framework that drives companies to embrace sustainability and report their ESG performance accurately.


Customer Demand for Ethical Brands

Consumers are increasingly drawn to ethical brands, placing pressure on businesses to prioritize ESG practices. According to surveys, 74% of customers consider ethical corporate practices and values as a crucial factor when choosing a brand. Furthermore, a significant percentage (66%) of consumers plan to make more sustainable or ethical purchases in the coming months. To cater to this demand, companies are adopting sustainability initiatives, including carbon-labeling on products, to provide transparency and facilitate informed consumer choices.


Employee Expectations and Social Impact

Employees have become increasingly conscious of the impact their organizations have on society and the environment. They want to work for companies that align with their values and contribute positively to the world. A survey revealed that 93% of employees believe that companies must lead with purpose, while 65% feel that organizations should aim to leave their people “net better off” through work. Businesses that prioritize ESG values and make a positive impact on people and the planet are likely to see higher levels of employee satisfaction and attract top talent. Moreover, social impact has become an essential aspect of corporate philanthropy, with companies increasing community investments and providing opportunities for employees to engage in social initiatives.


ESG Stakeholders Pave the Way for a Sustainable Future

In short, ESG stakeholders, including investors, nonprofits, governments, customers, and employees, collectively drive and shape ESG metrics. The growing interest in ESG investing, the influence of ESG rating agencies, and the demand for ethical brands from customers all contribute to the momentum behind sustainable business practices. Additionally, nonprofits and NGOs drive the establishment of ESG regulations and reporting frameworks, while governments are implementing legal requirements to ensure corporate accountability. As employees prioritize purpose-driven work and communities expect businesses to give back, organizations are compelled to integrate ESG considerations into their operations. By recognizing and responding to the diverse interests of ESG stakeholders, businesses can thrive in a changing landscape and contribute positively to the world.

 

ESG companies are outperforming their peers in recent years – why?

Findings.co | supply chain | security | ESG

Higher ESG rating, higher return

Indeed the ultimate goal of any investment is to earn a maximum return. But as the focus has increased on sustainability, investors worldwide are resorting to smart investing strategies. In the current investment scenario—where environmental sustainability and corporate social responsibility are driving business decisions—investors place a great deal of emphasis on the environmental, social, and governance (ESG) rating of a company they wish to invest in.

Take a look how to easily automate, monitor and assess your ESG posture:

ESG criteria are becoming increasingly popular amongst investors to evaluate the ability of companies to be stewards of nature, managers of social relationships, and trailblazers of excellent leadership. Now, ESG companies that uphold the principles of smart investing while catering to the needs of socially conscious investors are seen outperforming their peers in a big way, especially after the COVID-19 pandemic.

In 2020, the year of extreme and dramatic changes trigged by the pandemic, the median total return on equity funds of ESG companies focused on sustainability exceeded that of their peer funds by 4.3 percentage points. Funds of such companies provided better returns almost every month of the year. Their focus on sustainability is essentially indicative of the quality of their board and management.

Low beta, high quality 

The companies with higher ESC ratings fell and rose less dramatically as the markets collapsed and recovered sharply in April 2020 than those with lower ESG ratings. The pattern suggests that stocks of such companies also have a low-beta-high-quality factor. Such funds are also less affected by volatility in the larger market.

There’s been a significant rise in the popularity of ESG investing. It is mainly triggered by fears of the global community over climate change. As such, socially conscious investors, especially millennials, now consider the impact of their funds as they have started investing. It’s crucial to note and understand that ESG risk is an investment risk; those firms that meet ESG standards are more unlikely likely to be sustainable enterprises.

Similar trends were observed when fixed income ESG stocks were analyzed from January to September 2020. The bonds of ESG companies with high ratings performed better on average than their lower-rated peers. The stocks of companies with an A-rated ESG score lost around 0.5 percent on average during the period compared to low-rated stocks, which lost 4.6 and 4.4 percent.

A peek into the future.

ESG and smart investing with a focus on sustainability are expected to grow. The attitude of retail investors towards sustainable investment has also been shifting. In the U.S., close to half of individual investors adopt sustainable investing. Also, 80 percent of asset-owner institutions are seen incorporating sustainability factors in their investment processes.

It’s also worth noting that the Institute for Sustainable Investing, in 2019, found that sustainable funds had larger market capitalizations on average and hold more stocks in companies that are considered growth stocks. Let’s not forget. Evolving regulations also lead companies to disclose their sustainability practices, providing investors with more data to understand ESG-related risks and growth opportunities. We can hope that the future of sustainability investing delivers on its promises and make a positive global impact in the times to come.

Get started with your ESG journey easily with Findings ESG.

ESG Investing is popular but confusing – here’s how it works

ESG-Investing-is-popular-but-confusing-here’s-how-it-works

ESG investing is becoming popular as awareness grows about the impact of corporate actions on the environment, society, and governance. This article will look at how ESG Investing works and some of the benefits and drawbacks of this growing movement. What should you consider when including this type of investment in your portfolio?

What are the essential characteristics of an ESG investment strategy?

Many factors make up an ESG investment strategy. For a company to be an ESG investment, there must be exposed to environmental and social aspects. Exposure to these factors can be defined by three characteristics: alignment, integration, and recognition. All three of these characteristics must be present to exhibit an entire ESG investment strategy. By adopting one or more of these strategies, they can better prepare themselves in times of need.  It is much easier to come back from challenging situations when you are ready. It takes careful planning, diligence, and perseverance to fully adopt an ESG investment strategy. However, if done correctly, these practices will strengthen your company and increase its value over time and preserve its reputation within its community.

How do I make sure my fund managers follow an ethical approach?

The first and most basic way to make sure your fund managers take ESG into account is to ask them. As with any other question, you should call them up and ask if they use sustainability metrics in their investment process. They’ll tell you, Of course, we do (which might or might not be true), and that will give you a sense of how serious they are about ESG investing. If you like what you hear and want to invest, you can trust that your money isn’t funding unethical companies. But if they seem mysterious, or worse—dismissive—then it could mean that there aren’t good incentives in place to keep fund managers accountable for their actions. That would indicate an unethical culture at your mutual fund management firm.

Why is this different from other kinds of socially responsible investing?

The social responsibility aspect of ESG investing isn’t just about environmental or social impact but may include these factors. It also aims to be financially responsible and considers an investment’s impact on other financial indicators such as price volatility, liquidity, earnings growth, operating efficiency, and capital preservation. These features are often not found in socially responsible investments as they tend to focus on issues surrounding environmental or social effects. As a result, many consider ESG to be more than just socially accountable investing — because it includes financial indicators and increased engagement with companies — while others think it is just another kind of SRI.

When did this become popular? And why should I care now?

After decades of playing second fiddle to shareholder-value investing, ESG has emerged as a star in its own right. Even though sustainability and corporate ethics are still relatively new concepts in business management, concerns about social issues have been around for thousands of years—and they show no signs of fading away. That’s why more and more investors are looking at companies through an ESG lens.

Some examples of funds in this space and their returns over time.

Newfield ESG Long/Short Fund (EQLIX), Calvert Social Investment Strategy Fund (CSLFX), Vanguard FTSE Social Index Fund ETF (VFTSX). After a rocky start, there are signs that environmentally conscious investing has been growing in popularity—more than 150 socially responsible mutual funds with $200 billion in assets under management. Still, concerns remain about what kinds of businesses these investment funds hold and their role in helping companies change their behavior to protect employees and the environment better. 

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ESG Investing – What Green Bonds are, and why do they matter?

ESG-Investing-–-What-Green-Bonds-are,-and-why-do-they-matter-

Sustainability has become an integral part of how we do business and live our lives, and the concept of ESG investing has taken hold with investors and financiers alike. What are green bonds, and why do they matter? Read on to find out!

3 key ways green bonds improve corporate sustainability

green bonds increase access to capital for sustainable projects; green bonds help decrease reliance on fossil fuels, and green bonds help finance critical social programs. We’ll examine each of these ways in detail below.

An introduction to green bonds

Undertaking a green business venture or a project is by no means cheap. The costs of starting up an alternative energy project could run into millions of dollars. And even if you secure funding for such projects through loans or grants, those payments will add to your operating costs over time. However, governments worldwide have been easing financing concerns through what’s known as green bonds — debt securities that raise funds to support environmental-friendly endeavors. More recently, private organizations have been taking up their initiatives in making it easier for entities engaged in green initiatives to raise funds from investors. These so-called green bonds have several advantages over conventional debt offerings. You need to know about them: 1) What are Green Bonds? 2) How Do They Work? 3) Where Can You Buy Them?

The history of green bonds

The idea of a bond linked to environmental, social, or governance criteria – known as ‘green bonds’ – originated in 2003 when HSBC issued its first ecological bond in response to investor demand. This was followed by BNP Paribas with its first Corporate Sustainability Bond in 2005. Today there is greater recognition of ESG issues from governments, investors, and issuers than ever before. Green bonds have increased over recent years. In 2010, only three green bonds were issued globally; today, it is not uncommon for international financial centers like London to see two or three different green issuance rounds each week.

How is a green bond different from any other bond?

A green bond is no different from any other bond in that it is debt security – a loan – given by an organization to raise money for any purpose. However, green bonds typically have specific criteria which make them eligible for being classified as green or environmentally friendly. They tend to be used exclusively for projects with positive environmental or social impacts, whether that means energy efficiency retrofits or renewable energy generation. These bonds are commonly referred to as ESG bonds (Environmental Social Governance). An investor who wants to include more green investments in their portfolio can purchase ESGs because these securities contain safeguards against non-environmentally friendly use of proceeds. In short, if your company has borrowed money through a green bond, you must use that money only on activities with positive effects on people and the planet. This way, investors can feel good about making such investments while knowing they’re getting solid returns.

Challenges in the market for Green Bonds

The market for green bonds remains relatively small, but both public and private sector actors recognize a need to increase access to capital for climate-friendly projects. In October 2017, Sustainable Finance Lab, in conjunction with The Rockefeller Foundation, released its second Climate Finance Survey. The survey results reveal that limited capital and coordination are among the most significant barriers to scaling up investments in clean energy. One of those critical challenges has been high transaction costs, or what is often referred to as the pipeline problem. Green bond issuance data from Bloomberg New Energy Finance (BNEF) shows that transaction costs for green bonds have been more than double those of comparable rated corporate bonds since 2008. This means that investors looking to invest in low-carbon infrastructure through green bonds were paying too much due to inefficient issuance processes. As a result, some financiers had said that there was limited interest amongst potential institutional investors when investing in them.

 

Eager to learn more about ESG? Start your ESG journey with Findings ESG today.

A retired asset owner reveals – These 3 things will attract investors like flies

A-retired-asset-owner-reveals-–-These-3-things-will-attract-investors-like-flies

3 things you should be doing to attract ESG investors

ESG (environmental, social, and governance) investors are becoming more popular as millennials enter the workforce. Around 60% of ESG-focused funds show growth in assets under management over the past year. But what can companies do to attract more ESG money? This article will look at three things to consider when working with ESG investors to attract sustainable investment dollars.

1) Allocation matters

An ESG-friendly portfolio is an integral part of a sustainable investment strategy, but it’s just as crucial for investors that manage other people’s money (OPM). These days, many clients expect their financial advisors to invest sustainably and request environmental, social, and governance (ESG) information when reviewing or choosing an advisor. Advisers need to demonstrate how they manage sustainability in their portfolios to earn new business from clients seeking out these investments. And for those who don’t offer such solutions today, it will likely become increasingly necessary to compete and keep up with shifting investor preferences over time. In either case, OPM advisers need to do two things: identify relevant ESG factors within their client’s portfolios and then make informed investment decisions in line with client expectations.

2) Education is important

When searching for potential investments, Environmental, Social, and Governance (ESG) investors perform a thorough due diligence process. While your business might not be eligible for an asset from a fund, these types of investors can still help by providing feedback and advice. Remember, there is no shame in being honest about how much work your business needs. The more willing you are to self-critique, the easier it will be for others to trust that you’re working towards those changes. It’s important to remain honest about yourself and realistic about your goals. Remember that potential investors want to see transparency and honesty.

3) Be transparent

A growing number of institutional investors are pressuring organizations they invest in to disclose more about their environmental, social, and governance (ESG) performance. They’re asking companies many questions – some that might even seem uncomfortable at first. The purpose of these questions is transparency and improving performance, though it can feel like an interrogation at times. Transparency doesn’t come easily, but there are three things organizations can do to make sure they’re ready for such conversations with ESG-minded investors. First, have all your numbers together. This means having clear information on everything from greenhouse gas emissions levels to community involvement efforts available when you sit down with ESG investors. It takes work to get those numbers put together, but it’s worth it. Second, build relationships. One of the most important parts of successfully navigating any conversation is knowing your partners inside and out. Take time to research each ESG investor beforehand to know what kinds of topics they want to be addressed and how they usually approach them. Also, take care not to assume things based on past experiences with other investors or one-off interactions. Every organization and every investor will be different. Third, keep records of your progress. Keeping track of your progress sends a clear message to ESG investors that you’re committed to being transparent in both action and communication with them going forward. Although it may sound tedious, documented progress shows that you’re serious about maintaining transparency in your ESG practices and giving your investors peace of mind.

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Social and ESG: What’s the deal?

Social and ESG: Understanding the Impact in Investing - Ilan Lavan

Social and ESG: What’s the deal?

Social and ESG are two acronyms often used in the investing world, especially when looking at impact investing (sometimes called Socially Responsible Investing). There’s no denying that both have made an enormous difference in the world we live in, but there’s also debate over what they mean to the average investor—or if they even matter at all. To help cut through some of the confusion, here’s a breakdown of what Social and ESG mean in this context and how they can make all the difference to your portfolio.

The United Nations have adopted social and environmental goals to achieve globally by 2030.

Part of their sustainable development goals (SDGs) is 17 goals adopted by 189 countries to achieve globally by 2030. They include ensuring quality education, affordable healthcare, economic growth, gender equality, and climate action. And each one is linked to one or more of what is called sustainable development pillars – like climate action or health – that together make up a foundation for sustainable development.

How will it affect you as an investor?

As investors, we are primarily concerned with two fundamental things regarding our portfolios— whether or not we make money (i.e., portfolio return) and whether or not we incur a loss (i.e., portfolio risk). The problem with relying on portfolio risk as your primary performance indicator is that it only tells you how much you will gain or lose on your investment. It says nothing about your actual returns. However, by also including social considerations in your investment research process, you can improve both of these numbers (portfolio return and portfolio risk) at once. This gives you a more complete picture of potential investments than relying solely on traditional metrics such as total return, alpha, beta, and Sharpe ratio. So what do we mean by social considerations?

Do you support the SDGs?

UN member states adopted the SDGs in 2015, which was quite a feat as they are an ambitious set of goals with targets spanning 2030. Goal 16 is dedicated to promoting peaceful and inclusive societies for sustainable development while also calling on national governments to promote social justice and reduce inequality within their borders. 

How does it help with your portfolio management/target audience?

Investors have noted recent research on sustainability—also known as social and environmental governance, or ESG, issues—and found it helpful. It can help investors in a few different ways.

First, incorporating ESGs into investment analysis allows asset owners to align their investments with their values better.

Second, socially responsible investors can use investments with a positive social impact to raise capital for social ventures. In fact, according to some experts, social entrepreneurship could be one of the most effective ways to reduce inequality and increase prosperity around the world.

Third, investing in sustainability-focused companies is often associated with superior performance for both companies and shareholders. For example, since its inception 21 years ago, Calvert Impact Investing Index Fund has outperformed S&P 500 by nearly 2% per year. 

This represents just one approach; other sustainable investing strategies also exist. The key, though, is to find something you’re comfortable with (that fits your time horizon, risk tolerance, and financial goals) and then stay focused on it.

Social ESG made easy.

At Findings, we urge our clients to track and report their ESG performance via our Findings ESG solution; Reporting your social efforts shouldn’t be different.

Remember that integrating an easy-to-use, cost-efficient solution can ease your way into ESG compliance while using industry best practices to elevate your current efforts.

[Discover how you can use Findings ESG for your needs] 

ESG Trends for 2022

ESG-Trends-for-2022

Investors are increasingly using Environmental, Social, and Governance (ESG) factors to analyze organizations they choose to invest in. 

Environmental factors essentially focus on how a corporation behaves as a guardian of the environment. 

Social factors focus on how the company deals with its suppliers, employees, consumers, and the communities in which the business functions. 

The leadership of a corporation, CEO remuneration, internal controls, shareholder rights, and audits are all covered under Governance.

Sustainable investing that upholds all the ESG criteria has been rapidly growing. Here are the top 3 ESG investing trends to look out for in 2022.

Watch: The benefits of ESG investing

 https://youtu.be/7hEGY-XYRIw

ICarbon net-zero rather than offsetting footprints

While several businesses have made significant progress in decreasing their carbon footprint and deploying offsetting carbon strategies to reach carbon neutrality, scientists and activists are concerned that these initiatives may not be enough to prevent a future climate crisis. 

Several additional measures must be taken to reverse or reduce carbon emissions to the lowest level attainable. 

Carbon net-zero companies would be expected to make substantial progress in genuine carbon footprint reduction or elimination within their operations and supply chains, with offsetting strategies being used only as of the last choice.

Accountability rather than transparency

Customers, community leaders, and policymakers have all demanded more disclosure about how businesses operate and what methods they plan to deploy in the future, so the concept of transparency has been prevalent in recent years. 

However, while transparency has been widely appreciated, it’s not enough anymore. Activists of all kinds are demanding that companies be held accountable for their actions and prove that they are indeed moving towards carbon net-zero rather than simply offsetting their carbon footprint. Therefore, transparency can only be seen as the first step for businesses to hold complete accountability and truly eliminate their carbon footprint across their operations and supply chain.

In addition, increasing stakeholders want businesses to publish accurate results rather than mere promises. Companies will continue facing increased expectations for accountability, and the volume and relevance of third-party auditors will continue to increase.

Assessments automation for accurate reporting

Businesses can use an automated evaluation tool to bring their ESG goals into reality. Automation provides tools for estimating greenhouse gas emissions, publishing disclosures, risk assessments, and climate risk analytics, in addition to managing a significant portion of their ESG workload.

By automating ESG assessment, companies can do better in the following areas:

·       Identify environmental, social, and Governance opportunities and hazards that affect your corporate structure, capital assets, and distribution network.

·       By promptly recognizing possible ESG concerns, you can cut transaction time and costs.

·       Stay on top of your ESG Program’s performance.

·       Identify possibilities for improving the ESG program well in advance and potentially reduce costs.

·       Streamline ESG reporting processes to attract investors.

The bottom line

Sustainable investing continues to be a growing trend in 2022. The most important trends for businesses to consider this year are eliminating their carbon footprint instead of only offsetting it and being accountable for their actions rather than transparent about their practices.

Automating ESG assessments can also be crucial in providing accurate data to stakeholders while also providing data to the businesses to improve their ESG performance.

4 ESG Best Practices for Energy Efficiency

4 ESG Best Practices for Energy Efficiency

An energy-efficient ESG strategy a can help you reduce your carbon footprint, improve your operations and ultimately boost your bottom line. Here are five best practices to get you started.

1) Strategy on Energy

Energy efficiency is an essential part of every business’s Environmental, Social, and Governance (ESG) strategy. Energy efficiency will also be one of your most significant competitive advantages. According to an NRDC report, Energy efficiency measures that could be implemented at USS industrial plants are estimated to reduce emissions of greenhouse gases by more than 170 million metric tons per year—roughly equivalent to taking over 60 million cars off thU.S.S. roads and highways each year. That said, there’s still room for improvement—and many companies aren’t tapping into their full potential when it comes to energy efficiency strategies. To maximize energy efficiency, you should take a holistic approach: consider low-cost and high-impact changes such as implementing variable speed drive on air compressors or modifying production schedules to shift work hours in lower-cost periods. 

2) Portfolio Impact

Having a diverse portfolio is one of the most critical factors in mitigating risk and driving returns. An investment strategy centered on energy efficiency fits into several strategic asset classes, including waste management and infrastructure. This strategy can help drive social value and financial returns, which makes it an ideal addition to any portfolio. Recent research has shown that energy efficiency has grown from 20% of total global power consumption in 1996 to 33% today. Additionally, 1/3rd of greenhouse gas emissions originate from inefficient equipment, buildings, and vehicles.
Nevertheless, companies continue to spend money on building new data centers and extensive facilities without an effective method for operating their systems efficiently or effectively reducing their carbon footprint through clean energy sources. To mitigate risk across your portfolio as well as position yourself ahead of competitors focused on best practices in energy efficiency, consider these 5 ESG bE.S.G. practices:

  • Provide transparency into energy performance;
  • Implement energy-efficiency programs;
  • Obtain certifications related to sustainability;
  • Conduct investment analyses that consider environmental impacts;
  • Engage with your customers.

3) Climate Change Mitigation

When it comes to climate change, we must act now. That’s why companies are increasingly putting climate change mitigation into their everyday operations—including energy efficiency. By taking small, preventative measures like using more efficient appliances and installing sensors and intelligent lighting systems, companies can ensure that they’re doing their part to reduce their carbon footprint. These investments will often pay off in less time than you might think! Just look at Toyota with its energy action plan: cutting CO2 emissions by half over 20 years.

4) Resource Conservation

It’s difficult to quantify how much energy is wasted every year, but conserving resources is a good idea regardless. While renewable energy is ideal, reducing consumption and using efficient equipment goes long. It has been shown that companies who embrace resource conservation as part of their environmental responsibility can save over 40% in waste reduction costs. At minimal cost, that’s an opportunity any business cannot afford to pass up.

Want to know more about how to embrace ESG best practices effortlessly? See what Findings can do for you.

 

Why is Net Zero carbon emissions important?

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Companies across the globe are working to reduce their carbon emissions, and many are doing so by net-zero carbon emissions commitments. What does this mean? Many companies are shifting away from coal-powered power plants toward renewable energy, which has less environmental impact than coal plants. While you might not realize it, even if you don’t work at one of these companies, your life relies on the success of net-zero carbon emissions initiatives through your electricity use alone. That’s why it’s so important to spread awareness about these efforts and how they can benefit everyone in the long run.

What are Net Zero carbon emissions?


Net-zero means cutting your greenhouse gas (GHG) emissions to zero—not offsetting them. The term carbon neutral often has a similar meaning, but that can mean different things to different people. For some, it simply means getting all their energy from renewable sources—and even then, not everyone considers it truly net-zero because you may have needed to burn fuel somewhere else for transportation or other reasons. Others consider carbon neutral only when you’ve taken specific actions like planting trees to compensate for your fossil fuel use—which isn’t true net-zero. Bottom line: If you aren’t reducing and eliminating your emissions, then you aren’t net-zero. There are many great tools and resources available for calculating and offsetting your net-zero goals. But first, start by cutting down on those carbon emissions!

How does it relate to SRI/ESG investing?

CDP first launched the Net-Zero Carbon Emissions (NZE) global commitment to We Mean Business Coalition (WMC), which brings together members of the business, investors, and cities to accelerate corporate action on climate change. The NZE commitment requires companies to reduce their net greenhouse gas emissions to zero, draw down their net emissions to near zero, or offset any remaining emissions through forest restoration, tree planting, or other carbon reduction projects. Additionally, businesses are asked to make public commitments to doing so by signing onto one of three different types of Net-Zero Commitments (ZC): 1) ZC1—Buildings; 2) ZC2—Scope 1 + Scope 2; 3) ZC3—Scope 1 + Scope 2 + Scope 3. Once these commitments are made, signatories report their progress annually through CDP’s Climate Action Registry. Companies must immediately make changes towards setting Net-Zero targets because climate change will reach catastrophic levels without immediate action. To date, 100% of MSCI ESG Index constituents have signed on as Net-Zero emitters, increasing from around 15% just two years ago. However, further progress needs to be made if we genuinely want to address climate change.


What kind of investor would benefit from this type of investment product?


Investors who take a long-term perspective and have a keen interest in sustainable investing will benefit from these types of investments. Not only does it reduce investors’ exposure to climate risk, but it also allows them to support companies with policies related to sustainability. In addition, investors can see returns from these types of investments in traditional ways, such as stock price appreciation and dividends. That way, if an investor changes their mind about net-zero carbon emissions investment products, they do not necessarily need to liquidate their entire portfolio. Instead, they can liquidate part of their portfolio while keeping other parts invested because there are still positive aspects of maintaining investment in these types of companies.

Because there is little difference between net-zero carbon emission strategies and traditional strategies when creating portfolios, any individual who may want to invest in one should ask themselves how much they care about sustainability. If they care very much, it will make sense to create or maintain some portfolio of at least partially net-zero carbon emission investment products. Furthermore, investors can participate in environmental and social impacts by choosing companies that align with their values (although many argue that doing so may provide more benefits than financial returns).


7 companies who have made net-zero carbon emissions commitments


Apple, Johnson & Johnson, Kohl’s Department Stores, Nike, Procter & Gamble Co., Target Corp., and Wal-Mart. These companies have all taken a step in a positive direction by making commitments to reduce their environmental impact by reducing their energy use and greenhouse gas emissions while still keeping up with business demands. These seven companies are just some of many more that have made net-zero carbon emissions commitments since California enacted its Global Warming Solutions Act in 2006. This act requires companies who do business in California to report how much they emit into Earth’s atmosphere on an annual basis… They must also set targets for how much they will reduce those numbers every year until 2050. And what about you—have you considered your company’s net-zero carbon emissions commitment? If so, you should know that it’s easier than it sounds – you can trust the findings ESG platform to help you embrace best practices in no time.

 

To learn more, visit our ESG resources page.

 

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