Climate transition pledges are flourishing, metrics and goals too
With the green transition movement ongoing, the number of green/ESG pledges is skyrocketing, sparking a bit of confusion on which metrics or goals signatory companies and organisations have committed to overall. A telescoping effect is at play this week as three green transition-related announcements suceeded one another within two days. The European commission shot first on Monday with the launch of its Green Consumption Pledge, itself part of the European Climate Pact, a building greener Europe initiative.
The pledge relies on five requirements which will prepare EU companies to comply with upcoming standards set by the non-financial reporting directive that will come out in 2022 for large EU companies. The committed firms have to take concrete measures for at least three of its requirements while publishing public data as a proof of their progress. Hence, the companies need to calculate their carbon footprint, including their supply chain, that of selected flagship products. For this, they must use the calculation methodology or environmental management scheme developed by the European commission. Increasing the sale of sustainable products or services in the company’s total sales and committing part of their corporate public relations expenditure to the promotion of sustainable practices are two other pillars of the pledge. The last one is ensuring information provided to consumers in relation to the company and product carbon footprints is “easy to access, accurate and clear.”
French groups L’Oréal and Decathlon, Belgian company Colruyt, Danish firm Lego as well as Dutch brand Renewd are the first companies to have joined the pledge, which focuses on non-food products. The EC said the pledge is complementary to its Code of Conduct unveiled on Tuesday aimed to “bring together stakeholders from the food system to make commitments for responsible business and marketing practices.” The EC has set end March 2021 as deadlines for companies from the non-food sectors as well as companies in the retail sector selling both food and non-food products willing to join its new pledge. This initial pilot phase of the Green Consumption Pledge is expected to be completed by January 2022. A review will be conducted before next steps are taken.
New principles for local adaptation to climate transition
Monday has also seen the launch of the Principles for Locally Led Adaptation set by the World Resources Institute and signed by 40+ governments, global institutions, local and international NGOs, on the occasion of the Climate Adaptation Summit. This new set of principles seeks to ensure climate adaptation is led by local people. Signatories commit to eight principles. These include among others devolving decision making to the lowest appropriate level; addressing structural inequalities faced by various population groups; providing real flexible and long term funding. Investing in local capabilities to leave an institutional legacy as well as building a robust understanding of climate change impacts, risk and uncertainty are also part of the requirements.
Commenting on this new initiative, Andrew Norton, director of the International Institute for Environment and Development, said: “Climate adaptation is central to being able to prepare, adapt and transform societies, economies and ecosystems — ensuring it is locally led is key to its being effective. For too long vital climate finance and support have been directed by distant, uninvolved institutions led by their priorities rather than being determined by the people on the frontline who know most what is needed. These Principles are an opportunity to change that, particularly in this super year of climate and biodiversity action, and put the most affected and informed voices front and centre of climate action.”
Another set of metrics
Another initiative came on top from the World Economic Forum, where ‘better world’ type announcements have become sort of an annual tradition. A coalition of 61 firms - including Allianz, BBVA, Credit Suisse, HSBC Holdings, Fidelity International, UBS and Santander for the financial sector - have committed to the Stakeholder Capitalism Metrics. This set of 21 environmental, social and governance (ESG) metrics and disclosures were released by the World Economic Forum last September and tailored in collaboration with Bank of America, Deloitte, EY, KPMG and PwC. These aim at measuring long-term enterprise value creation for all stakeholders. In committing to those metrics, the signatories are invited to promote “further convergence of existing ESG standards, frameworks and principles to support progress towards a globally accepted solution for non-financial reporting on common ESG metrics.” Klaus Schwab, founder and executive chairman of the World Economic Forum, said, “Stakeholder capitalism becomes now really mainstream.” Joining climate transition pledges too.