This article was originally published on the SINAI TECHNOLOGIES website
A global pandemic may have put sustainability on the back burner for many corporations over the past year. Still, as economies begin to bounce back and vaccination programs accelerate, many corporations continue to prioritize sustainable practices to meet consumer demand and lessen their impact on the environment.
This article explores corporate sustainability best practices in the new low-carbon era we find ourselves in. From internal carbon pricing, emissions baseline definitions, and accountability, enhanced principles and demands have emerged as the new bedrock of corporate sustainability. Together with more robust supply-chain engagement and intelligent auditing, corporations risk getting left behind if they choose to ignore the advancements in business practices when it comes to corporate sustainability.
Corporate sustainability in the new low-carbon era
A lot has changed when it comes to corporate sustainability in the last five years. So what is corporate sustainability in today’s world?
The new low-carbon era has led to new principles and demands, including:
Internal carbon pricing,
Emissions baseline definitions and scenario analysis,
Supply chain engagement, and
Let’s take a closer look at each emerging principle, what’s shifted and changed over the years for each, and what it means to achieve a positive impact for each, now and in the future.
- Internal carbon pricing
“Carbon pricing” is a market-based approach to lowering the emissions that cause global warming.
The approach consists of putting a price on carbon emissions – a real, monetary amount – so the cost of the impact on the climate and the options for low-carbon energy solutions reflect what we choose to produce and consume.
Putting a price tag on carbon is widely advocated as a powerful and efficient method of incorporating climate risks into the cost of corporations doing business.
In many places, emitting carbon is now much more expensive, thanks to carbon pricing. Producers and consumers are looking at technologies and products that can help them generate less. Many markets are operating as an effective way to cut emissions, which results in a clean energy economy shift and fosters innovation in low-carbon technologies.
Several large corporations have introduced an internal price for the carbon they emit that plays a crucial role in their business decisions – from Google to Apple and Unilever – which has contributed to the practice of a growing number of corporations developing their own internal carbon price that reflects the risks and opportunities emissions pose to their business.
Further, McKinsey and Company’s research reveals growing company interest using an internal carbon charge, with 23% of companies already using one and a further 22% planning to use an internal carbon charge in the next two years.
- Emissions baseline definitions and scenario analysis
Arguably one of the most essential corporate sustainability practices is setting and defining your business’s carbon baseline.
Why? Because it’s incredibly challenging to accurately measure your progress and positive impact without it.
Developing a detailed carbon baseline gives corporate management the ability to see carbon emissions across different areas of the business and make better-informed decisions, backed by data.
Defining your initial baseline can produce a large volume of data that can be easier to view, analyze and integrate if collected and tracked in a centralized place. Because baseline definitions only capture your greenhouse gas (GHG) emissions in a moment of time, corporations benefit from the use of technology for real-time data collection that evaluates the positive impact of the operational changes they implement. Defining your baseline carbon also supports peer benchmarking and assessing your market position. To learn more about establishing baselines for GHG management, read our recent blog that goes into more detail on the topic.
90% of S&P 500 Index® companies publish sustainability reports, according to research published last year by the Governance & Accountability Institute.
That’s up from 74% in 2014.
Real accountability is now the standard among most industries. An intensified focus on corporate sustainability is growing, which many are claiming is in response to exponentially increasing demand from investors.
A focus on accountability also impacts the management firms that corporations look to hire, as they strive for business partners that reflect their own accountability efforts when it comes to sustainable practices.
- Supply Chain Engagement
It’s no longer enough to have social and environmental promises made and met by only the corporation; you need robust engagement and practices reflected throughout your corporation’s whole supply chain.
Businesses are starting to use AI and machine learning technology to track and measure the impact of those in their supply chain. Software has emerged that makes these associated tasks easier to manage and mitigates the risk associated with some suppliers’ adverse environmental effects.
The barrier to meaningful corporate sustainability today is the need to improve operations of the economy’s complex supply chains.
Historically, corporations struggled to obtain insights into their complete carbon footprint and gain a clear picture of their suppliers’ operations to help them alter behaviors and systems without compromising the ability to meet their corporate sustainability goals.
- Intelligent Auditing
Lastly, elevated corporate sustainability takes advantage of intelligent and cutting-edge auditing.
A corporate sustainability audit supports the success of other vital practices undertaken by leading businesses today, ensuring accountability, monitoring progress against baselines, and analyzing supply chain operations with real-time data and insight.
But performing a regular, comprehensive, and data-driven audit, you’ll be better able to identify what’s working and what isn’t in terms of reducing your carbon emissions and more accurately calculating carbon pricing. It also keeps your company accountable and accurate with its data.