Report Report: Carbon bubble, resilient ag, water-smart future, SDG finance
The Report Report is a monthly wrap-up of recent research on sustainable business and clean technology produced by Corporate Eco Forum, a by-invitation membership organization comprised of large, global companies that demonstrate a serious commitment at the senior executive level to sustainability as a business strategy issue.
2019 Gen Z Purpose Study (Porter Novelli and Cone Communications) finds that 90 percent of Gen Z believe companies must take action on social and environmental issues, and 75 percent will do research to see if a company is being honest when it takes a stand on issues. The report also finds that "environment" is the top priority issue Gen Z wants companies to address, followed by poverty and hunger and human rights.
Balancing the Budget: Why Deflating the Carbon Bubble Requires Oil & Gas Companies to Shrink (Carbon Tracker) finds that the major oil and gas companies need to reduce their combined production 35 percent by 2040 to align with the climate mitigation targets set out by the Paris Agreement. The report finds that no major oil and gas companies are on track to be aligned with the Paris Agreement by 2040.
Banking on a Low-Carbon Future: Finance in a Time of Climate Crisis (Boston Common Asset Management) evaluates the performance of 59 of the world’s largest banks across three categories: climate strategy; risk management; and opportunities. Key findings include:
- 71 percent of banks disclosed governance and strategy aligned with the Task Force on Climate-related Financial Disclosures in 2019, compared to 95 percent in 2018.
- 81 percent of banks are disclosing information on progressive climate-related public policy engagement, up from 71 percent in 2018.
- 67 percent adopted a group-wide climate strategy in 2019, up from 58 percent in 2018.
- 78 percent are implementing risk assessments for scenarios in which global temperature increases are limited to 2 degrees Celsius by 2020, up from 49 percent in 2018.
- However, 40 percent of banks have not developed any exclusion or restriction policies for high-carbon sectors and financing for fossil fuels continues to increase each year, totaling $1.9 trillion from 2016-2018.
Business and the Fourth Wave of Environmentalism (Environmental Defense Fund) offers insight into how companies are leveraging new technologies to expand their sustainability efforts and drive business results. Key findings include:
- 94 percent of business leaders agree that investing in emerging technologies is essential to staying competitive — up 10 percent from last year.
- While the overwhelming majority of executives (92 percent) agree that emerging technologies can help improve both their bottom line and sustainability, just over half (59 percent) are investing for this purpose. This 33-point opportunity gap shows companies are leaving environmental and business opportunities on the table.
- 7 in 10 C-suite leaders and VPs are feeling pressure from customers and investors to make sustainability a strategic priority, and eight in 10 feel pressure from regulators.
- More than nine in 10 business leaders say consumers likely will hold them accountable for their environmental impact, up 12 points from 2018.
Dig In: A landscape of business actions to cultivate a sustainable and resilient food system (Quantis) covers the top sustainability priorities for the food and beverage sector to help companies develop tailored strategies and solutions that will have the most meaningful impact across their supply chains. The report includes case studies, interviews and insights from General Mills, MARS, Del Monte, Unilever, Danone, Tillamook and Nespresso.
Feeding Ourselves Thirsty: Tracking Food Company Progress Toward a Water-Smart Future (Ceres) evaluates the water risk management performance of 40 major companies in the food sector, across four industries, on a 0-100 point scale based on overall corporate governance and management of water risks in their direct operations, manufacturing supply chain and agricultural supply chain. The top-performing companies in each industry included:
- Agricultural Products: Olam (55 points)
- Beverage: The Coca-Cola Company (75 points)
- Meat: Smithfield Foods (38 points)
- Packaged Food: Unilever (87 points)
The Palm Book: Tracking Progress on Sustainable Palm Oil Commitments in Indonesia (CDP) examines how nearly 100 companies are managing deforestation risks from palm oil supply chains in Indonesia. Key findings included:
- 89 percent of the companies examined are already reporting forests-related risks.
- One-third of companies reported the potential financial impacts associated with substantive deforestation risks in 2019, representing $4.9 billion in losses if risks aren’t managed.
- Nearly 20 percent of companies examined are on track to meet their 2020 targets — including certification and traceability — to remove deforestation from their supply chains.
- While reputational risk (67 percent) continues to be the most frequently reported risk, companies sourcing palm oil from Indonesia are underestimating the physical (20 percent) and regulatory risks (19 percent) in their operations.
- More than 10 percent of companies still don’t consider deforestation in their risk assessments.
Reporting Matters 2019 (WBCSD) examines the corporate sustainability reporting and disclosure practices of WBCSD member companies. Key findings included:
- 88 percent of member companies in the benchmark have improved their overall scores since the baseline year 2015; 38 percent have improved their materiality score in this timespan.
- 95 percent of reports reviewed acknowledge the SDGs in some way; 86 percent prioritize specific SDGs and present some evidence of alignment and contribution.
- 39 percent of reports combine financial and non-financial information, up from 26 percent of the sample in 2015; 20 percent are self-declared integrated reports.
- 87 percent of reports reference the Global Reporting Initiative; of those, 77 percent claim to be in accordance at Core or Comprehensive level.
- 37 percent of the 123 companies in the sample with ESG data on Bloomberg Terminals link sustainability performance and executive remuneration.
- 23 percent of reports provide a digital-first experience; 64 percent of members with an offline-first approach produce complementary online content.
Scaling SDG Finance for the Sustainable Development Goals (U.N. Global Compact) offers guidance to companies seeking options for scaling their positive impact on the SDGs through sustainable financing. The report highlights three areas of opportunity: foreign direct investment; financial intermediation; and public-private partnerships.
Sustainable Signals: Individual Investor Interest Driven by Impact, Conviction and Choice (Morgan Stanley) examines the attitudes, perceptions and behaviors of individual investors towards sustainable investing. Key findings included:
- 85 percent of individual investors are interested in sustainable investing.
- 84 percent of individual investors want the ability to tailor their investments to their impact goals.
- 86 percent believe that corporate ESG practices can potentially lead to higher profitability and may be better long-term investments.
- 88 percent believe that it is possible to balance financial gains with a focus on social and environmental impact.
- 65 percent cited a lack of available financial products as a barrier to including sustainable investing in their portfolios.
Women in the Workplace 2019 (McKinsey & Co.) provides insight into the state of women in corporate America using data from more than 300 companies and individual survey responses from more than 68,500 employees. Key findings included:
- The representation of women in the C-suite has increased to 21 percent in 2019, compared to 17 percent in 2015.
- 44 percent of companies have three or more women in their C-suite, up from 29 percent in 2015.
- For every 100 men promoted and hired to a manager position, only 72 women are promoted and hired.
- 87 percent of companies are "highly committed" to gender diversity, compared to 56 percent in 2012.
- More than 50 percent of companies hold senior leaders accountable for progress on gender diversity metrics, up from a little over 33 percent in 2015.
World Energy Outlook 2019 (International Energy Agency) finds that global energy demand, under the current policies scenario, will rise by 1.3 percent annually through 2040. The report also predicts that low-carbon sources will provide more than half of total global electricity generation by 2040, with solar and wind leading the way.