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Welcome to my April update of salient sustainability stories.

Climate change featured large in the news with protests in Paris and the Extinction Rebellion protests in London. While I don't agree with the methods, the sentiment is a good one. Climate change is real and the actions that have been put in place have not been enough to limit global warming to safe levels.  What better, then, to focus this month on the issue of climate change. I hope you find it useful.

Best wishes,

David

April 2019 Update on Climate Change

3 easy to digest bite-sized sustainability stories & thinking:

  1. Investors, KFC & climate change
  2. What are Science-Based Targets?
  3. Benefits of reporting Climate risks

Investors, KFC & climate change

This month the owner of KFC & Pizza Hut, Yum! Brands, announced that it would join the only other restaurant group to make a commitment to carbon emissions in accordance with the Science Based Targets Initiative. The other restaurant chain, interestingly, is MacDonalds. What is pertinent is how this came about.

Shareholders had proposed a resolution for Yum to increase the use of renewable energy and other climate change mitigations. Investors agreed to withdraw this and in repsonse, Yum made a public commitment to pursue a science-based target to reduce greenhouse gas emissions from its operations, franchises and supply chain (Scope 1, 2, and 3 emissions), and to explore purchasing renewable energy. The head of sustainability, Jon Hixson, was quoted saying "As Yum grows as a business, we aim to do so in a way that respects the planet. We remain committed to energy and climate initiatives to minimize the environmental impact of our restaurants and supply chain."

So what are the learnings? It is that investors are increasingly putting pressure on companies to take action on climate change. And my advice to clients is always to be proactive here and have a climate change plan in your business rather than having to be reactive.

What are Science-Based Targets?

This is a big subject and you can find lots of detail here. However, in summary, the science based targets initiative (SBTi) is a framework and process to help companies set carbon emissions reduction targets that will, in turn, limit global warming to 2 degrees based on climate science (hence the science bit!).  A company will set the target first and then work out an action plan to meet the target. So the target is based on what is required to limit global warming rather than what the target the company chooses.  Therefore it is quite different from the way a company usually would set a financial target, for example. The target, or goals, are then are submitted to the Science Based Targets organisation to get them validated (approved). For example, I recently read that the chemical company DSM have has theirs approved, representing the first in their sector in Europe to do so. 

An important aspect of the methodology is that, for many companies, the process forces them to initiate actions and reductions upstream of the company (e.g. their supply chain) and also downstream of them (to the customer and the product use phase). So it is is not just about the manufacturing sites reducing the impact, it is about their suppliers and their customers.

There has been an important announcement in the past few months from the SBTi. Following, an IPPC special report, the temperature rise limit of 2 degrees celsius has been reduced to 1.5 degrees and so, as of October 2019, a new targets will need to need to be consistent with the more demanding 1.5 degree rise. If you want to know more please contact me.

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Benefits of reporting Climate risks

I read an interesting article recently that stated that two-thirds (67%) of UK corporates will be disclosing climate-related risks and opportunities in their 2019 annual reporting. This came out of a survey commissioned by the Carbon Trust https://www.carbontrust.com and conducted by Ipsos MORI. This is interesting timing because recently the World Economic Forum highlighted extreme weather events and the failure of climate change mitigation and adaptation as the top risk faced by the world in 2019.

Starting to report on climate risks and opportunities are seen as an important step to a low carbon economy. The good news is that there were benefits identified to the companies that did report in this way. Of all respondents:

  • 72% saw an increase in brand value
  • 37% saw a reduced level of shareholder pressure & activism
  • 31% cited a positive financial impact
  • 29% saw a greater diversity of investors
  • 21% saw an increase in company valuation
If you are interested in reporting climate change risks there is a task force (Task Force on Climate-related Financial Disclosures - TCFD) that sets out recommendations and best practice in reporting. You can find more information here.

 

Happy to help.

I would be delighted to use my practical business experience to help address your sustainability challenges, whether it lies in:

  • Strategy
  • Marketing
  • Execution
Just drop me an email or learn more.
Copyright © 2019 David Brunt Consulting Ltd, All rights reserved.

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