Businesses around the globe are seeking ways to achieve carbon neutrality as global temperatures rise. There are many steps businesses can take to combat climate change. These include reducing carbon footprint and conserving biodiversity.
Transparency
Transparency is the most crucial aspect of climate action. Companies must be open about their environmental impact before they can claim that they are trying to reduce it. This means that companies must disclose the steps taken to reduce carbon emissions, as well as how they calculated them based on Scope 1 and 2. Recognizing the impacts their activities have on water and soil, as well as biodiversity, is also a part of this process.
Sustainability reports can be a great way for transparently communicating about these impacts. Large companies are subject to more stringent reporting requirements from regulators all over the globe. The Securities and Exchange Commission in the USA recently published proposed rules on climate disclosure for listed companies. These rules would require disclosure of Scope 1 or 2 emissions in annual investor reports.
This development shows investors and governments that transparency is essential for climate action. Companies that are not transparent about their impacts will soon have difficulty raising capital and could face fines.
Traceability
It is essential that businesses make it easy to trace their actions when they take steps to reduce their environmental footprint. Companies that can’t track corporate actions, from strategic decisions to funding to final impacts, are more likely be accused of greenwashing. They may not be accountable for their actions.
ClimateTrade Marketplace, for example, allows you to trace all carbon offset transactions using blockchain technology. Every transaction on blockchain is immutable, and everyone can see it, making fraud virtually impossible.
It means that investors and companies can “follow money”, which is a way for them to track their investments, from their corporate accounts to the projects they have chosen. Every transaction results in the emission of a certificate that offsets carbon emissions. It contains project information and a unique key. This traceability makes reporting on climate actions for companies much simpler and more reliable.
Standardization
It is important that companies are aware of the fact that there is currently no standardization in carbon markets. This makes it difficult to establish quality benchmarks. There is currently no regulation regarding the pricing or generation of carbon credits from sustainable projects in the world, except for mandatory markets such as the EU Emissions Trading System.
It is therefore crucial to make sure that carbon mitigation projects are verified using well-known standards such as Verra, CDM and Gold Standard. After an external audit, these international organizations issue certificates certifying that projects have met their stated impacts.
A second way to ensure uniform climate action impact is to use the UN Sustainable Development Goals. Each of the 17 SDGs has a list of specific actions. This is a great way of evaluating the impact of a climate mitigation project against each of these actions.
Collaboration
Climate change is a global problem that affects individuals, businesses and communities of all sizes. It would be foolish for companies to attempt to tackle this problem on their own. They should instead collaborate with their peers. Many people already work with sector-specific organisations on topics related to market trends and public policy. Decarbonization could easily be added to that list.
Businesses should work with governments to help them influence the course of climate regulation so that it doesn’t hinder innovation and competitiveness. The SEC, for example, is collecting feedback on its proposed climate disclosure rules. Many businesses have already responded.
Companies should also work closely with customers and investors to understand their expectations and find creative solutions. Investors have made it clear that transparency and action on Environmental, Social and Governance issues (ESG) are prerequisites for future funding. Conscious consumers are becoming increasingly concerned about environmental and social issues. Companies can set themselves apart by listening to stakeholders and taking climate action right away to stay ahead of the competition.
