Opinion Piece: ESG All-in-One vs. Carbon-Specific Platforms: Finding the Optimal Fit

I was recently asked whether an ESG all-in-one solution or a carbon-specific platform is a better fit. Ultimately, it depends on your goals and expectations:

• If your primary expectation of the software is to act as a digital wallet for your sustainability KPIs and streamline the reporting process, then an ESG all-in-one solution can be the right fit. The risk is that you focus on a breadth of KPIs and compromise granularity, accuracy, and the potential for driving real change.
• If your primary expectation of the software is to provide you with deep insights and analytics on emissions (and potentially 2-3 other environmental metrics), then a carbon-specific platform will be more useful. The risk is that you build analogue processes for other metrics (e.g., the “S”), absent dedicated software.

Anecdotally, I typically see two types of companies choosing ESG-wide platforms over carbon-specific platforms:

1. Small or medium enterprises (e.g., with <$100m of revenue) across any sector. In the context of a limited budget, these organisations may get more value through an all-in-one digital wallet and be happy to live with the inevitably manual scramble to get the right data into the system. The need for granularity and accuracy is typically also a bit lower.
2. Larger enterprises with simple environmental profiles (e.g., a software company or professional services firm). In the absence of lots of material inputs and complex processes, emissions calculation shouldn’t be a hard enough challenge to require specialised software. It would make more sense to devote an additional budget to supporting actual change/action.

For some companies, I’d suggest avoiding going for all-in-one solutions. I’d avoid ESG-wide platforms if there’s a lot of operational complexity (e.g., multiple business units, manufacturing processes, growing activities, global spread). In these cases, any savings from an all-in-one solution may well be lost in the simple work of data gathering, data cleanup, and assumption testing for the environmental data alone.

Leaked from SoS. Listen to the full episode here.

By Saif Hameed, CEO of Altruistiq

Industry Insight: Sustainable Buying Choices are Not Linked to Income

For years, we’ve heard that sustainable buying choices are linked to income. But the data is not that straightforward. Here’s what we found when we compared consumer survey data for 2020-22 across a set of 7 countries:

• No positive correlation between GDP per capita and sustainable buying preferences. If anything, in our sample set there was an inverse correlation (i.e., surveyed consumers in wealthier countries were less interested in sustainability than their counterparts).
• Positive correlation between percentage of population <65 and sustainable buying preferences. In our sample, consumers more likely to factor sustainability into their buying choices were likely to be part of younger populations.

We tested this with companies we work with in some of the markets surveyed. There are a few interesting anecdotes to layer on:

• Within these markets, we’re likely still talking about younger, urban consumers (which are a large enough share to sway the data).
• Sustainability in these markets is partly about the environment but more about ‘wellness and wellbeing’. E.g., indicators that might also suggest the product is healthy or of high quality.

The main takeaway for business is: sustainability claims should start to factor in localisation as a powerful marketing tool to capture the hearts and minds of consumers. The market is wider than you think it is, but it’s also more nuanced.

Policy Pulse | The Latest Sustainability Developments: Why is SBTi FLAG Guidance Important?

A breakdown of the key policy updates that you and your company need to know about from the last fortnight.

FLAG guidance is set to significantly impact emission inventories for companies that engage in land sector activities (F&B, apparel, and cosmetics or any company where FLAG emissions are >20% of their total baseline). FLAG will mandate these businesses with, or about to set, SBTi-validated targets to measure their land-based emissions across three core activity areas:

• Land Management (LM)
• Land Use Change (LUC)
• Removals (note that these are optional)

When will the guidance come into force?

• April 2023: FLAG SBTs are required from April 2023 for companies without a currently validated SBT, or with a validated SBT who are adding a Net Zero SBT.
• Within 6 months of the final release of GHG Protocol LSRG: Companies with validated SBTs that are required to submit a FLAG target must do so within 6 months of the release of the final GHG protocol Land Sector and Removals Guidance. The GHG Protocol LSRG is planned for release in mid-2023.

What do we think?

We expect three big shifts to occur as a result:

1. More Granular Measurement & Accurate Calculation

Current state: Scope 3 is estimated with Spend based calculations and secondary emission factors.

Shift: Spend Based will be replaced with Weight-Based data coverage as businesses are required to know who their suppliers are, how much land they own, what type of land it is and what crops they're growing on this land.

2. Better Data Accessibility & Analysis

Current state: Detailed analytics and abatement planning are primarily focused on Scope 1 & 2, with limited or no potential to include Scope 3 (Purchases).

Shift: Scope 3 data will become more shareable and accessible with increased access to supply chain data.

3. Scaled Budgets & Impact Reduction for Scope 3

Current state: Reduction interventions for Scope 1&2 are increasingly granular and budget supported. Reduction interventions for Scope 3 (Purchases) are more randomised and focused on pilot initiatives.

Shift: Scope 3 intervention budgets will be easier to unlock as more granular data provides a clearer view of costs and predicted ROI.

Recommended resources:

• LSRG Draft Guidance
• SBTi FLAG Guidance

Sustainability Trailblazers: How Asahi Group is accelerating decarbonisation efforts.

Asahi Group, the international beverage giant, has recently set some punchy decarbonisation targets:

• Long-term: Zero carbon emissions by 2050
• Near term: Reduce Scope 1 and 2 carbon emissions by 70 per cent by 2030, compared to 2019 levels and 30% reduction in Scope 3

To make headway with these targets, Asahi Group has accelerated 3 key decarbonisation initiatives:

• Transitioning to renewable energy sources
• Investing in high-efficiency technologies
• Implementing innovative manufacturing processes

To finance these initiatives, Asahi Group released green bonds onto the local market in Japan earlier this year. The proceeds from the green bonds will be used to exclusively solve environmental problems.

On top of these operational initiatives, Asahi Group has prioritised a few, really compelling initiatives that act as strong brand assets and resonate across their consumer base:

• Plastic packaging: transitioning all PET bottles to environmentally conscious materials (e.g., biomass and recycled materials) by 2030. They are also looking into eco-friendly materials and sales methods that eliminate plastic containers or packaging.
• Water: reduce water consumption to 3.2 cubic metres per kilolitre or less by 2030. In April 2030, they signed the CEO Water Mandate, a global initiative that supports the private sector to advance water solutions through water use targets and community cooperation.

It is clear that Asahi is making bold and strategic moves. Instead of scattering investments, they concentrate their efforts on pivotal impact areas. This strategic approach positions Asahi Group as the leader in these areas, aiming not just to 'play the game' but to 'win the game'.

Other news

• SBTi launches their 2022 Monitoring report examining global SBTi progress
• TNFD announced partnerships with 12 global organisations (GRI, CPD, SBTN)
• UK Government releases biomass strategy to prioritise CSS

Events on the Agenda

• 2nd European Sustainable Beauty Forum, 12 - 13th September 2023
• Register interest to join our State of Sustainability community events!

‍

Got a spare 2 minutes? We’d really appreciate it if you gave feedback on this newsletter.

‍