Sustainability Deadlock: Do I Launch Interventions Blind? Or Wait for Data Visibility?

I often get the question; do I just get going on creating impact, or wait until I have better data systems to tell me where to focus? Here’s my take on the trade-offs:

The case for getting going:

• No-regret moves: There are some no-regret, low-cost moves which likely won’t change with time e.g., switching to renewable energy (which holds a cost parity to non-renewable).
• Data transformation timelines are notoriously unpredictable. Most overrun, are over-costed, and underdeliver. What you have right now is likely to be what you will have for the next couple of years.
• Competitive value decreases. The value of taking a step ahead of the curb is likely going to disappear progressively with time. At this stage in time, you won’t be a first mover but you would certainly be a fast follower.

Wait for impact until you’ve got data visibility:

• High-cost trade-offs need data insight. If you are putting meaningful money behind an initiative that requires fine-tuned trade-offs, it’s worth investing in a proper data system to ensure your investments pay off (in terms of impact and money).
• Learn from first movers and observe best practice. Framing their systems and learning from their mistakes could reduce the need for full-scale investment - however, I find this to be a bit risky and can result in a deadlock.
• Suppliers might be moving faster than you. Suppliers will have to figure out their side of the data problem; most of your supplier's data problem will also be your data problem. You can benefit from them putting in the effort and expense rather than you. (This tactic decreasingly holds water. Typically as a larger brand, you will face more scrutiny from stakeholders and regulators.)

By Saif Hameed, CEO of Altruistiq

Insights taken from our latest guide. Read here.

‍

Industry Insight: Contractural terms to drive supplier engagement

Good supply chain engagement is key to limiting the financial liability of your sustainability program (otherwise your company is left carrying the can for a massive Scope 3 reduction). Within this context, we’re seeing more and more companies bring in some form of relevant covenants or legal terms in their contracts with suppliers. We’re seeing two types of covenant in particular:

• Requiring the supplier to share emissions data and targets. This is becoming standard practice across several of the largest retailers (e.g., the latest is Amazon). The logical place for this to lead is into some form of requirement for a year-on-year improvement.
• Limiting the supplier’s ability to sell emissions reductions to third parties (e.g., offsets/removals). This is necessary to protect the company’s ability to benefit from the in-value chain reductions that they have already assumed in their emissions reduction plans.

Both covenants are becoming necessary and we’re expecting to see them evolve in sophistication.

Insights taken from our latest Live Q&A - watch here.

Policy Pulse | The Latest Sustainability Developments: SBTi set to transform target validation

Since starting in 2014, SBTi has grown massively, seeing 4,230 companies commit to targets by 2022 - representing an impressive 34% of the global economy by market capitalisation. The ambition has grown too, with a target to cover 10,000 companies and 5GT of emissions with SBTs by 2025.

SBTi operates as the standard setter of target guidance whilst being paid by companies to validate the same targets - which has created tension. And so, SBTi has just announced a major transformation to improve their governance and scale up the amount of target validation they can do.

These changes include:

• Creating separate entities for target validation - SBTi will effectively split into two, a standard-setter and a service provider for target validation.
• More oversight into standard-setting - they have already adopted a technical and scientific advisory council this year, who will feed into updated standard-setting processes.
• New legal structure - SBTi has moved from its NGO partnership set-up to become a legal company with a Trustee Board, with aims to become a registered charity.

What does this all mean?

SBTi wields a lot of influence within the corporate climate action ecosystem, where they hold influence over:

• What science counts when setting science-based targets
• Which companies get their emission reduction targets validated
• Demand for the carbon credits market through their requirements on the use of offsets in a Net Zero standard

What we think

SBTi’s governance changes are massively welcome as they bring more trust behind SBTs through increased transparency and technical expertise. This shift will allow companies to have their SBTs validated more quickly.

Yet taking a step back, SBTi is in a difficult position as they are a vital component of the climate change eco-system but still need external support. In particular:

• Enforcement - only 53% of companies reported full progress on their targets last year. As the voluntary body they are now, there is no way to ensure companies follow their commitments.
• Actual reductions - targets should be science-based to set the right ambition, but SBTi does not say how these can actually be achieved. This is where science-based reduction plans are needed, which some organisations are creating for certain sectors e.g., Mission Possible Partnership.

Learn more

• FT - Arbiter of corporate climate plans faces shake-up
• SBTi - Press release of UK incorporation
• SBTi - Progress and monitoring report 2022

Sustainability Trailblazers: Less is More. Evian’s Naked Bottle.

Evian introduced its first circular-designed, label-free bottle. This is a key milestone in Evian’s journey to becoming a fully circular brand by 2025. We can guess what you’re thinking… “not another packaging innovation headline”, but we think this initiative is actually really remarkable. Here’s why:

• Waste management: The film label is by far the most difficult to recycle, unlike PET bottles are actually highly recyclable. It is dead weight and serves no purpose after consumption. By removing it, Evian is making big moves to close the loop on wasted resources.
• First mover status: Through sustainability message established through packaging. What we love is the fact that now they’ve done it, no one else can do it. There’s not enough space in the market for two mineral water brands to be out there with no label, making Evian’s move a market-defining block.
• Resource efficiency: Evian has demonstrated that sustainability does not inherently mean more expense. Rather, it’s about doing more with less. By removing the label, and embossing the bottle, Evian has streamlined production, and reduced costs, all the while maintaining its environmental objectives. It’s a win-win.

The lesson to take from Evian is to think about using packaging to promote your sustainability narrative.

‍

Related resources:

• Build an Emissions Data Roadmap: a Four Step Guide (guide)
• SoS Live: Fluffy ESG Bonuses, Offsets as a Strategy and Defining Supplier Contractural Terms (podcast)
• The Do’s and Don’ts: Setting up your Sustainability Data Roadmap (podcast)

Other news

• California Passes First-in-Nation Climate Disclosure Rules
• UK pledges £1.6bn to international climate finance to support developing nations
• UK offshore wind auction sells no capacity

Events on the Agenda

• State of Sustainability IMPACT, 21st September. Register interest here.
• State of Sustainability Mixer with Charles Conn, Chair of Patagonia. 25th October 5.30 - 8pm. Register interest here.

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