Planet: Companies are accelerating their investment in combating the climate crisis

• Climate is the most urgent pillar of sustainability, and companies are activating in various ways.
• Many are now investing in green bonds and other financial instruments to drive change.

Of the four pillars, "planet" is the one that gets the most attention, funding, and urgency. The term sustainability is generally used in terms of environmental initiatives, even though it is only one component.

Among the United Nations' 17 Sustainable Development Goals, six are related to climate.

• Goal 6: Clean water and sanitation
• Goal 7: Affordable and clean energy
• Goal 12: Responsible consumption and production
• Goal 13: Climate action
• Goal 14: Life below water
• Goal 15: Life on land

As pressure has grown for corporations to stop polluting, they are increasingly tapping into financial instruments to transition their business toward sustainable operations and outcomes.

Green bonds are one way companies are using new financial offerings to drive change. Also called sustainability bonds, they work like regular bonds in many ways and allow companies to raise money for capital projects. But green bonds are targeted to sustainability goals, allowing investors to support outcomes like reducing carbon emissions.

Apple is using green-bond proceeds to support its goal of carbon neutrality by 2030. Each project it selects aims to support "low-carbon design and engineering, renewable energy, energy efficiency, carbon mitigation, and sequestration," the company said.

Since 2016, Apple says it has invested about $4.7 billion in green bonds to bring "clean energy to local communities while reducing carbon emissions."

So far, the company has funded 17 projects which include solar developments near Reno, Nevada, and Fredericksburg, Virginia, a wind farm near Chicago, and onshore wind turbines in Denmark.

Through the bond, Apple, the Canadian government, and Quebec's government partnered to invest in the Canadian aluminum supplier Elysis, intending to eliminate greenhouse-gas emissions that are usually created during the aluminum-smelting process. The project is relevant to Apple because of its heavy use of aluminum in products like the iPhone, Apple Watch, and MacBook.

As it stands, Apple has estimated that it has avoided nearly 1 million metric tons of greenhouse gas emissions and generated 1.3 million megawatt-hours of renewable energy.

Green-bond standards

There are several green-bond standards companies can follow, and maintaining transparency and compliance is a big priority in most. Two common sets of criteria are the European Commission's, which was established in 2018, and the Green Bond Principles of 2014.

"A lot of green bonds and financing around real assets is moving toward having much more rigorous reporting and data around ESG credentials," said Guy Grainger, the global head of sustainability services and ESG at JLL, a real-estate services company. "There's going to become no hiding place in terms of how these are measured."

Other than transparency and reporting requirements, the European green-bond standard also requires the money to be appropriated "fully to projects that are aligned with the EU taxonomy" and reviewed through an external entity, which must be registered and supervised by the European Securities Markets Authority.

The Green Bond Principles and Climate Bonds Standard were established in 2014 by a large group of investment banks and are listed as "voluntary best practice guidelines." Like the European standards, it includes guidance on how proceeds can be used, project evaluation and selection, fund management, and reporting.

"People are going to have to start demonstrating what they're doing inside these green bonds," Grainger said. "There will be a lot of scrutinies, and the checks and measures that are being put in place by the capital on these green bonds are quite onerous in terms of reporting."

Nike's move to zero

Not all companies are taking the green-bond route to tackle the climate crisis. Nike, one of the largest athletic footwear, apparel, and equipment companies, has incorporated sustainability goals and initiatives into its operating budget.

According to Nike's 2020 impact report, its shoe factories had reduced energy consumption by 10% year over year since 2015, with 100% renewable energy being used across its US and Canada factories.

"Sustainability has been a strategic focus at Nike for decades," Noel Kinder, Nike's chief sustainability officer, told Insider. "Climate change presents a major threat to the future of sports, and the scale of change needed to address the urgency of climate change requires innovation across every part of Nike."

Move to Zero is Nike's initiative focused on getting the company to a "zero-carbon, zero-waste future." The action program looks at the climate crisis through a science and sports lens, showing the specific negative effects global warming has on athletes around the world.

"If there is no planet, there is no sport," Kinder said. "Which has galvanized us to place sustainability at the very foundation of how we approach our business."