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Imagine trying to reach a specific destination, but your map is outdated, the signs point in different directions, and fellow travelers argue over the best route. This is a reality of the struggle many companies face when it comes to tackling <keyword id="6361617" type="General" weightage="100" keywordseo="climate-change" source="Orion">climate change</keyword>, a new study explains. Despite their best efforts, companies are getting tangled in a web of conflicting national targets, inconsistent government guidance, and limited options for reducing their <keyword id="66463" type="General" weightage="20" keywordseo="carbon" source="Orion">carbon</keyword> footprint. This frustrating situation may be hindering their ability to effectively contribute to global climate goals, the research elaborates. The challenge begins with mixed messages. Governments and regulatory bodies often send conflicting signals, with national targets and international standards failing to align perfectly. This leaves companies confused and unsure of the best course of action. Furthermore, standardised data sources and accounting methods don't always capture the unique picture of each company's emissions. This leads to inaccurate assessments and suboptimal reduction strategies, something the world, in the current stage of the climate crisis, cannot afford. Adding to the confusion, the research explains that some companies rely far too heavily on <keyword id="1690954" type="General" weightage="20" keywordseo="carbon-offsets" source="Orion">carbon offsets</keyword> to compensate for their emissions, instead of focusing on concrete reductions within their own operations. This act might make the operations seem emission-free, effectively tricking shareholders. Much like greenwashing, this can be compared to paying someone else to complete your errands while your own to-do list remains untouched. While this might ease the immediate pressure, it certainly doesn't address the root cause of the problem. Finally, companies juggle competing demands from regulators, shareholders, and customers. This makes it difficult to prioritise efficient decarbonisation strategies and resource allocation. This act of trying to please everyone at once often leads to compromises and suboptimal outcomes, the study reads. To navigate this complex maze, the researchers propose a two-pronged approach. First, companies need a more dynamic framework. This means combining a <keyword id="66463" type="General" weightage="20" keywordseo="carbon" source="Orion">carbon</keyword> measurement and management process with a flexible "Plan, Do, Check, Act" cycle. This ensures alignment between climate targets, actions, monitoring, and reporting, just like having a clear, up-to-date map and constantly checking your progress. Second, governments and regulatory bodies need to work together to create a more unified international framework, similar to the somewhat recently released <keyword id="12704208" type="General" weightage="20" keywordseo="issb" source="Orion">ISSB</keyword> standards. This step would empower companies to accurately assess, manage, and reduce their carbon footprints, similar to having clear and consistent road signs throughout your journey. Reaching global climate goals requires a collaborative effort. Companies, governments, and regulators need to work together to create a clearer roadmap, remove conflicting roadblocks, and prioritise efficient resource allocation. Only then can companies truly navigate the climate maze and contribute meaningfully to a sustainable future. The findings of this research have been published in <keyword id="6355515" type="General" weightage="20" keywordseo="business" source="Orion">Business</keyword> Strategy and the Environment and can be accessed <a href="https://dx.doi.org/10.1002/bse.3635" data-type="tilCustomLink">here</a>.

Is there a fundamental problem preventing businesses from contributing efficiently to climate mitigation efforts?

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="A photo of Novartis headquarters building with the logo" height="2756" width="3674" msid="92709566" hostid="261" sizebytes="513936"></div><ul class="summary-list"><li><keyword id="14386095" type="UNKNOWN" weightage="60" keywordseo="novartis" source="Orion">Novartis</keyword>'s first integrated social impact report was released earlier this year.</li><li>A coalition of <keyword id="11896309" type="UNKNOWN" weightage="100" keywordseo="sustainability" source="Orion">sustainability</keyword> organizations has recommended integrated reporting to improve the quality of information.</li></ul>In March 2022, global pharmaceutical company Novartis published its first-ever <a href="https://www.reporting.novartis.com/2021/novartis-in-society.html">Novartis in Society</a> integrated report.That means the company combined its report on annual financial performance together with details of its progress toward sustainability goals, or <keyword id="12011554" type="UNKNOWN" weightage="60" keywordseo="esg" source="Orion">ESG</keyword>. Other companies that produce integrated reports include <a href="https://investors.etsy.com/financials/annual-reports-and-proxy/default.aspx">Etsy</a> and <a href="https://corporate.ford.com/social-impact/sustainability.html">Ford.</a> From Ford's 2022 report: "Last year we were proud to launch our inaugural Integrated Sustainability and Financial Report,building on more than two decades of sustainability reporting at Ford and giving our stakeholders a more holistic view of our performance." Such reporting is not new, but it's also not universally adopted. Advocates of this type of reporting say that it deepens the connection between business strategy and sustainable goals.Global organizations for decades have wrangled with not just what to report on sustainability goals, but how to report. Novartis' decision to combine financial and sustainability reporting into one combined overview is something more companies may choose to do as international bodies adopt these standards. <h2>Measuring impact on community health</h2>Public health and sustainability goals are not new to Novartis, but the global pandemic clearly brought them under a new kind of scrutiny. Lutz Hegemon, group head of corporate affairs and global health, told Insider about how the pandemic had impacted the company's community health goals. "Our priority now, more than ever before, is to ensure uninterrupted supply of essential medicines, including antibiotics, to all those who need them, wherever they may be," he said.Hegemann also said that the pandemic had demonstrated how fragile infrastructures and public health systems fail to reap the benefits of health innovation. "COVID-19 reinforces the need to continue to do more to strengthen healthcare systems across the globe as we implement the Novartis Access Principles across our portfolio," he said.To learn more about the Novartis Access Principles, Insider turned to the company's integrated report. "We aim to implement an access strategy for all new medicines launched," the report reads. "These strategies include innovative pricing and access models, earlier launches in low- and middle-income countries, and approaches to strengthen healthcare systems." The report includes a data table of patients reached through "access approaches," at 56.2 million in 2021, including the proportion that was funded by the <a href="https://www.novartis.com/news/media-releases/novartis-reinforces-commitment-patient-access-pricing-eur-185-billion-sustainability-linked-bond">company's 2020 sustainability-linked bond</a>. In keeping with the principles of the integrated report, it also includes broader reporting of the company's financial performance, reflecting $52 billion in net sales, a 4% increase over the past year. <h2>Global reporting standards </h2>Integrated reporting is not a new concept. According to <a href="https://www.esgthereport.com/why-are-integrated-reports-increasing-in-popularity/">ESG - The Report</a>, the International Integrated Reporting Council (IIRC), issued its first global framework in 2013, following consultation with accounting, business, and investor groups. Other acronym-heavy organizations have recently weighed in on the benefits of combining externally facing materials. On <a href="https://www.ifrs.org/news-and-events/news/2022/05/integrated-reporting-articulating-a-future-path/">May 25, 2022</a>, the International <keyword id="12759223" type="UNKNOWN" weightage="60" keywordseo="financial-reporting" source="Orion">Financial Reporting</keyword> Standards Foundation (IFRS), the chairs of the International Accounting Standards Board (IASB), and the International Sustainability Standards Board (ISSB), announced they would be incorporating the IIRC's current framework."We are convinced that the Integrated Reporting Framework drives high-quality corporate reporting and connectivity between financial statements and sustainability-related financial disclosures which improves the quality of the information provided to investors," read a statement by Andreas Barckow, chair of the IASB, and Emmanuel Faber, chair of the ISSB.Hegemann said Novartis decided to merge its previous Novartis in Society ESG Report and Annual Review into one document to "increase the quality of our ESG disclosures by providing a streamlined and integrated view of how we create value for our stakeholders through our purpose and corporate strategy."Novartis tapped the Integrated Reporting Framework in developing the report, as well as SASB Standards provided by the <keyword id="14386096" type="UNKNOWN" weightage="60" keywordseo="value-reporting-foundation" source="Orion">Value Reporting Foundation</keyword>.Standards are constantly evolving, and Hegemann said the integrated approach leaves the company "well positioned to continue to enhance our ESG disclosures and adapt to emerging ESG reporting standards."

Novartis debuted its first integrated sustainability and finance report this year — more companies are likely to follow suit

<a href="https://www.businessinsider.com/financing-a-sustainable-future-2022"></a><div type="image" title="A hedge maze within a city center" height="4000" width="5333" msid="93035079" hostid="261"></div><ul class="summary-list"><li>Navigating numerous organizations and frameworks related to sustainable reporting can be confusing.</li><li>It's most important to focus on what's critical for your company's stakeholders, then connect with the right resources to help.</li></ul>When it comes to <keyword id="11896309" type="UNKNOWN" weightage="100" keywordseo="sustainability" source="Orion">sustainability</keyword> disclosure, organizations, and metrics, there are a lot of acronyms — from <keyword id="14519825" type="UNKNOWN" weightage="60" keywordseo="sasb" source="Orion">SASB</keyword> to <keyword id="14519826" type="UNKNOWN" weightage="60" keywordseo="gri" source="Orion">GRI</keyword> to <keyword id="14519824" type="UNKNOWN" weightage="60" keywordseo="tfcd" source="Orion">TFCD</keyword>. Between them, they may provide frameworks and guidelines, help set goals, and assess how businesses may be affected by things like climate change. For companies getting started down their own path towards sustainable accountability, it can be daunting. And now that the <keyword id="11898795" type="UNKNOWN" weightage="60" keywordseo="sec" source="Orion">SEC</keyword> has proposed a rule change that requires companies to disclose climate-related risks to their business, it's imperative that leaders learn to navigate the universe of tools out there — especially because they are likely based on structures already being used by companies. "The proposed disclosures are similar to those that many companies already provide based on broadly accepted disclosure frameworks," according to the <a href="https://www.sec.gov/news/press-release/2022-46" target="_blank" rel="noopener nofollow sponsored">SEC statement announcing the proposed rules</a>. "Such as the Task Force on Climate-Related Financial Disclosures [TFCD] and the Greenhouse Gas Protocol [GHG]."The anticipation of new rules is motivating corporate leaders. "Today, we're on the precipice of regulated ESG in the US, and the EU is moving forward on ramping up its ESG disclosure regulations," said Christine Robinson, a partner in sustainability and ESG services at <keyword id="11939352" type="UNKNOWN" weightage="60" keywordseo="deloitte" source="Orion">Deloitte</keyword>. "There is a sense of urgency to understand the acronyms, how they fit together, and what [they] mean in the context of what could be regulated disclosures."While numerous organizations exist, it's possible to narrow down the important ones by focusing on the stakeholders that are most critical to the company. <h2>First, figure out what's important</h2>Robinson says that before diving into frameworks and guidelines, companies should focus on a materiality assessment that will inform what's necessary to track and report. Therefore, what frameworks and organizations support your needs. "In the context of ESG, that's an assessment of peer and industry benchmarking ... what are the topics the industry is focusing on," she said. For example, companies within the healthcare vertical may have different priorities than companies in retail or real estate sectors. Figuring out what sustainability issues a company's competitor is reporting is a solid way to narrow focus. A materiality assessment also looks at what stakeholders are most critical, whether it's investors, employees, customers, or NGOs. "Engaging with them in a way you can understand the topics they are expecting to hear from you about," Robinson said. "Marry that with what is happening inside the business and with what leadership is seeing and hearing every day."The point is, take the time to figure out what's important to the business and to the people who matter most. "It helps a company think through their priority stakeholders and what their expectations are," Robinson said. "That's going to be a key driver of the standards that are accepted for use in disclosure."And that information will help direct the company to the most important framework or organization.<h2>The rapidly changing nature of global organizations </h2>When speaking to sustainability experts, SASB is an acronym that frequently comes up. It stands for <a href="https://www.sasb.org/about/" target="_blank" rel="noopener nofollow sponsored">Sustainability Accounting Standards Board</a> (SASB) and is "geared to the investor community," Robinson said. "They are grounded in the SEC definition of what is material for a reasonable investor."The board produces the SASB Standards, a set of global guidelines to share with investors the environmental, social, and governance (ESG) issues that impact companies' financial performance. SASB standards are directed toward investors. They are available for 77 different industries, as the issues that impact financial performance often differ depending on the industry.But the world of disclosure organizations has been dynamic over the past year. In fact, as of June 2021, SASB had merged with the International Integrated Reporting Council (IIRC) to form the <a href="https://www.valuereportingfoundation.org/" target="_blank" rel="noopener nofollow sponsored">Value Reporting Foundation</a>. And that, in turn, merged into the <a href="https://www.ifrs.org/groups/international-sustainability-standards-board/" target="_blank" rel="noopener nofollow sponsored">International Sustainability Standards Board.</a>"This is all happening very quickly," Robinson said. "What the ISSB is doing is trying to deliver a comprehensive baseline of global sustainability standards, specifically for investors and capital market participants about a company's ESG risks, performance, and opportunities." <h2>The right framework for the right stakeholders </h2>As those global standards move more companies towards things like integrated ESG and financial reporting, organizations that are just getting started will benefit most by zeroing in on the most important audiences for their information.If employees or customers are the key stakeholders, companies will look to GRI standards. "Employee sentiment may bring up ideals like purpose, and tying the work you do to your own values, that's the sentiment employees bring," Robinson said. "That's not in the SASB standards. That's a place where I would advise companies to look at GRI." The <a href="https://www.globalreporting.org/about-gri/#:~:text=GRI%20(Global%20Reporting%20Initiative)%20is,language%20to%20communicate%20those%20impacts." target="_blank" rel="noopener nofollow sponsored">Global Reporting Initiative</a> (GRI) is an international organization that helps companies worldwide hold themselves accountable for sustainability practices beyond just climate. The <a href="https://www.globalreporting.org/standards/" target="_blank" rel="noopener nofollow sponsored">GRI Standards</a> allow organizations to better understand and report credibly on their impacts on the environment, economy, and people. The standards are designed to encompass a wide variety of stakeholders, including investors, employees, and more. If the key stakeholders are the investment or financial community, TFCD is the acronym of choice. The <a href="https://www.fsb-tcfd.org/about/" target="_blank" rel="noopener nofollow sponsored">Task Force on Climate-Related Financial Disclosures</a> (TCFD) was spearheaded by the Financial Stability Board Chairman Mark Carney and chaired by Mike Bloomberg, the former mayor of New York City and media entrepreneur.It gives companies a framework on what they to disclose to investors and other financial stakeholders to accurately assess climate change-related risks and opportunities. The goal is to drive capital towards more sustainable investments. "You go through the TFCD framework and do things like establish governance at the board and management level, identify risks and opportunities, run through risk mitigation plans and decarbonization strategy, and report metrics," Robinson said. "To help you measure your performance on climate and how you, as a company, are tracking against and anticipating a transition to a low-carbon economy.""It really does all go back to the stakeholder," Robinson said. She said that while the SEC might require investor-facing reports, that doesn't mean companies should stop doing voluntary disclosures on other topics around sustainability that are not financially material. "Companies have to learn how to operate in a world of regulated ESG disclosure. But that doesn't negate or do away with voluntary disclosure to all others but investors."

Acronyms and jargon make sustainability reporting confusing. Focusing on the important stakeholders within your business can clear up the process.

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Is there a fundamental problem preventing businesses from contributing efficiently to climate mitigation efforts?

Ankush Banerjee

Novartis debuted its first integrated sustainability and finance report this year — more companies are likely to follow suit

Julia Hood

Acronyms and jargon make sustainability reporting confusing. Focusing on the important stakeholders within your business can clear up the process.

Julia Hood,Elisa Xu

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