Who will be the sustainability leaders in 2019?

Published 9th July 2019 by Lucy Haines

Research is now well underway for EcoAct’s ninth annual Sustainability Reporting Performance reports. In the context of last year’s IPCC report, unprecedented public movement for climate action as well as strengthened government targets, understanding corporate sustainability performance has never been more pertinent.

In 2018 Microsoft, BT Group and M&S topped the ranks of global leaders in sustainability reporting best practice. How has best practice evolved since? Are we making enough progress? And who will triumph on the sustainability leader board?

The research

Published annually in September, our reports are based on research into the public disclosures of companies in four leading global indices: FTSE 100 (UK), CAC 40 (in France), IBEX 35 (Spain) and the DOW 30 (USA). The purpose is to highlight trends and recognise leadership in environmental performance across some of the world’s largest and most carbon intensive companies.

The scoring criteria has been developed by our consultants and experts and continues to evolve each year to take account of the ongoing changes and expectations surrounding best practice reporting.

Leadership profile

What does it mean to be a global leader in sustainability disclosures? There are lots of companies with impressive environmental initiatives and most large companies are now expected to publish comprehensive sustainability reports. What sets the leaders apart?

Microsoft stole the top spot in 2018. The tech giant achieved this in part by being one of only two companies in its index (DOW) to be carbon neutral. Beyond this, its exploration of technological solutions such as greener data centres and artificial intelligence tools for the environment and water scarcity show its impressive commitment to innovation. Its strategy has generated annual savings of 9.5 MtCO2e and they also recycled over 10 million kilogrammes of consumer e-waste.

Telecommunications giant, BT, knocked M&S from the top spot of the FTSE rankings last year to take second place globally but M&S continues to demonstrate its longstanding strength in leadership in third. BT has set and now reviewed its science-based targets and pledged a new goal to reduce its carbon intensity 87% by 2030, as well as targeting its supply chain by setting a separate SBT to cut supply chain emissions 29% by 2030. It is also rapidly approaching its 100% worldwide renewable electricity target.

M&S’ Plan A 2025 remains an exemplary sustainability strategy. M&S is one of five carbon neutral companies in the FTSE 100. It reports extensively on KPIs beyond emissions and continues to make progress on its goal of zero waste by 2025.

What’s new this year?

There have been some quite big developments in the last year in the world of sustainability, and here are three of the most significant developments that will likely play a role in setting apart the leaders in sustainability in 2019

More ambitious targets

In October last year the Intergovernmental Panel on Climate Change (IPCC) published its report into 1.5 degrees of warming and provided sobering evidence of the urgent need for more ambitious climate targets. In addition to this, protest movements around the globe have gathering momentum in early 2019 with climate groups and students demanding recognition of the global climate and ecological crises and rapid decarbonisation.

In response to the scientific call for raised ambition, the Science Based Target initiative (SBTi) has duly updated their guidance for science-based targets (SBTs) to align with a target of limiting warming to 1.5 degrees or well-below 2 degrees. Although a recent development and not a requirement for new targets until October this year, the bar for best practice target setting is rising.

Net Zero

We are starting to see some strong government commitment to Net Zero – in the UK, in Denmark, and in New York State which shows signs that stronger legislative drivers for this goal are increasing likely.

To support the net zero goal companies will need to be engaging in various initiatives for emissions reduction and committing to carbon neutrality. Year on year we are seeing increasing utilisation of renewables, supply chain engagement, energy efficiency measures and innovation. The sustainability leaders have in fact already been working towards carbon neutrality, if not there already in a few instances.

However, from now and in the foreseeable future, it will be difficult for businesses to ignore the net zero goal in their sustainability report or to disregard the risks and opportunities posed by the increasingly inevitable transition to a low carbon economy.

Demand for climate-related financial disclosures

The TCFD (Task Force on Climate-related Financial Disclosures) is the acronym wielding increasing influence over the sustainability and financial reporting sphere. Last week 466 investors wrote a letter to the G20 asking them to mandate climate-related financial disclosures. To those inside and outside the sustainability community, and particularly in the financial sphere, the TCFD is now considered the gold standard for climate-related business disclosures.

Last year we saw plenty of mentions but very limited application. It remains a challenge for businesses due to the TCFD’s relative infancy in practice. However, a sustainability leader will be applying the recommendations and helping to forge the path forward in the continual improvement of climate-related disclosures.

 

What will the future bring?

Much of the new developments are happening after the completion of many companies’ annual sustainability disclosures this year, which will be taken into account in the research. Nevertheless, we’re hoping that 2019 and beyond will bring further improvements and continue to raise the bar of corporate sustainability disclosures whilst representing the level of ambition needed to limit catastrophic global warming.

With the public spotlight on the climate and ecological crises growing in intensity, how businesses are acting and disclosing on sustainability issues matters more than ever before. Who will sit atop the leader boards and are we making enough progress to meet our global goals? We just have to wait until September to find out…

 

 

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