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If your investors are assessing your climate risk, shouldn’t you be?

The SSC Team November 12, 2015 Tags: , , , Strategic Sustainability Consulting No comments
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This summer, the World Resources Institute and the UNEP Finance Initiative consulted with more than 100 energy, climate, and finance experts to create a discussion framework for investors to weigh exposure to the risks of climate change.

Essentially, it is a toolkit for investors to evaluate a company based on climate risk factors not directly related to physical risk. Most investors can already pick out obvious physical risks, i.e. investing in coastal property as sea levels rise. But non-physical, climate-change effected risks are also important.

The WRI discussion framework addresses those risks, called carbon-asset risks. They include public policy, regulation, technology, unpredictable market conditions, and shifting public opinion.

This discussion framework is an excellent tool for investors to weigh risks as they choose to make investments, but we argue that companies themselves should be looking at this tool to discover their own carbon asset risks and then engaging in some deeper-level analyses and audits.

For example, the assessment recommends that investors look beyond carbon footprinting and delve deeper into company supply chain audits that may uncover risks. For example:

  • Geographic location (are too many of your suppliers in the path of a super-typhoon?),
  • Local regulations (are the countries your source your raw materials from looking to legislate and increase your costs?),
  • Diversification in operations or production (are your products and services too dependent on fossil fuels?).

This discussion framework, while absolutely useful for investors, can also be used as a cheat sheet for your own business. Next step: Start auditing and taking action now to mitigate your climate risk.

Reducing exposure to risk is crucial, not only to become more attractive to investors, but also to become a more sustainable organization overall!

If you’re ready to start looking more deeply at your carbon asset risk, contact us to learn more about sustainability assessment and supply chain analysis.

Using Risk as a Lens for Sustainability Decision-Making

The SSC Team October 1, 2015 Tags: , , Strategic Sustainability Consulting No comments

Dispatch from SSC President Jennifer Woofter

I often tell clients that sustainability is not a stand-alone concepts, but a lens through which  companies can make good business decisions. It's another set of criteria, another flowchart of questions, that lead to optimal choices.

That said, sustainability is not a perfect lens in and of itself. Sure, there are sustainability concepts and frameworks (like materiality, zero waste, and The Natural Step) that aim to provide guidance on how to think about sustainability, and protocols on how to use sustainability to make decisions. But I find that it's often lackluster -- at the end of the materiality process, or the Natural Step "ABCD process" we often look around the table and say "okay, that seems reasonable, but what does it mean for ACTUAL planning for next quarter? And what does it tell us about changes needed for next year's budget?"

Here is where risk, and it's associated tools, comes in. By marrying traditional risk assessment, mitigation, and adaptation methodologies with sustainability concepts, we can start to answer questions like:

  • How likely is it that climate change is going to have a significant impact on our operations in the next three years?
  • How big of an impact is water scarcity going to be for our supply chain in the next decade?
  • How resilient is our business to labor unrest in Asia?
  • Of all the options for adapting to increasing sustainability regulation, which ones are likely to be the most effective?

There is SO MUCH WORK to be done at the intersection of sustainability and risk. It's really exciting work, and if you've done any reading on the subject lately, I'd love to hear your thoughts in the comments below! 

5 Ways to Benchmark Your Sustainability Performance

The SSC Team September 24, 2015 Tags: , , , , Strategic Sustainability Consulting No comments
A dispatch from SSC President Jennifer Woofter As we work with clients to advance their sustainability journey, we're always looking for ways to slice and dice the information we gather. I thought it might be helpful to share some of the common ways we analyze an organization's performance:

Company Now vs. Company Then

How does the client's current performance compare against it's performance in the past (1 year ago, 5 years ago, etc.). This works best when we've been working with a client for a while and can judge how much progress has been made since our initial assessment.

Company vs. Industry Peers

We look at client performance against a representative peer group -- so for example, a midsize mining company would be compared against other midsize mining companies.

Company vs. Industry Leaders

We look at client performance against the sustainability leaders in the industry -- so we might compare a midsize mining client against the current mining constituents of the Dow Jones Sustainability Index (DJSI).

Company vs. Value Chain Partners

We look at the client's performance against its key upstream suppliers and downstream customers. This analysis provides great insight into risk mapping and alignment -- is the client paying attention to the things its customers care about?

Company vs Sustainability Standard

Comparing a client's sustainability performance against other external standards (ISO 14001, GRI, CDP, SASB, DJSI, etc.) is another way to spot omissions and mis-alignment. It can also help to spot the areas where the standards overlap -- where the client may get the most bang for the buck in closing a gap. What other ways to benchmark are we missing? Let us know in the comments!

How Sustainability Practitioners Should Give Feedback

The SSC Team September 15, 2015 Tags: , , Strategic Sustainability Consulting No comments

Enjoy this article from the SSC blog archives:

As consultants, it's our job to deliver feedback to our clients throughout the sustainability consulting engagement--and we've gotten pretty good at identifying, refining, and delivering news (both good and bad) about a company's "state of sustainability" and roadmap for action. But when we read the article, Don’t Sugarcoat Negative Feedback, in Harvard Business Review, we realized that the art of providing feedback has a much broader application to companies pursuing sustainability initiatives. Here are some of our takeaways:

USE FACTS IN YOUR FEEDBACK

Berglas: Deliver constructive feedback rapidly in its raw form. This doesn’t mean harshly; there’s a way to soften blows without delaying them if you strive to be empathic. Just never make it seem like you’re avoiding hard cold facts. All that does is make the facts seem worse than they are.

Focusing our feedback on facts is a great way to create some space between participants, so that no one feels blamed, guilty, or shamed. It also allows everyone to (more) objectively assess the situation--including whether the feedback being provided is correct, how a solution should be constructed, and how responsibility and accountability for change should be allocated.

Wrong: [After 20 minutes of praise and exultation about everyone's awesome sustainability work.] "Look, even though we're all doing our best, it's not enough. We're falling behind on our performance data, and that's shown up in some recent press. We can't let our industry leave us in the dust. Come on, guys, we've got to improve!"

Right: "Our three-year carbon emissions are up 4.3%, while Competitor A is holding steady and Competitor B actually decreased its emissions by 1.1%. A report, which is getting press coverage this week in the New York Times and a number of "green blogs", calls us out for poor energy and climate performance in our industry. Let's talk about what that means in light of last month's board meeting where there was consensus about aiming for the top 25% of our industry across all sustainability issues."

DON'T PREDICT THE OUTCOME

Berglas: Resist the urge to prophesy. The absolute worst thing a CEO, coach, or consultant can do when offering constructive criticism to someone is to provide a timetable for the process that a person who must change should be expected to conform to.

While goals and targets are critical elements of effective sustainability planning, changing people (and institutions) is an uncertain process. When you need to address employee engagement and organizational culture issues, don't make promises that you can't keep. Yes, you can get a new Code of Ethics in place by the end of the year, but can you put a clear time line on when your emerging-market suppliers are going to really *get* the concepts of anti-bribery and corruption? You can provide a clear road-map, but putting calendar dates down for personal and organizational change is a dangerous proposition.

BE HONEST ABOUT THE EFFORT REQUIRED TO CHANGE

Berglas: Don’t minimize the challenge. When you critique someone with a history of success you have to assume that the flaws you see in them are (a) entrenched, and, (b) something they have long grappled with to suppress or get past. Saying, “No big deal” to that sort of issue can scare the socks off someone who knows that what you’re targeting for change is an issue they have battled unsuccessfully for years.

Sustainability is probably the biggest, most complex challenge that the world has ever faced -- and individual organizations trying to navigate a highly interconnected system in which it has limited leverage and resources is not an easy task. (Hah, understatement!) So don't portray the journey as all rainbows and kittens. It's going to be hard, and there are going to be really tough decisions. People need to understand that the road is going to be long, and the challenges are going to be scary--but that all great, epic adventures start with a seemingly insurmountable mountain to climb.

Looking to start a new sustainability project but need to gain support? Find out ways to gain that support for your new project or idea here!

What Sustainability Practitioners Need to Know About Water

The SSC Team September 8, 2015 Tags: , , , , Strategic Sustainability Consulting No comments

Enjoy this article from the SSC blog archives:

While carbon emissions management and reporting tend to be the first "big picture" sustainability issues that companies tackle, water is poised to become "the next big thing" in terms of corporate sustainability risk management. As always, we're staying on top of it--culling through the best resources and guides to help our clients effectively tackle the issue.

Because we love to share- and don't want to re-create the wheel- here are three articles that bring home the most important tools, concepts, and frameworks related to corporate water management. Enjoy!

The four pillars of water risk assessment 

In this economic climate and as part of our natural lives we are all familiar with undertaking risk assessments in our everyday professional and personal existence; from the most basic travel decisions ensuring punctuality, to the most comprehensive health and safety issues ensuring the safety of our colleagues in the workplace.

How far away is a standardised approach to water reporting? 

With corporate awareness of water-related risk growing exponentially, so the demand for a standard means of measuring and reporting water usage increases. Katharine Earley explores current practice in benchmarking usage at a global level, and examines the tools and guidelines available to companies as they unravel the complex web of their water footprint. 

Reporting water risks: A step-by-step guide 

An increasing number of companies are experiencing detrimental water-related business impacts, including operational or supply chain disruptions and property damage from flooding, to name a few. These impacts can be costly -- in 2011 they cost some companies up to $200 million -- and have caught the attention of investors around the world. To make the reporting process easier, WRI has aligned its Aqueduct Water Risk Atlas with CDP’s water questionnaire. 

If you are interested in corporate water management, you'll love our free white paper Every Last Drop: Water and the Sustainable Business. Got another water resource to share? Leave a comment, or talk to us on Twitter (@jenniferwoofter).

What Sustainability Practitioners Need to Know About Water

The SSC Team September 8, 2015 Tags: , , , , , , , , , , , , Strategic Sustainability Consulting No comments
Enjoy this article from the SSC blog archives: While carbon emissions management and reporting tend to be the first "big picture" sustainability issues that companies tackle, water is poised to become "the next big thing" in terms of corporate sustainability risk management. As always, we're staying on top of it--culling through the best resources and guides to help our clients effectively tackle the issue. Because we love to share- and don't want to re-create the wheel- here are three articles that bring home the most important tools, concepts, and frameworks related to corporate water management. Enjoy!

The four pillars of water risk assessment

In this economic climate and as part of our natural lives we are all familiar with undertaking risk assessments in our everyday professional and personal existence; from the most basic travel decisions ensuring punctuality, to the most comprehensive health and safety issues ensuring the safety of our colleagues in the workplace.

How far away is a standardised approach to water reporting? 

With corporate awareness of water-related risk growing exponentially, so the demand for a standard means of measuring and reporting water usage increases. Katharine Earley explores current practice in benchmarking usage at a global level, and examines the tools and guidelines available to companies as they unravel the complex web of their water footprint.

Reporting water risks: A step-by-step guide

An increasing number of companies are experiencing detrimental water-related business impacts, including operational or supply chain disruptions and property damage from flooding, to name a few. These impacts can be costly -- in 2011 they cost some companies up to $200 million -- and have caught the attention of investors around the world. To make the reporting process easier, WRI has aligned its Aqueduct Water Risk Atlas with CDP’s water questionnaire. If you are interested in corporate water management, you'll love our free white paper Every Last Drop: Water and the Sustainable Business. Got another water resource to share? Leave a comment, or talk to us on Twitter (@jenniferwoofter).

Should You Pare Down Your Sustainability Agenda?

The SSC Team August 27, 2015 Tags: , , , , , , Strategic Sustainability Consulting No comments
Enjoy this blog from the SSC archives: At the beginning of the year, a lot of people find themselves making long lists of things to achieve over the next 12 months. And ambitious sustainability agendas are no exception--it seems like we're always being pushed to do more, move faster, and achieve greater sustainability performance. After all -- we know that global challenges can't be solved by half-measures. Today, we're challenging the idea that you must do "better" sustainability by doing "more" sustainability-related activities. Instead, let's look at the benefits of doing less. And we'll start by reviewing an article called The Art of Adding by Taking Away by Matthew E. May, published last January in The New York Times. May begins his article with a quote from ancient Chinese philosopher Lao Tzu: “To attain knowledge, add things every day. To attain wisdom, subtract things every day. Profit comes from what is there, usefulness from what is not there.” This saying sparked something in May, who began to investigate the logic of problem solving by taking things away: "It dawned on me that I’d been looking at my problem in the wrong way. As is natural and intuitive, I had been looking at what to do, rather than what not to do. But as soon as I shifted my perspective, I was able to complete the project successfully." May finds that there are many ways to tie the "doing more by doing less" thinking into the business world:
  • By removing distractions, companies can focus on what really matters.
  • By searching for patterns and finding common elements, companies can spot opportunities earlier and streamline decision-making.
  • By removing product features, companies can drive innovation and reach new audiences.
So what does this mean for sustainability practitioners? Take a hard look at your company's sustainability activities -- are they clearly aligned and focused with your business strategy? Are they designed to mitigate your biggest environmental and social impacts? Are they responsive to your key stakeholders? Or...are your company's sustainability activities spread too thin and flow in so many directions it is difficult to adequately keep track of them? If your sustainability agenda doesn't revolve around a clear strategy, it's time to get off the merry-go-round and do a little paring. Here's what we suggest:
  • Conduct a materiality assessment to identify and prioritize your (internal and external) stakeholders and what they care about. This will give you a short list of sustainability topics that are the most important, and a longer list of "nice to have" activities to tackle as time permits.
  • Assess each of your existing sustainability activities against a materiality matrix. If you find that activities are falling outside of the "must have" sustainability priorities, you should consider redirecting resources to more important places.
  • Develop guidelines to help you address the importance, effectiveness, and urgency of any new activities under consideration. This will keep you on the straight and narrow going forward.
If you'd like some help in conducting a materiality assessment, please contact us! We love to take clients through this process--it's enlightening, empowering, and energizing to identify what's important (and what you can leave behind). In the meantime, we love May's final advice about how to apply this thinking to your own life: "First, create a “not to do” list to accompany your to-do list. Give careful thought to prioritizing your goals, projects and tasks, then eliminate the bottom 20 percent of the list — forever." "Second, ask those who matter to you most — clients, colleagues, family members and friends — what they would like you to stop doing. Warning: you may be surprised at just how long the list is." "The lesson I’ve learned from my pursuit of less is powerful in its simplicity: when you remove just the right things in just the right way, something good happens." Have you tried this approach? We'd love to hear what you're giving up in 2014, and what you're making more room to do! Leave us a comment or join the conversation on Twitter.

How to Set Smart Carbon Goals

The SSC Team August 6, 2015 Tags: , , , Strategic Sustainability Consulting No comments

Enjoy this blog from the SSC archives:

Every company needs smart carbon goals -- and this is especially true if you are a Walmart supplier (or sell to a retailer with a similar sustainability scorecard). But what makes a good carbon goal? You don't want to be too ambitious and fall short, but you also don't want to set such easily attainable goals that you look lazy. What is the right middle ground?

Before we jump in, we want to mention that there is much disagreement in the sustainability industry about what an appropriate carbon goal is -- and what companies should be aiming for. So please take our opinion with a grain of salt. What works for you might be different that for another organization.

Ok, let's get into it.

Should you set a goal of carbon neutral? 

Maybe. It's an admirable goal, and we love BHAGs. However, there are two main problems that we see with carbon-neutral goals. First, it's easy to slide from a meaningful effort to reduce carbon-generating activities into a focus on buying your way out of the problem with RECs and carbon offsets. Second, the challenge of zero carbon is so big that it can be overwhelming. Avoid these two problems by 1) keeping the emphasis on carbon reduction, and only purchase carbon offsets to mitigate truly unavoidable impacts, and 2) creating a year-by-year plan with shorter goals that get you to carbon neutral.

Should you set a goal aligned with IPCC guidelines?

Yes. The IPCC report is the go-to place for understanding global carbon thresholds. In it, scientists tell us we must reduce the amount of CO2 in the atmosphere from its current level of 392 parts per million ("ppm") to below 350 ppm. That equates to a global reduction in carbon emissions by 80% by 2050 (against 1995 baselines). (Read more about the science here). In order to honestly say that you are "doing your part" to stop climate change, your company should be aiming to reduce its carbon footprint at this same rate. (If you're interested in learning more, please contact us -- we have access to tools that can help you figure out what IPCC guidelines mean for your company on a year-by-year basis!)

Should you set a modest 5% - 10% goal?

Maybe. It's better to have a modest goal, rather than no goal. But our general feeling is that these types of goals are mostly suited to extremely short timeframes -- like 1-3 years. And that's great, particularly if you are just starting out and need some quick wins to build momentum. But don't overlook the bigger picture. It's critical to understand where you need to be in the long run (20-50 years from now). Focusing on that horizon will help you consider the carbon implications of capital investments, supply chain development, mergers and acquisitions, and new product development.

Should you set goals beyond tons of CO2-e?

Yes. There are lots of ways to set carbon goals. And while an absolute reduction in tons of CO2-e is a vital element of a carbon management plan, it is not complete. Consider the following to round out your approach:

  • Adjusted carbon goals (like carbon-per-production-unit, or carbon-per-$-revenue) will help you determine how your carbon efficiency is changing as you grow (or shrink) your organization.
  • Employee engagement goals (like % of employees trained on carbon reduction initiatives) will help you measure how far into your organization you have embedded your mission.
  • Supply chain goals (like % of suppliers reporting their Scope 1 and 2 emissions) will help you track how much of your Scope 3 emissions are covered, and how much you are leveraging your value chain towards sustainability.

Are simple mistakes holding back your sustainability? Find out how to correct those mistakes here!

How to Set Smart Carbon Goals

The SSC Team August 6, 2015 Tags: , , , Strategic Sustainability Consulting No comments
Enjoy this blog from the SSC archives: Every company needs smart carbon goals -- and this is especially true if you are a Walmart supplier (or sell to a retailer with a similar sustainability scorecard). But what makes a good carbon goal? You don't want to be too ambitious and fall short, but you also don't want to set such easily attainable goals that you look lazy. What is the right middle ground? Before we jump in, we want to mention that there is much disagreement in the sustainability industry about what an appropriate carbon goal is -- and what companies should be aiming for. So please take our opinion with a grain of salt. What works for you might be different that for another organization. Ok, let's get into it.

Should you set a goal of carbon neutral?

Maybe. It's an admirable goal, and we love BHAGs. However, there are two main problems that we see with carbon-neutral goals. First, it's easy to slide from a meaningful effort to reduce carbon-generating activities into a focus on buying your way out of the problem with RECs and carbon offsets. Second, the challenge of zero carbon is so big that it can be overwhelming. Avoid these two problems by 1) keeping the emphasis on carbon reduction, and only purchase carbon offsets to mitigate truly unavoidable impacts, and 2) creating a year-by-year plan with shorter goals that get you to carbon neutral.

Should you set a goal aligned with IPCC guidelines?

Yes. The IPCC report is the go-to place for understanding global carbon thresholds. In it, scientists tell us we must reduce the amount of CO2 in the atmosphere from its current level of 392 parts per million ("ppm") to below 350 ppm. That equates to a global reduction in carbon emissions by 80% by 2050 (against 1995 baselines). (Read more about the science here). In order to honestly say that you are "doing your part" to stop climate change, your company should be aiming to reduce its carbon footprint at this same rate. (If you're interested in learning more, please contact us -- we have access to tools that can help you figure out what IPCC guidelines mean for your company on a year-by-year basis!)

Should you set a modest 5% - 10% goal?

Maybe. It's better to have a modest goal, rather than no goal. But our general feeling is that these types of goals are mostly suited to extremely short timeframes -- like 1-3 years. And that's great, particularly if you are just starting out and need some quick wins to build momentum. But don't overlook the bigger picture. It's critical to understand where you need to be in the long run (20-50 years from now). Focusing on that horizon will help you consider the carbon implications of capital investments, supply chain development, mergers and acquisitions, and new product development.

Should you set goals beyond tons of CO2-e?

Yes. There are lots of ways to set carbon goals. And while an absolute reduction in tons of CO2-e is a vital element of a carbon management plan, it is not complete. Consider the following to round out your approach:
  • Adjusted carbon goals (like carbon-per-production-unit, or carbon-per-$-revenue) will help you determine how your carbon efficiency is changing as you grow (or shrink) your organization.
  • Employee engagement goals (like % of employees trained on carbon reduction initiatives) will help you measure how far into your organization you have embedded your mission.
  • Supply chain goals (like % of suppliers reporting their Scope 1 and 2 emissions) will help you track how much of your Scope 3 emissions are covered, and how much you are leveraging your value chain towards sustainability.
Are simple mistakes holding back your sustainability? Find out how to correct those mistakes here!

Deciding on a Measurement Process: Calculating Your Company’s Carbon Footprint

The SSC Team July 28, 2015 Tags: , , Strategic Sustainability Consulting No comments
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Enjoy this blog post from the SSC archives:

You can't manage what you don't measure -- but deciding what to measure, how to measure it, when to measure it, and where to capture and store the data can be one of the most challenging pieces of a carbon management strategy. If you're stuck at this stage (or getting ready to tackle it), here are some questions to guide your decision:

Which carbon calculation standard do you want to use? 

There are several carbon calculation standards out there, but 99% of companies will end up choosing the GHG Protocol. Why? 

The Greenhouse Gas Protocol (GHG Protocol) is the most widely used international accounting tool for government and business leaders to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol, a decade-long partnership between the World Resources Institute and the World Business Council for Sustainable Development, is working with businesses, governments, and environmental groups around the world to build a new generation of credible and effective programs for tackling climate change. It provides the accounting framework for nearly every GHG standard and program in the world - from the International Standards Organization to The Climate Registry - as well as hundreds of GHG inventories prepared by individual companies.

Our advice: whatever standard you choose (e.g. an industry specific standard), make sure that it's built on (and in compliance with) the GHG Protocol. It makes life so much simpler.

Which emissions categories are most relevant to your organization? 

In sustainability jargon, this is a question about materiality -- which activities within your operations and value chain generate material emissions? The GHG protocol outlines more than a dozen different categories (like "purchased electricity" and "employee commuting") to choose from. In most cases, you want to calculate emissions from Scope 1 (direct emissions) and Scope 2 (indirect emissions), along with a handful of Scope 3 (indirect emissions) categories that make the most sense given your size and industry.

Which carbon footprint tool makes the most sense?  

There are a wide variety of options to measure your company's carbon emissions. There are excel spreadsheet models, and dozens of software programs -- both SaaS and enterprise-level options. Some companies even choose to develop their own internal calculators that integrate directly with their internal systems (like ERP, timesheets, business travel reimbursement, etc.). To dive deeper into this process, check out our free white paper on Choosing Sustainability Management Software. It's a vendor-neutral look at how companies can choose the most effective software option, including the pros and cons of some of the most popular software features.

How will we manage the process? 

How many facilities are we going to include? Where is the raw data now, and how will we get it into our carbon calculator? Where are we missing data, and how can we best fill in the blanks? What is our timeline? All of these questions should be answered -- at least tentatively -- at this stage of the process.

Are simple mistakes holding back your sustainability? Find out how to correct those mistakes here!