The countdown to COP28 is well and truly on, and high on the agenda set out by new president, Dr Sultan al-Jaber, is a global stocktake of progress made against the emissions commitments made in Paris seven years ago, with national performance coming under scrutiny before the 2030 target date.
But regardless of the specific agenda for COP28, or the inevitable debate over expected outcomes, let me say this; Dubai is just one moment in time. The bigger point for business leaders is that more change is coming, and it’s time to be proactive, anticipate the risks, and future-proof your business.
Being ready means looking beyond the noise surrounding COP this year, or even next, to some of the longer-term trends shaping the Environmental, Social and Governance (ESG) landscape.
ESG has matured
The starting point is to recognise how ESG has matured as a discipline. What used to be called business ethics, driven by internal codes of conduct, has evolved and expanded to become a fundamental part of doing good business, akin to clear business objectives and stakeholder engagement.
Whatever the outcome at COP28, ESG concerns will continue to dominate global policy debates and therefore commercial strategy. Across geographies, industries, services and products, the ESG agenda will define access to markets, impact the cost of capital, and increasingly influence a company’s ability to attract top talent. Adoption of ESG principles will determine an organisation’s ability to succeed, or merely survive in this new landscape.
This is the next context in which businesses must assess the suitability of their current risk management and assurance strategies. As policymakers debate the precise route that the path to Net Zero will take, the exact requirements behind Green House Gas verification, or the details behind supply chain due diligence legislation, companies need to have the support and frameworks in place to pre-empt those issues. This has gone so far beyond organisations being compliant. This is about being confident and competitive, wherever policy and legislation goes.
Scope is deepening
It’s clear that ESG requirements are becoming not just broader, but also deeper as governments look to the private sector to help solve deep-rooted and complicated issues. Our advisory teams are working with clients to ensure that strategies are much more holistically thought-out – from the way risks are identified in the first place, to the design of effective initiatives and the ability to monitor and report accurately. This ‘end-to-end thinking’ reflects the growing strategic status of ESG as a discipline and its integration into every aspect of management systems, business planning and operational delivery.
What’s more, companies must consider how risk management strategies across the E, the S, and the G may overlap. Yes, companies are recognising that climate change can impact business assets and performance, and we’re seeing businesses take measures to adapt and mitigate those climate risks. But companies must also consider the human rights and social implications of how they respond to climate change by conducting due diligence on their climate action, including their supply chains. The UN describe this as a ‘Just Transition’, meaning companies must embed human rights, social dialogue, and fair employment principles into climate risk management strategies to deliver shared benefits for businesses, workers, and communities (UN, 2023).
These requirements are going to be overwhelming for many, but prompts an important question about the tools needed for the job. Which brings us to…
Data - the great enabler
As is so often the case, in the midst of so much uncertainty and complexity, there is also opportunity. LRQA’s own strategy reflects our firm belief that, over time, data and technology will transform how companies approach ESG management and at the same time, redefine the art of the possible.
We are seeing a fast-evolving ESG and data analytics market, and LRQA’s own supply chain intelligence platform, EiQ, is a world-leading example of using data to help organisations identify, prioritise and manage risk to drive business performance and meet regulatory requirements. EiQ delivers unique, actionable insight to enable end-to-end supply chain ESG due diligence and equips organisations with a form of ‘fitness tracker’ for their value chain, which can inform strategy.
This accelerated adoption and integration of data analytics is particularly important given the shift towards ‘zero tolerance’ for greenwashing from businesses. The UN’s renewed focus on greenwashing, notable at COP last year, is just one manifestation of a coming wave of reform to sustainability reporting. In September, the International Sustainability Standards Board (ISSB) indicated that 30 countries have now committed to introduce, or consider introducing, its standards into jurisdictional requirements.
Finding a partner
The implication of these developments could not be clearer: ESG investments count for nothing if companies fail to introduce and integrate comprehensive and verified sources of data at the same time.
From inspection services, cybersecurity, advisory to assessment, helping clients create and demonstrate meaningful change is in the very DNA of our business. We’re proud to have worked with Repsol, a global multi-energy company, who successfully achieved ISO 14067 – the international standard for quantification and reporting of a product’s carbon footprint. LRQA also this year worked with Bridgestone, the global leader in tyres and sustainable mobility, to verify their first-ever carbon-neutral tyre manufacturing facility in India according to the international PAS 2060 standard.
Whatever happens post-COP28, it’s evident that ESG performance will need to continue to improve across every sector. The existential risk being debated at COP28 is a sobering reminder that our capabilities as a global assurance partner have never been more mission-critical - shaping a more sustainable and secure future not just for businesses, but for people and the planet.
This article is part of the ‘LRQA on COP28’ series, covering a number of topics in the lead-up to COP28 from third-party verification of carbon emissions to data driving ESG transparency.