The move will help create a greener economy, end greenwashing, and add real PR value.
There is no escaping the fact that companies are playing and will continue to play a major role in creating and maintaining a global green economy. This was made apparent at this year’s COP26 (The 26th U.N. Climate Change Conference), which concluded last month and emphasized that new standards for measuring Environmental, Social, and Governance (ESG) practices will be forthcoming thanks to the creation of International Sustainability Standards Board (ISSB).
This step has been a long-time coming since corporate efforts to promote their ESG activities with investors, as well as customers, have grown as an important contributor to getting people on the same page in supporting a climate agenda that works.
As a matter of fact, according to S&P Global, 1,386 companies took part in the company’s Corporate Sustainability Assessment in 2020. This compares to 280 companies in 1999, and it highlights how many companies are now placing value in ESG.
However, over the years, a single framework on how to measure and report ESG has been missing, especially since several varied reporting standards were created by different bodies, but without unification between them.
For example, there’s the Global Reporting Initiative, as well as the Sustainability Accounting Standards Board (SAAB), among others, and what practices to follow have led to inconsistent reporting and an inability for investors to accurately compare company results.
Xenophon Strategies even helps companies prioritize their ESG practices, but the fact that no unified framework exists has been a sticking point for investors, consumers and even governments because without a baseline, how does one truly measure a company’s ESG efforts and accomplishments?
Additionally, a lack of real and reliable ESG measurements also hurts a company’s public relations and overall reputation, especially if a company is seen to be “greenwashing” its products and image.
Whether intentionally or not, several companies in recent years have been called out to promote themselves as more sustainable and environmentally friendly than they really are. And not to call any specific company out, ones accused of greenwashing have ranged from clothing manufacturers, oil enterprises, restaurant chains, and household goods producers.
The list is longer than it should be, but a new framework by the ISSB that sees companies adhering to the same measurements and reporting guidelines will hold everyone accountable, put an end to greenwashing, and add value to a company’s PR.
Of course, the implementation of unified standards is also critical to investments and the global market. Investors will be able to make more accurate evaluations and decisions regarding long-term capital investments with corporations that are adding real value to a greener economy.
With the creation of the ISSB, there is still some time to wait, however, before standards will be released. An early timeline has the ISSB publishing ESG standards in 2022, followed by application in 2023, and ESG reporting from companies taking place in 2024.
Nevertheless, these new standards are right around the corner and will soon help strengthen global objectives for a greener and more sustainable economy and environment.