Sustainability Reporting and Adaptation

Sustainability Reporting and Adaptation As the Corporate Social Responsibility, or CSR for short, reporting season concludes for many corporations—and the concept of integrated reporting – preparing one report that links fiscal and CSR data – gathers steam, the opportunities abound for companies to make their climate-adaptation efforts transparent to their shareholders, customers, employees and external stakeholders.  Stakeholders need to understand how a company is managing risks and exploiting new opportunities to make informed future decisions, and these reports are an organized mechanism to elucidate these plans.

The Carbon Disclosure Project (CDP), for instance, does a good job of pulling climate adaptation information out of companies, and the independent, not-for-profit organization has been mulling the issue since at least 2006 when it published the CDP 2006 UK Adaptation Report.  At least three industry-specific reports on building business resilience have followed since along with Carbon Disclosure Project Report 2008: FTSE 350, Building Business Resilience to Inevitable Climate Change.

The thousands of companies that report through CDP also respond to adaptation-specific questions, such as:

  • Is your company exposed to physical risks from climate change? (2.1)
  • Do physical changes triggered by climate change present opportunities for your company? (5.1)
    • Have you identified any climate change opportunities (current or future) with the potential to generate a substantive change in your business operations, revenue or expenditure? (6.1)

By contrast, the Global Reporting Initiative is much more subtle in its adaptation questions. Someone digging for adaptation references (like me!) can see climate adaptation in questions like:

EN6 – Initiatives to provide energy efficient or renewable energy-based products and services and reductions in energy requirements as a result of these initiatives.

EN10 – Percentage of total volume of water recycled and reused.

EN 14 -Strategies, current actions and future plans for managing impacts on biodiversity.

EN20 – Total environmental protection expenditures and investments by type.

And, as mentioned in a previous blog, Securities Exchange Commission (SEC) guidance asks companies to disclose climate risks and opportunities, which some companies interpret to mean more than risks and opportunities to a price on carbon.

What really proves inspiring are the corporations that  use these tools and others to change their own behavior.  A recent piece by Nike’s Hannah Jones, “Why Sustainability Reporting Is Revolutionary” is particularly compelling.  She suggests that climate challenges can impact corporate success (citing droughts and floods and their impact on commodity prices, for example).  To her, the investor’s question is: “Will you invest in the company that innovates, is resilient and anticipates changes in the market?”  In other words, investors are trying to identify corporate-climate adaptation leaders.    The best way to identify yourself as that leader is to start talking about your climate-adaptation efforts – through rich descriptions in your CDP and SEC reports and through climate-adaptation-specific explanations in your CSR and financial reports.  Leading companies will create best practices in this budding field.