Much different to what it was 20 years ago, it’s definitely out with ‘tree hugging’ and in with modern sustainability and the duties and responsibilities imposed on businesses. With regulation both locally and internationally now stipulating minimum requirements ‘modern sustainability’ is a hot topic amongst Boards.
UK regulators are clamping down on false green claims on consumer products and as recently reported in an online Financial Times article on 19 August 2021 by Helen Thomas on Greenwashing in the UK , it is clearly not easy for businesses to navigate the ever-changing ‘green’ landscape.
Locally, the recent change in the Guernsey Finance Sector Code of Corporate Governance (the “Code”), which asks boards of companies to which the Code applies (and for those to which the Code does not apply it is certainly necessary to comply for the sake of good corporate governance) to consider the impact of climate change on their strategy and risk profile and, where they judge it appropriate, make climate change related disclosures. This welcomed change introduces timely climate change related disclosures and drives business focus towards climate change and showcasing Eco- Compliance in accordance with international principles is the way forward. The challenge faced by most businesses now is to not only assess the impact of the recent Code change, but also what practical steps to take to adhere to the Code and look towards future international gold standard compliance.
Whilst the demand and practice of Environmental, Social and Governance (“ESG”) reporting have increased, there still lies a considerable knowledge gap between ESG information and supply. This gap is driven by several factors such as various reporting standards and frameworks as highlighted by the Duff & Phelps study in Thomas’ Financial Times article, evidencing a perplexing 14 different ESG frameworks!
This surely creates space for a prelusive disclosure that meets international regulatory requirements such as the internationally accepted Task Force on Climate-Related Financial Disclosures (“TCFD”) but with future scope.
It is crucial to create Board awareness surrounding sustainability and the businesses’ impact on climate change, operating a user friendly climate risk assessment model that considers the four pillars of TCFD at a fundamental level, then benchmarking to enable reporting and analysis, allowing local requirements to be met and encompassing future growth opportunities is optimal.
The international pandemic has proved that, when compelled, it is possible to create real and impactful change and ESG momentum is certainly building, but more prominently how we align it with our business models is at the forefront together with market integration. The new regulation in the Code is a positive step towards meeting the UK Chancellors target of making TCFD reporting mandatory across the UK economy by 2025, so right now businesses should recognise that TCFD is on the horizon and start identifying the opportunities and risks that climate change and the transition to Net Zero present for their business. Only then, can a strategy for maximising opportunity and minimising risks be developed and appropriate reporting metrics designed. Strategy, Metrics and Targets are an integral part of any business, however what this looks like in terms of climate change and sustainability are fairly new concepts to most businesses and with the confusing number of frameworks available we have the ability in Guernsey to simplify the process based upon international best practice with the TCFD framework. This creates scope to tier the requirements and locally benchmark companies, providing full transparency for Boards and producing Guernsey’s own standard in Sustainability.
Explore how Aspida can help:
As Companies begin to focus on either complying with regulation or fulfilling their own pledges on net zero, we are frequently asked how businesses should measure, quantify and report on climate related risks and with this in mind, our Aspida Advisory team of leading advisory and compliance specialists has launched the Aspida Climate Risk Assessment offering, partnered with industry experts on corporate sustainability with local presence ESi Monitor.
Get in touch with the Aspida Advisory team today to find out more on how we can help your business with not only meeting sustainability requirements, but also identifying and managing risks and opportunities: Email us at email@example.com or visit https://aspidagroup.com/services/complianceandrisk/