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Sustainability consulting market to double by 2027

Posted on February 14, 2022February 14, 2022 by dishanth

The sustainability consulting market is set to more than double over the next five years, according to a new report from research firm Verdantix.

Spending by companies on environmental, social and governance (ESG) and sustainability consulting services hit US$6.24 billion globally at the end of 2021, and is projected to grow to US$16 billion by 2027, the study, ESG and Sustainability Consulting: Market Size and Forecast 2021-2027, estimated.

Regulatory changes that mandate sustainability reporting and pressure from stakeholders to acknowledge climate risk and decarbonise, will boost sustainability consulting spending in all regions and in all sectors, the study said.

ESG and sustainability consulting services are expected to grow by 17 per cent a year between 2022 and 2027, but corporate reporting and disclosure services will see the largest increases, with a compound annual growth rate of 21 per cent.

Market growth will be swiftest in Europe, Middle East and Africa, but there will be comparable growth in Asia Pacific and North America, the study projected.

Clampdowns by regulators and other law enforcement authorities in Europe and the United States have led to greater scrutiny of ESG commitments. US and German regulators are probing Deutsche Bank’s AG asset management following allegations last year that the firm overstated the credentials of some ESG-labeled investment products. This has prompted other companies to verify their own public statements related to ESG.

Previous data from Verdantix showed that acquisitions in the sustainability consulting sector tripled last year on the back of a surge in spending on ESG services and demand for sustainability expertise.

The report’s author and Verdantix research director, Kim Knickle, said that consultancies stand to benefit as companies look for external expertise to help them re-engineer their business models around sustainability, and adapt to more rigorous reporting requirements as regulations increase.

Singapore Exchange (SGX) became the first stock exchange in Asia propose mandatory climate disclosures aligned with the Task Force on Climate-related Financial Disclosures last August. Most stock exchanges in Asia Pacific now mandate sustainability reporting, but rules are expected to tighten as scrutiny grows over the quality and effectiveness of reporting.

Source Eco Business

Google to help fashion brands map ESG supply chain risks

Posted on November 26, 2021November 26, 2021 by dishanth

Consumers are demanding more transparency about where their clothes are produced and under what conditions. With the average supply chain for a merino sweater spanning 28,000 kilometres, fashion brands have the colossal task of tracing a product’s history from field to shelf in a bid to clean-up the sector’s spotty environmental, social and governance (ESG) record.

In partnership with conservation group World Wide Fund for Nature (WWF), fashion label Stella McCartney and non-profit The Textile Exchange, the search giant has developed the Google Impact Fibre Explorer, that it says will enable companies to identify the biggest risks associated with more than 20 fibre types in their supply chains, including synthetics.

Despite sustainability pledges, the fashion industry is failing to tackle its hefty carbon and environmental footprint and is on a trajectory that will far-exceed the pathway to mitigate climate change to align with the United Nation’s goal of keeping global temperatures from rising above 1.5°C since pre-industrial times, according to research by McKinsey, a consultancy.

The fashion industry is one of the largest contributors to the global climate and ecological crisis — accounting for up to 8 per cent of global greenhouse gas emissions.

A large chunk of emissions could be avoided in its upstream operations with approximately 70 per cent of the industry’s greenhouse gas emissions stem from energy-intensive raw material production.

The Global Fibre Impact Explorer (GFIE) dashboard allows brands to upload their fibre portfolio data and get recommendations to reduce risk across key environmental categories. Image: The Keyword, Google

Environmental factors such as air pollution, biodiversity, climate and greenhouse gasses, forestry and water use are calculated to produce risk ratings. The tool will also provide brands with recommendations for targeted and regionally specific risk reduction activities including opportunities to work with farmers, producers and communities.

During a pilot phase, British fashion house Stella McCartney was able to identify cotton sources in Turkey that are facing water stress.

Brands such as Chanel, Nike and H&M are among the 130 companies that have pledged to halve their greenhouse gas emissions by 2030 under the renewed United Nations Fashion Charter announced last month during climate talks in Glasgow. Alongside updated commitments to cut emissions, the charter promises to reduce the environmental impact from the use of materials such as cotton, viscose, polyester, wool and leather.

The renewed agreement is more ambitious than a previous commitment in 2018 to cut emissions by a third. Nevertheless, the signatories represent a slither of the vast garment and footwear industry with fast-fashion brands such as BooHoo, Shein and ASOS notably missing from list.

The textiles sector also called for policy change to incentivise the use of “environmentally preferred” materials, such as organic cotton and recycled fibres earlier this month.

Consumers do not want to buy products made with forced labour…Without government regulations, many companies will continue to make choices based on profits not on rights.

Laura Murphy, professor of human rights and contemporary slavery, Helena Kennedy Centre for International Justice

Improved data mapping tools should help to shed light on fashion’s murky supply chains. Many brands do not have reliable information on their upstream suppliers beyond the manufacturers they deal with. Data from cotton farms and spinners are rarely available on paper, let alone a digital format. Blind-spots are perpetuating environmental and social problems that have dogged the industry for decades.

Cotton supply, in particular, has come under the spotlight. China’s northwestern Xinjiang region, which produces a fifth of the world’s cotton, is where the Chinese government has allegedly committed grave human-rights violations against the largely Muslim population of Uyghurs and other minorities.

A new report published on 17 November by Sheffield Hallam University in the United Kingdom analysed supply chain connections identified through shipping records to show how cotton from the Uyghur region circumvents supply standards and import bans to end up in consumer wardrobes around the world.

In the report, Laundering Cotton: How Xinjiang Cotton is Obscured in International Supply Chains, Professor Laura Murphy and co-authors identify more than 50 contract garment suppliers – in Indonesia, Sri Lanka, Bangladesh, Vietnam, India, Pakistan, Kenya, Ethiopia, China and Mexico – that use the Xinjiang fabric and yarn in the clothes they make for leading brands, “thus obscuring the provenance of the cotton.”

“The benefits of such an export strategy may be clear: the end buyer is no longer directly involved in buying Xinjiang cotton,” the report said. “International brands and wholesalers can buy from factories in third countries that have few visible ties with Uyghur region-based companies.”

The researchers identified over 100 international retailers downstream of Xinjiang cotton, Murphy told media on a call on Friday. These include Levi Strauss, Lululemon, H&M, Marks & Spencer and Uniqlo, according to the report.

“Consumers do not want to buy products made with forced labour,” Murphy told Eco-Business. “We need our governments to insist that companies trace their supply chains back to the raw materials and make those findings public. Without government regulations, many companies will continue to make choices based on profits not on rights.”

Source Eco Business

Building a nature-positive economy

Posted on May 5, 2021 by dishanth

The planet’s ecosystems are nearing critical tipping points, with extinction rates 100-1,000 times higher than they were a century ago. Our current economic system has put natural resources under ever-increasing pressure.

As the recent UK Treasury-commissioned Dasgupta Review of the Economics of Biodiversity puts it, our economies “are embedded within Nature … not external to it.” The task now is to embed this recognition in our “contemporary conceptions of economic possibilities.”

Many businesses, recognising the perils facing the planet, are changing the way they operate. But they can’t do it all alone, and the current rules of our financial and economic system must change if we are to build an equitable, nature-positive, net-zero future.

Such changes make economic sense. Firms that take a long-term view and meet the needs of all stakeholders by prioritising environmental and social risks and opportunities over short-term gains and profitability outperform their peers in terms of revenue, earnings, investment, and job growth. Similarly, companies with strong environmental, social, and governance (ESG) policies perform better and have higher credit ratings.

According to the World Economic Forum’s 2021 Global Risks Report, four of the top five risks to our economies are environmental – including climate change and biodiversity loss. Human-driven nature loss, its links to the spread of diseases such as COVID-19, and the estimated $300 billion annual cost of natural disasters caused by ecosystem disruption and climate change highlight the risks of unbridled economic growth. Thinking beyond GDP and short-term profit is therefore essential in order to restore our relationship with the planet and transform our system into a viable one.

The true risks arising from nature loss and climate change often are not accounted for or understood, including by investors. The economic cost of land degradation amounts to more than 10% of annual gross world product, and human-caused declines in ocean health are projected to cost the global economy $428 billion per year by 2050. The flip side is that shifting toward a nature-positive economy could generate $10 trillion of business opportunities and create nearly 400 million jobs.

…governments must implement ambitious policies that reflect a vision of the sustainable economy to which we aspire. Such measures could not only unlock new business opportunities but also create a level playing field and stable operating environment.

Thriving companies supporting this transition are in a true leadership position. But if a sustainably-oriented firm’s profits dip, reality hits. Investors often chase short-term profits instead of using ESG indicators as a credible proxy – alongside financial performance – to measure a company’s value. This definition of business success must change.

Consider the case of consumer goods multinational Danone. In 2020, Danone became the first listed French company to adopt the model of an entreprise à mission, or purpose-driven company, when 99% of shareholders agreed to embed sustainability into the firm’s governance structure. This year, the company came under increasing pressure from activist shareholders – including from those in the 1% who opposed the new model – owing to what they regard as the firm’s “prolonged period of underperformance.” While Danone’s share price has underperformed those of its rivals, the company is not in the red. Nonetheless, in March it announced the departure of Chairman and CEO Emmanuel Faber, who had championed the firm’s sustainable business model.

It is fair to say that not all shareholders value the same things, and the fact that investors are questioning companies’ ESG efforts can only be positive. But that should not stop advocates of a purpose-driven strategy that considers a wider range of stakeholders and their interests from seeking ways to strengthen the rules and bolster non-financial performance further. As the Dasgupta Review argued, we must “change our measures of economic success to help guide us on a more sustainable path.”

First, we need meaningful and credible ESG data alongside traditional financial reporting in order to counter accusations of greenwashing. Corporate performance indicators must embed the true value of natural, social, and human capital to reveal the full state of health of the planet, people, and profits. To that end, efforts are underway to develop a globally accepted system for corporate disclosure of both financial and sustainability information.

Second, all investors should stop investing in activities that have a highly negative impact on the climate and biodiversity, and they should call for companies in their portfolios to issue reports aligned with the Task Force on Climate-Related Financial Disclosures and the more recently established Task Force on Nature-Related Financial Disclosures. BlackRock, the world’s largest asset manager, has asked all firms in its portfolio to do this by the end of 2020, and a group of major investors worth $4.7 trillion has committed to making their portfolios zero-carbon by 2050. In addition, the US Securities and Exchange Commission recently established a Climate and ESG Task Force charged with monitoring listed companies’ conduct in these areas.

Lastly, and perhaps most important, governments must implement ambitious policies that reflect a vision of the sustainable economy to which we aspire. Such measures could not only unlock new business opportunities but also create a level playing field and stable operating environment. In the run-up to the United Nations Biodiversity Conference (COP15) scheduled to take place in China in October, more than 700 companies are urging governments to adopt policies now to reverse nature loss by 2030. And just recently, the UN adopted a landmark framework to integrate natural capital into economic reporting.

The coming post-pandemic recovery gives the world a chance to embrace such reforms. We must rewire our economic system and reward sustainable, long-term performance that goes beyond financial returns.

Paul Polman, co-founder and chair of IMAGINE & Food and Land Use Coalition. Eva Zabey is executive director of Business for Nature.

Source Eco Business

Is A Renewable Energy Boom Coming To The Middle East?

Posted on March 16, 2021 by dishanth

The coronavirus pandemic has raised awareness among GCC countries of the importance of environmental, social and corporate governance (ESG) standards. If current trends continue, then ESG could become a valuable element of the region’s recovery from Covid-19.

ESG standards are used by investors to evaluate potential investments, as well as enabling business leaders to formulate responsible and sustainable corporate strategies.

Environmental criteria take into account a company’s environmental footprint, as well as the actions it takes to offset it. Social criteria evaluate how it manages relationships with its various internal and external stakeholders. Lastly, governance criteria evaluate the inner mechanisms of a company’s management and operations.

Demand for investments that are ethical and sustainable has been increasing in recent years. Globally, more and more investors are turning to businesses that embrace ESG, and this tendency has been boosted by Covid-19.

As phrased in a report published by S&P Global in April last year, “strong ESG performers with stakeholder-focused and adaptive-governance structures are likely to remain resilient amid these rapidly changing dynamics”.

ESG standards have become a central focus of the world’s major financial bodies. In January this year, at the World Economic Forum (WEF) in Davos, it was announced that a coalition of multinationals and business leaders had signed up to the “Stakeholder Capitalism Metrics”, a set of ESG standards released by the WEF and the International Business Council in September 2020.

“Stakeholder capitalism [has become] mainstream,” Klaus Schwab, founder and executive chairman of the WEF, told international media at the time. “The public commitments from companies to report not only on financial matters but also their ESG impacts are an important step towards a global economy that works for progress, people and the planet.”

Meanwhile, the International Financial Reporting Standards Foundation is moving forward with its plan to develop a single set of internationally recognised sustainability standards. In early February the foundation announced the goal of producing a definitive proposal by September this year.

In the GCC region, ESG has likewise become a hot topic in recent months.

For example, at the end of last year the CFA Institute – a global investment association – announced the results of a study which found that 94% of retail investors in the UAE were interested in or applied ESG principles in 2020, up from 90% in 2018.

Meanwhile, 74% of investors in the UAE with values-based objectives said they would be willing to give up some profit in exchange for meeting their values objective.

Green shoots in the GCC

Significant steps have been taken by major regional players towards a more ESG-oriented future.

Qatar National Bank (QNB) set up its Green, Social and Sustainability Bond Framework in February last year.

Related Video: Fukushima’s Radioactive Wastewater Disaster Then, in September last year, QNB launched its $600m green bond, for which it received subscriptions of more than $1.8bn. These proceeds will be used to “finance and/or refinance assets in verified Eligible Green Projects”, the bank said.

This was only the second such issuance from a commercial bank in the GCC, following the green bond of the National Bank of Abu Dhabi, as it was then known, in 2017.

In a further sign of the growing interest in such instruments in the region, in April last year the Dubai Financial Market launched the UAE ESG index, while in August Tadawul – Saudi Arabia’s stock exchange – announced that it planned to launch its own ESG index in 2021.

This was followed in September by Saudi Electricity’s $1.3bn green sukuk (Islamic bond) issuance, which was five times oversubscribed, a result that was driven by growing regional demand for ESG-compliant investments.

Saudi Arabia recently reinforced its commitment to ESG and sustainability during the Saudi Future Investment Initiative in January, at which Tadawul and the Future Investment Initiative Institute signed a memorandum of understanding to advance ESG awareness in the Kingdom.

At the same conference Prince Abdulaziz bin Salman Al Saud, the minister of energy, told media that Saudi Arabia was set to become “another Germany when it comes to renewables”.

Despite these promising indications, however, the Saudi ESG index has yet to be launched.

Elsewhere in the region, in early February the Abu Dhabi Investment Office launched an ESG policy, which it will deploy in relation to different operations, among them public-private partnerships.

ESG key to GCC recovery?

The growing focus on ESG standards dovetails with development priorities shared by countries in the GCC region.

On the one hand, it ties in to different diversification strategies. Last year’s slump in oil prices served to underline the importance of a more broad-based economy. Investments guided by ESG – for example, in renewable energy – offer a way to augment diversification.

On a related note, the Gulf is on the front line of climate change, and ESG can boost resilience as well as reducing emissions.

Lastly, globally speaking, ESG-guided companies have proven remarkably resilient in the face of Covid-19. An increased focus on ESG may thus constitute a way to drive a sustainable recovery from the pandemic.

By Oxford Business Group

Source Oil Price