What are the next logical steps on the Sustainability Journey for an organization committed to carbon reduction? What is the starting point for a company setting its sights on improved performance across a multitude of ESG ratings platforms?
As a consumer goods company openly dedicated to wellness, safety, and transparency, our client was already actively engaged in social initiatives and community partnerships, with the goal of reaching more people and providing access to safe product options for all. With a strong focus on rigorous ingredient and material assessment, formulation testing, and quality and safety validation, the company practices continuous improvement with ongoing reevaluations, continued learning, and constant innovation. While our client has always embedded ESG and sustainability in its purpose and values, the company’s sustainability team reached out to ADEC ESG Solutions for support in bringing sustainability to the forefront of its mission to make a positive impact and address stakeholder needs.
ADEC ESG Solutions’ deep expertise in greenhouse gas (GHG) emissions management, ESG disclosure and reporting, and stakeholder engagement encouraged our client to reach out for support as it took these important steps along its Sustainability Journey.
Scope 1 and 2 GHG Emissions Inventory and Management
Well-organized data collection processes are necessary to develop high-quality emissions inventories. This data can also create the basis for emissions reduction targets, mitigation strategy identification, and GHG emissions-related metric monitoring.
Using client-provided data for the 2021 reporting year, we developed scope 1 and 2 GHG inventories covering all of our client’s direct operations. This involved collaborating with various client teams to standardize data collection and streamline future data collection efforts.
First, our team identified emission factors and calculated emissions, employing a structured calculation process complying with the World Resources Institute GHG Protocol, the globally recognized standard for corporate GHG emissions methodologies. To put together this inventory management plan, we systematically documented the GHG emissions inventory process, data, and systems. This documentation enables consistent replication of the GHG emissions inventory in future years and serves as a key document in third-party verification efforts.
Scope 3 GHG Emissions Screening and Roadmap
For many companies, scope 3 emissions are a large and complex part of emissions portfolios, and understanding the extent and magnitude of these emissions is essential. To help our client’s team start building a solid foundation for its GHG scope 3 data, we conducted a boundary analysis, which enabled us to better understand the company’s value chain and identify relevant scope 3 emissions categories. We then conducted a screening of scope 3 emissions, which gave us a better idea of the magnitude and impact of each scope 3 category. Lastly, we worked with our client to identify emissions factors specific to its scope 3 activities, developing a data collection roadmap for each emission source. These roadmaps can be used by our client to make progress towards other goals such as capturing and managing relevant scope 3 emissions, preparing to set science-based targets, conducting third-party verification, and developing a strong supply chain engagement program. They can also be used to demonstrate a strong commitment to emission reduction in future CSR reporting, CDP reporting, or other annual reporting.
Our team analyzed the fitness of each data input for more advanced ESG workstreams that depend on high-quality GHG data, such as strategy identification and performance monitoring. We provided recommendations in the near- and medium-term to improve data management practices and improve our client’s ability to meet its ESG objectives.
ESG Reporting Management
Clear communication is a key part of any ESG program. Setting targets, declaring future plans, demonstrating progress, and communicating results are all actions that offer transparency and illustrate that a company’s ESG program is organized, resilient, and data-driven. These aspects of ESG reporting also enable companies to improve investor responses.
We supported our client in developing comprehensive and holistic management of its ESG disclosure and reporting platforms and performance. This included support for the following frameworks, ratings, and platforms:
- Morgan Stanley Capital International (MSCI)
- Sustainalytics’ ESG Risk Ratings
- Institutional Shareholder Services (ISS) ESG Services
We started by establishing a solid baseline and foundation, assessing each individual platform on the basis of functionality, materiality, and how it aligned with our client’s overall ESG goals. We then assisted in the development of reporting processes and systems that streamlined future ESG reporting. This included conducting a gap analysis and providing recommendations on key program metrics, specific to our client, that would work toward improving the client’s responses and performance on these platforms. This targeted approach created efficiencies between platforms and allowed our client to focus its resources on principal areas of impact, rather than develop out full systems. This process also included an improvement and action roadmap for each platform to maximize performance.
As a result, our client’s team better understood existing gaps in its programs and began taking steps to develop strategies that would allow them to move forward on the company’s Sustainability Journey.
Investor Tear Sheet Development
Early in the collaboration process, a gap analysis showed that two aspects of our client’s ESG reporting would be better served by a dedicated investor tear sheet: the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) reporting platforms. The ADEC ESG team met with many of our client’s internal stakeholders to better understand its programs across environmental, social, and governance spheres. The resulting tear sheet gives our client a clear, precise avenue to communicate on SASB and TCFD reporting to investors, who have begun prioritizing ESG metrics more each year. Beyond SASB and TCFD requirements, the tear sheet highlights our client’s dedication to social topics, which are an important aspect of the company’s values.
Website Stakeholder Engagement
With the goal of effectively communicating its Sustainability Journey, ESG initiatives, and goals, we supported our client in developing its website’s ESG strategy and content. Tapping into ADEC ESG’s in-depth experience working with stakeholders at all levels, we worked closely with client teams to provide advisory support on how to improve ESG disclosure content. As a part of this initiative, our client also improved the clarity and accessibility of key policies on its website.
This consumer goods company deeply values operating sustainably and in a way that demonstrates its commitment to the communities it serves. Its sustainability team is setting a strong foundation for an ambitious ESG program, and we look forward to being a trusted partner as they continue to grow.
Results and Deliverables
- Foundational GHG emissions inventory for scopes 1 and 2
- Improvement roadmaps for scope 3 emissions data collection
- Strategic and gap analysis of ESG ratings and reporting platforms
- Improvement roadmaps for ESG ratings and reporting performance
- Investor tear sheet aligned to SASB and TCFD frameworks
- ESG website vision and strategy