Are Changes in Sustainability Reporting and Audits Coming?

How businesses can prepare for potential impacts on ESG standards

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What a whirlwind start to the New Year for businesses in regard to their environmental impacts, as recent events have created questions surrounding what’s in store for reporting and reduction processes, and what actions organizations should be taking.  Let’s revisit the sudden causes for uncertainty across the nation.

First, on January 14th, the Chairman and CEO of BlackRock, Larry Fink, issued his annual letter to CEO’s which included pointed expectations for companies – ultimately pressuring them to positively impact society by reducing and reporting their environmental impacts, as well as provide assurance to investors that their reporting is reliable and accurate.  This influence could have a major hand in changing transparency and sustainability practices for many businesses.

Simultaneously, at the World Economic Forum, corporate leaders have called on representatives from the world’s largest four accounting firms to assist in determining “green” audit standards. This is a massive undertaking, led by groups that don’t historically represent food and ag, and there are currently hundreds of separate frameworks and standards that are designed around reporting a company’s environmental impacts.

While decisions on standardizing sustainability audits could take years, companies need to take action now to maintain their social license to operate. Measuring and reporting Environmental and Social Governance (ESG) impacts can be complex and unfamiliar. There are added complexities when impacts include land and animal-based food systems.

“Now is not the time to wait and see,” says Matt Armstrong, sustainability advisor at K·Coe Isom. “The best action is to be proactive, identify what your organization’s environmental impacts and climate risks are, and stay ahead of changes.”

Preparing for ESG Impacts

Here are a few examples of how an organization can get started:

  • Complete a carbon inventory: Identify all aspects of your business that emit greenhouse gas emissions. From production processes on the farm to manufacturing practices in your food plants, your business likely emits greenhouse gas emissions that need to be tracked and reported.
  • Set a baseline and goals: Once you inventory your carbon emissions, your company can calculate emissions and set a baseline on which to measure change and show progress and action to your key stakeholders. Setting goals shows your stakeholders that you are interested in driving change – that you are mitigating climate risks by driving change across your business.
  • Assure your data: Verifying your inventory and baseline shows stakeholders that you are providing accurate, reliable information.

“Regardless of outcome, there are countless indications that intent to change course toward increased transparency is serious, and businesses will ultimately be held accountable for new reporting and audit standards,” adds Armstrong.

K·Coe Isom’s sustainability team will be monitoring the situation as it develops.

K·Coe Isom has been providing guidance on framework implementation and assessing environmental impacts since 2001, and currently leads food and agriculture in sustainability assurance and auditing. As specialists in carbon measurement, goal setting, sustainability program development and assurance, K·Coe can assist your organization navigate new expectations from financial stakeholders, management, and customers.  Contact a sustainability advisor with questions or concerns. 

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