Progress, not perfection
We weren’t short of bold commitments last week as world leaders jostled for primacy in the global climate debate.
In the UK, Prime Minister Boris Johnson set a new target to reduce emissions by 78% by 2035. China reaffirmed its commitment to achieve carbon neutrality by 2060. The European Union pledged at least a 55% cut in emissions by 2030. The United States stated it would reduce its greenhouse gas emissions by 52% below its 2005 levels by 2030 – the most ambitious target the US has ever set.
Business leaders, too, used Earth Day to set out their commitments to tackling climate change. Advertising giant WPP announced its goal to reach net zero carbon emissions in its operations by 2025, and across its entire supply chain by 2030. A laudable pledge rightly winning praise from commentators, stakeholders and industry peers.
Meanwhile, investors are on the hunt for ESG compliant targets. Blackrock, the world’s largest asset manager, secured over $125bn for the launch of its Carbon Transition Readiness ETF launch last week – an ETF focused on US companies considered most likely to prosper in the transition to a low-carbon world.
Publishing emissions targets is, therefore, a no-brainer. The temptation is to follow world leaders and global behemoths and set bold, sweeping commitments to deliver carbon neutrality in the next five to ten years. Simply acknowledging an issue with your operations or supply chain will boost your ESG rating and attractiveness to investors.
But investors aren’t expecting your business to solve environmental problems on your own and all at once.
They recognise that not everyone has the financial might to deliver change at speed. Making commitments is important. But long-term success will be secured by delivering tangible, incremental, results. And ultimately that comes down to the goals you set.
Setting realistic targets and establishing clear processes for measuring success will win the attention of asset managers looking to support the next ESG trailblazers. There are real opportunities for businesses everywhere, regardless of sector, to position themselves for long-term success with the right ESG communications strategy.
Even if you don’t meet your targets, regularly communicating what you’ve done and providing an honest appraisal of why you may have fallen short, will be welcomed. Your commitment and transparency matters.
The independent Climate Change Committee agrees. When commenting on the UK Government’s pledges last week, they said: we need to be honest about what is required to deliver on the promises made. Substantially reducing emissions in the next ten years sounds great, but it will require fundamental changes to all our lifestyles.
Rome wasn’t built in day. There is little consensus about what, how, and how much, companies should report. So, keep things simple. Set realistic goals. Take the first step. Concentrate on and communicate your progress, not perfection.