The Taskforce on Nature-related Financial Disclosures (<a href="https://tnfd.global/" target="_blank">TNFD</a>) released the fourth beta version of its risk management and disclosure framework today. This is the final beta framework before the full release for market adoption slated for September 2023.

“The TNFD is a market-led, science-based, government-backed initiative which aims to create a robust and global framework for organizations to assess, manage, and ultimately disclose their impacts, dependencies, risks, and opportunities related to nature,” said Carolin Leeshaa, TNFD taskforce member and national lead of natural capital and biodiversity at KPMG Australia.

The calls for biodiversity disclosures have <a href="https://www.triplepundit.com/story/2023/nature-related-risk-disclosures/764481" target="_blank">grown substantially</a> in the last year from consumers, investors and multilateral organizations as more research comes to light. For example, World Economic Forum data <a href="https://www.weforum.org/press/2020/01/half-of-world-s-gdp-moderately-or-highly-dependent-on-nature-says-new-report/" target="_blank">suggests</a> that half of the world’s GDP is moderately or highly dependent on nature, and further biodiversity loss will pose serious risk to our means of production. 

<h2>How does biodiversity loss impact businesses?</h2>

Nature provides critical services for business. Natural services like pollination, water purification, soil health regeneration and regulating climate are essential to all of the world’s economic activity. 

For example, “Australia is looking to get to AUS$100 billion (US$66.5 billion) of farm gate output by 2030, and about two-thirds of this target is highly dependent on honeybee pollination,” Leeshaa explained. “The bees are working for free; we’re not going to send them an invoice.”

As such, declining <a href="https://www.fao.org/news/story/en/item/1194910/icode/" target="_blank">global bee populations</a>, largely tied to intensive farming practices and global temperature rise, pose financial and systemic risks to the global economy. “This is why it is important to recognize and account for the full value of the services nature provides, so we can make better, nature-smart decisions,” Leeshaa said.

<h2>What are the drivers of biodiversity loss?</h2>

Biodiversity loss is linked to <a href="https://www.unep.org/news-and-stories/story/5-key-drivers-nature-crisis" target="_blank">five key drivers</a>, which are largely caused by human influence and impact. The most significant driver is land use change: Taking natural lands like forests and converting them to use in agriculture or urban development is pushing the lion’s share of biodiversity loss. The other drivers include climate change, pollution, overexploitation of resources and invasive species.

<h2>What’s the state of global regulations?</h2>

Announcements and agreements made at the COP15 U.N. Biodiversity Conference in Montreal in December 2022 have accelerated the global regulatory outlook on biodiversity. A global biodiversity framework (<a href="https://www.cbd.int/article/cop15-cbd-press-release-final-19dec2022" target="_blank">GBF</a>) was adopted by 196 member states, which includes four goals and 23 targets. The TNFD is working to be closely aligned with the global framework.

One of the main highlights of the global biodiversity framework is the ‘30x30’ target, whereby 30 percent of the world’s land needs to be protected by 2030. Also of importance is Target 15, which requires that signatory governments move to mandate large companies and financial institutions to regularly disclose their biodiversity impacts, dependencies and risks. 

The wheels are in motion, and although reporting at this point is still voluntary, businesses should prepare now for the eventuality of mandatory biodiversity disclosures. “The scale and momentum around nature and biodiversity has been quite remarkable," Leeshaa said. "What took climate maybe 10 to 15 years to achieve, nature has done in 10 to 15 months." 

<h2>What can businesses do to prepare for mandatory biodiversity disclosures?</h2>

“Educate and build awareness with your boards and your executive management around integrating nature into governance, strategy, risk management and asset allocation decisions," Leeshaa suggested. "You need to assess how nature actually impacts your business, and how your business impacts nature."

The TNFD has created a handy approach for businesses to begin their biodiversity journey and pilot the disclosure framework. It’s called <a href="https://framework.tnfd.global/the-leap-nature-risk-assessment-process/" target="_blank">LEAP</a> (locate, evaluate, assess, prepare) and acts as a four-step process. The first step is to locate your assets and activities that are near high-risk ecosystems. Evaluate means conducting a biodiversity impact and dependencies assessment in these areas. Then, assess the material risks to your organization, and finally prepare to disclose and report your findings.

<a href="https://www.triplepundit.com/story/2023/prepare-sec-climate-disclosure-rules/766336" target="_blank">Climate reporting</a> typically uses a carbon dioxide equivalent as a key metric. In biodiversity, there are many different metrics to use, complicating the process. Biodiversity disclosures also require supply chain investigation, much like <a href="https://www.triplepundit.com/story/2023/companies-prepare-sec-climate-disclosure-rules/768391" target="_blank">Scope 3 carbon emissions</a>, and businesses should begin having conversations with their suppliers to find out what nature-related data they can access.

The complexity of biodiversity reporting may scare some organizations away, but for this exact reason businesses need to come to grips with the topic. “Biodiversity reporting is coming, it’s more complex than climate, and it represents a material risk," Leeshaa said. "That’s why it’s important to get started earlier rather than later."

Image credit: <a href="https://pixabay.com/photos/red-panda-bamboo-tongue-out-mammal-1851650/" target="_blank">Pixabay</a>

Mandatory Biodiversity Disclosures Are Coming, But Don’t Panic: Steps You Can Take to Prepare

Flipping the switch to renewable-fed grids comes with challenges for power companies and operators. That’s because current grids were developed around fossil fuels with steady output and the ability to ramp up on demand. But renewable energy sources like wind and solar don’t work that way. This presents an opportunity for innovators, of which <a href="https://reactive-technologies.com/" target="_blank">Reactive Technologies</a> is one. The company specializes in technologies that help utilities transition to renewables by empowering grid operators with the measurements and data they need to keep the power flowing.

“The ongoing global transition to net-zero carbon involves massive build-out of renewable energy sources like wind and solar farms, which often replace carbon-intensive fossil fuel generators,” <a href="https://www.linkedin.com/in/fredericorauter/" target="_blank">Frederico Rauter</a>, chief revenue officer at Reactive Technologies, told TriplePundit. "While these no- and low-carbon renewable energy sources have many benefits in addition to curbing climate change, they also introduce new challenges."

<h2>A patchwork of old and new grid technologies</h2>

“With renewable energy set to become the <a href="https://www.weforum.org/agenda/2023/03/electricity-generation-renewables-power-iea/" target="_blank">top source</a> of the world’s electricity by 2025, power grid operators globally are struggling to manage the fluctuating energy supply associated with renewables — which, if not accommodated for properly, can destabilize the grid and, in the worst-case scenario, lead to supply interruptions and blackouts," Rauter explained. 

Vox reported on the inefficiency of the United States’ current <a href="https://www.vox.com/energy-and-environment/2018/11/30/17868620/renewable-energy-power-grid-architecture" target="_blank">grid architecture</a> back in 2018 — noting an increase in disturbances and calling for an overhaul designed around new, renewable technology. Unsurprisingly, that hasn’t happened. Instead, the transition to renewables looks more like new technologies jimmy-rigged to an old grid. That’s where innovators like Reactive come in.

“Traditionally, system operators have relied on fossil fuel power stations to help maintain system stability in the face of a sudden imbalance or disturbance, such as a fault,” Rauter continued, detailing how such plants can match the grid’s needs in real-time and create <a href="https://www.nrel.gov/docs/fy20osti/73856.pdf" target="_blank">stability in inertia</a>. “Inverter-based resources like solar, wind, and battery storage are connected to the grid with power electronics that do not inherently provide inertia and system strength, increasing the risk of system instability and supply interruptions. As coal-fired power plants retire and are replaced by renewables, operators have had to review the way they manage and monitor the grid to avoid risks.”

<h2>The hidden supply of renewable energy causes confusion for operators</h2>

The problem with patching renewables into a grid built for the steady flow from fossil fuels is that the supply from renewables is hidden from transmission and distribution operators, who need that information to estimate inertia and system strength. Within the power sector, inertia refers to the energy stored in power generators at a given time, while system strength measures the power system's ability to maintain the correct voltage across the grid.

“Without an accurate view of inertia or system strength, operators have in some cases been blind to potential security risks, and in others, were forced to overspend on balancing services, cap renewables integration, or even curtail their output in lieu of fossil fuels,” Rauter explained.

In his view, transmission and distribution operators are central to the energy transition and hold the key to making sure it is successful on both technical and economic fronts. But they need the right tools to be able to gauge outputs from renewables.

<h2>Tech to the rescue</h2>

Last year, McKinsey estimated that the transmission sector needs to expand by 60 percent by 2030 to keep up with the growth that’s required in renewables. But a <a href="https://www.mckinsey.com/capabilities/operations/our-insights/global-infrastructure-initiative/voices/upgrade-the-grid-speed-is-of-the-essence-in-the-energy-transition" target="_blank">hundred years' worth of development</a> is unlikely to occur in such a short timeframe. The hope is that new tech will help relieve some of that burden and make the most out of the grid we’ve got as improvements are made.

“Our technology directly measures inertia and system strength by sending pulses of power through the grid, which are measured and processed by Reactive’s grid edge measurement devices and cloud computing platform,” Rauter explained. “Using this system, operators can accurately map any deviations in levels of voltage and electrical frequency, allowing an almost instantaneous response to keep the grid in balance. With GridMetrix in place, operators around the world can reduce the risk of grid instability and bring more renewables online, safely and cost-effectively.”

Reactive's GridMetrix system is being used by transmission and distribution operators in the U.K., Italy, Germany, Australia, New Zealand and Japan. With it, Rauter said that operators are going to be able to more efficiently utilize renewable energy while protecting their system’s stability. “Our ability to measure transmission, distribution and demand level inertia will provide unprecedented transparency and allow operators globally to meet the challenge,” he said.

Image credit: <a href="https://www.pexels.com/photo/clear-sky-over-wind-turbines-next-to-simple-constructions-4727391/" target="_blank">Talal Hakim</a>/Pexels

Energy Tech Company Steps in to Help Stabilize the Grid for Renewable Power

The record-setting “blob” of seaweed headed for Florida’s coastline is getting a whole lot of attention. But beaches in the Sunshine State and across the Caribbean have seen record-setting amounts of the stuff for at least five years in a row. 

Sargassum seaweed blooms are not new either, though only in recent decades have they grown large enough to <a href="https://www.independent.co.uk/climate-change/news/seaweed-sargassum-florida-beaches-miami-b2300698.html" target="_blank">study by satellite</a>. Naturally, the phenomenon is linked to human activity. And while the problem may appear small compared to so many others, it doesn’t just threaten spring breakers’ good times. The masses of dead seaweed that wash up on shore threaten marine ecosystems, as well as the local tourism industry, the livelihoods of those working in the industry, and the <a href="https://mexiconewsdaily.com/news/experts-warn-of-danger-of-rotting-sargassum/" target="_blank">health of those tasked with cleaning it up</a>.

<h2>Too much of a good thing</h2>

The Great Atlantic Sargassum Belt stretches 5,000 miles, from the Gulf of Mexico to West Africa. But it’s not one solid stretch of seaweed, Rick Lumpkin, director of the physical oceanography division at the U.S. National Oceanic and Atmospheric Administration (NOAA), <a href="https://www.pbs.org/newshour/science/a-5000-mile-seaweed-belt-is-headed-toward-the-coast-of-florida" target="_blank">told the Associated Press</a>. “It’s a dynamic, constantly changing set of pieces of this large mass. It’s not one big continuous blob heading straight to South Florida.”

Sargassum seaweed starts out in the Sargasso Sea — a gyre in the Atlantic Ocean where four currents meet — and spreads out from there. It supplies marine life with food, habitat and a place to breed. Fish, turtles and seabirds all benefit from the tangled brown algae, making it an important part of the ecosystem. 

But the plant's intrinsic benefits are being lost in the harm done by its proliferation. “It comes in in such large quantities that it basically sucks the oxygen out of the water and creates what we refer to as dead zones,” Dr. Brian Lapointe, a research professor at Florida Atlantic University’s Harbor Branch Oceanographic Institute, <a href="https://www.cnn.com/travel/article/seaweed-sargassum-florida-caribbean-scn/index.html" target="_blank">told CNN</a>. “These are normally nursery habitats for fisheries … and once they’re devoid of oxygen, we have lost that habitat.”

<h2>Seaweed blooms: A stinky, expensive mess</h2>

On land, sargassum is a nuisance to beachgoers, a scourge for the tourism industry and a potential health hazard. Though the majority of what is floating along the belt will never wash ashore, what does amounts to piles of stinking, rotting vegetation that releases toxic hydrogen sulfide and often brings sea lice, jellyfish and other pain-inflicting critters with it. Hydrogen sulfide can cause respiratory issues as well as burning in the eyes and nose. It also smells like rotting eggs, a huge turn-off for tourists. The algae contain arsenic too, which limits how it can be repurposed.

And it's difficult and expensive to remove, with Miami-Dade County alone spending millions on cleanup every year. Caribbean nations spent <a href="https://www.mot.gov.jm/news-releases/sargassum-clean-costs-caribbean-us120-million-%E2%80%93-bartlett" target="_blank">$120 million in 2018 alone</a>, and hotels in the Mexican state of Quintana Roo spent up to <a href="https://mexiconewsdaily.com/news/removing-sargassum-from-beaches-proves-costly-for-hotels/" target="_blank">$90,000 per month</a> to get the stinky stuff off their beachfronts in 2021. In Barbados, it’s taking “1,600 dump trucks a day to clean the beaches of this seaweed to make it suitable for tourists and recreation on the beaches,” LaPointe said.

<h2>Many causes require many fixes</h2>

What’s caused this sudden increase in sargassum over recent years? A <a href="https://news.yahoo.com/how-pollution-and-climate-change-may-have-caused-the-florida-seaweed-blob-184045826.html" target="_blank">number of factors</a> are at play, including ocean acidification from increased atmospheric carbon dioxide levels, a 45 percent increase in nitrogen levels since the 1980s, and warming ocean temperatures worldwide. The growth is also cyclical — meaning the worse it gets, the worse it will get.

Much of the increase in ocean nutrient levels is likely due to fertilizer and sewage runoff. Some experts, <a href="https://www.scientificamerican.com/article/smarter-fertilizers-can-reduce-environmental-contamination/" target="_blank">including Jeff Carbeck</a>, CEO of the consultancy 10EQS, have recommended upgraded fertilizers to help combat the problem. Still, with so much of the issue tied up in CO2 levels and increased temperatures, at least one necessary fix is being held hostage by the lack of real progress on the larger climate crisis. 

<h2>A new normal</h2>

Experts don’t appear too enthusiastic that the sargassum will be brought back into balance. “This is the new normal, and we’re going to have to adapt to it,” Lapointe <a href="https://www.scientificamerican.com/article/heres-the-real-story-behind-the-massive-blob-of-seaweed-heading-toward-florida/" target="_blank">told Scientific American</a>.

Like so many other symptoms of our planet in crisis — from <a href="https://www.triplepundit.com/story/2022/vanuatu-non-proliferation-treaty/756021" target="_blank">sinking islands</a> to <a href="https://www.businessinsider.com/how-climate-change-is-making-plane-turbulence-worse-2023" target="_blank">worsening turbulence</a> — this new normal should have each and every one of us questioning whether what humanity has built is even worth it. Ultimately, each of these problems will continue to worsen until the assault on our planet by unfettered profit-driven interests is brought to an end. Is allowing it to continue really worth losing so much of what makes the Earth a beautiful, amazing place to live?

Image credit: <a href="https://www.flickr.com/photos/pnudmx/49462625141/in/photolist-5fdBSV-aQdwWV-P78dM8-8RNfE7-8jQC1i-4mm9uv-akkbc9-7wcVCR-aQdwkK-akkbeS-nHFzTi-aQxv4D-dQZWJa-2imS473-ozRTCs-dR6uZj-bGZtYp-54tfsj-9kR4tS-HuiGTG-2imQTcK-dR6uyb-aQdwHH-2merCaw-xpZxMw-2imS4ta-2jGkVew-P4BJ73-8EXSTn-obvSbB-5fdBNi-dQZW22-o2onGT-8S1oML-7D45eT-dR6upY-8S1oD5-dR6ufq-76xqEJ-dQZWPT-2hppQZR-dQZW7R-2hprK3z-dR6ud7-aQdwBa-dR6uof-UhMefD-2imQQsM-dR6uDN-8F2491/" target="_blank">PNUD México / Flickr</a>

Giant Seaweed Blobs Are the New Normal

At the COP27 climate talks in November, world leaders agreed to establish a <a href="https://www.thelancet.com/journals/lanplh/article/PIIS2542-5196(22)00331-X/fulltext" target="_blank">loss and damage fund</a> to help developing countries cope with the impacts of climate change. But <a href="https://www.reuters.com/business/environment/after-un-climate-deal-loss-damage-funding-two-years-off-2022-12-07/" target="_blank">it will be years</a> until the fund is up and running — leaving many questions unanswered, chief among them: Who pays for the climate crisis?  

While the responses to this question often place the financial onus of climate change on the global superpowers (China, the U.S.) that have contributed the most environmental harm, those powerful nations have consistently failed to accept this charge. Nations in the Global South have, by and large, contributed little to climate change, yet face the most serious consequences — including more frequent and severe natural disasters like drought, intense heat, and extreme storms. As the leading contributors to climate change drag their feet, the window for action continues to shrink, and blameless millions pay the price of the Global North’s pollution.

<a href="https://www.climateneutral.org" target="_blank">Climate Neutral</a>, a nonprofit dedicated to addressing this disparity, leverages corporate funding to finance sustainable projects in the world's least developed countries. In this way, corporations can circumvent the global gridlock preventing true action on climate change. The nonprofit also provides corporations a chance to move beyond empty promises and truly begin to right their own environmental wrongs.

“The pressure that we're trying to exert is pressure on companies because consumers, at least say, they care about climate change,” said Austin Whitman, CEO of Climate Neutral. “But they have very few ways to engage with companies directly and press companies to do more. So, if we can create the expectation that companies are doing their part to mitigate their emissions, there will be an increase in the flow of capital into projects.”

Climate Neutral challenges corporations to go beyond words and take aggressive action to reduce global emissions by 2030. To earn the nonprofit’s <a href="https://www.climateneutral.org/why-go-neutral" target="_blank">certification</a>, a company must demonstrate that it is taking steps to reduce future emissions, while also paying the full price for current emissions.
<figure role="group"><img alt="Climate Neutral label on tag of Avocado Green Mattress bedding - climate change action from brands" data-entity-type="file" data-entity-uuid="f5f45255-5840-445c-9e4a-f2d80af8eb6e" src="/sites/default/files/inline-images/Climate%20Neutral%20label%20on%20tag%20of%20Avocado%20Green%20Mattress%20bedding%20-%20climate%20change%20action%20from%20brands.jpg" width="1365" height="2048" loading="lazy" /><figcaption>The Climate Neutral Certified label on packaging at partner brand Avocado Green Mattress</figcaption></figure><h2>Rich nations can "export low-carbon technologies" to decarbonize the developing world </h2>

Rapid industrialization in an under-developed country can create intense environmental harm. But how can a country that already polluted the world through its own industrialization 200 years ago prohibit another nation from doing the same thing today? When it comes to polluting, rich nations are essentially telling poorer nations, “do as I say, not as I do,” and that isn’t very persuasive. 

“There is some transfer of wealth that's necessary to account for the fact that the economic costs are being borne initially, largely, by countries that have not caused the problem,” Whitman said.

For decades, the Global South has called on the North to pay reparations for the crimes of colonialism, which prevented development and stole the natural resources that would have funded such development. If rich nations don’t want poorer nations to develop in an environmentally harmful way, they ought to invest in sustainable infrastructure and practices in these underdeveloped nations.

“All the major sectors, they can be used just as well in India as they can in the U.S.,"  Whitman said as an example. "I think it's our job to export low-carbon technologies to really allow them to skip past that phase where the carbon intensity of the economy grows significantly before it starts to level off and then decline. We've got a pretty impressive system here in the U.S., and that knowledge can be exported, and is being exported.”

Climate Neutral understands that the urgency of the climate crisis demands action, not bureaucracy. Challenging corporations to pay for pollution and invest in the environment may not completely solve the climate crisis, but it is a fantastic way to get powerful players to put their money where their mouth is.

“This is one of the many, many dynamic aspects of the puzzle. We're not starting necessarily in the perfect spot,” Whitman said, “but that doesn't mean that we shouldn't start.”

Image credits: ©UNICEF Ethiopia/Raphael Pouget via <a href="https://flickr.com/photos/unicefethiopia/52012554248/in/photolist" target="_blank">Flickr</a> and Climate Neutral

Who Pays For Climate Change? Where Countries Falter, Corporations Fund

Public perceptions around food are changing. As more people understand the impact their food choices have on the environment, many consumers are eager to support those who produce food that is not only better for their health, but also for the planet. 

But with the proliferation of green certifications, labels and marketing claims, <a href="https://www.mindshareworld.com/uk/news/brands-must-tread-carefully-as-consumers-grow-more-aware-of-greenwashing-practices" target="_blank">consumers are uncertain</a> about sustainability generally. And the lack of transparency and consistency around these claims has left consumers confused and distrustful about which agricultural products are truly sustainable. 

<h2>Raising awareness of regenerative agriculture practices</h2>

In the world of food production, regenerative agriculture has been touted as an <a href="https://www.triplepundit.com/story/2022/cop27-regenerative-agriculture/760021" target="_blank">untapped solution</a> to the climate crisis. Using a holistic approach to farm management, regenerative agriculture aims to preserve the health of the soil, water, livestock, biodiversity and people of the farm for generations to come, while also serving as a critical means of carbon sequestration.

Unlike other designations, such as certified organic — which, in countries around the world, comes with legal frameworks — there are no regulatory or legal definitions for regenerative agriculture. Scientists and farmers widely acknowledge it includes production practices like cover-cropping, low-till farming, and rotational grazing that improve ecosystem health while sequestering carbon, as well as utilizing nature to its best extent. 

Many consumers have heard about the benefits of regenerative agriculture. But with no set standards or measurements for impacts and outcomes, the farmers and ranchers utilizing these practices are working to understand the ecosystem and adapt their approach without set guidance. Meanwhile, brands are challenged to educate and engage a consumer base that may be confused or even skeptical. 

<h2>Lessons from New Zealand, a regenerative agriculture principles pioneer </h2>

While the concept and practice of regenerative agriculture is spreading around the world, New Zealand is one country that <a href="https://www.triplepundit.com/story/2023/new-zealand-regenerative-agriculture/767336" target="_blank">has long utilized</a> these practices. Thanks to the island nation’s advantageous climate and landscape, coupled with the local culture and commitment to sustainability, many farmers and ranchers have been following the practices of regenerative agriculture for decades, and are on a path of continuous improvement.

“Regenerative practices like rotational grazing caught on here in New Zealand in the 1960s,” said Pat Maher, CEO of <a href="https://www.atkinsranch.com/our-ranchers" target="_blank">Atkins Ranch</a>, a network of family-run ranches raising grass-fed lamb. “All of our farmers operate through a rotational grazing model. What we're working on now is actually making sure that we can verify and certify those farming systems.”

The standardization and labeling of regenerative practices would help farmers and ranchers implement and market these practices to their customers. “Ensuring regenerative standards and the environmental outcomes can be independently audited and verified is critical to creating trust between farmers and consumers,” said Nick Beeby, general manager market development at <a href="https://beeflambnz.com/about-blnz/company-profile" target="_blank">Beef + Lamb New Zealand</a>.

Further, regenerative standardization at the global level would amplify the efforts of the farmers and ranchers who have been utilizing these principles for generations. Many of the ranchers within the Atkins Ranch network, for example, are fifth- and sixth-generation farmers whose families have been raising livestock on their land for over 150 years. 

“When we talk about these standards with our farmers here in New Zealand, it's not that we are asking them to do anything different — they've been implementing regenerative practices and focusing on continuous improvements for a long time,” Beeby continued. “Regenerative certification means we're now asking them to prove it and the environmental outcomes.” 

<h2>Why set the standard for regenerative agriculture? </h2>

Standardization and communication of regenerative practices and outcomes will help both consumers and producers better support the products of this system, but that’s not the only benefit of setting a certified standard. Defining regenerative agriculture has positive implications for the entire food supply chain, as stakeholders from retailers and manufacturers to consumer brands set their own environmental, social and governance (ESG) goals. 

An industry-wide consensus on regenerative agriculture would not only allow retailers and brands to provide their customers with the sustainable products they’re looking for, but it would also help them to fulfill their own sustainability commitments.

Further, standardization and consistent labeling will ensure that the term “regenerative” can no longer be misused as a vague and greenwashed marketing term. By eliminating customer confusion and amplifying the sustainable practices of farms like those in New Zealand and others around the world, standardization can help make regenerative agriculture a global movement. 

While industry-wide standardization is necessary to elucidate these practices to retailers and consumers, the establishment of these standards inherently presents a critical challenge: Regenerative agriculture, at its core, is regional — each farm must adapt to its own landscape and environment under the guidance of the farmer who knows what is best for the farm and the land. 

However, this inherent regionality ultimately helps define regenerative agriculture for what it truly is: a local, community-based solution to a global climate crisis. Some voluntary verification programs, such as the U.S.-based Savory Institute’s <a href="https://www.landtomarket.com" target="_blank">Land to Market</a>, aim to take local distinctions into account by <a href="https://www.landtomarket.com/eov" target="_blank">measuring desired outcomes</a>, rather than requiring the very same practices to be adopted on every farm. 

Atkins Ranch was one of the first companies in the world to join Land to Market, and is working with the New Zealand government to <a href="https://www.mpi.govt.nz/news/media-releases/new-project-to-help-farmers-gain-regenerative-agriculture-certification/" target="_blank">get more farmers verified</a>. 

"This project will help open up a new opportunity for more of our farmers to demonstrate the good work they're doing,” Steve Penno, director of investment programs at New Zealand’s Ministry for Primary Industries, said in an October statement. “And with a few tweaks, they can be rewarded for it.”

This article series is sponsored by Beef + Lamb New Zealand and produced by the TriplePundit editorial team.

Image courtesy of Beef + Lamb New Zealand

Regenerative Agriculture Standards Can Address Consumer Confusion While Bolstering Farmers

Committing to meet environmental, social, and governance (ESG) objectives and targets is one thing. Acting on them is quite another. What are businesses doing to prepare for high-quality sustainability and ESG reporting, and what challenges are they uncovering along the way? To find out, Deloitte <a href="https://www2.deloitte.com/us/en/pages/audit/articles/esg-survey.html" target="_blank">surveyed 300 public company executives</a> to get a pulse on current trends and sentiment. Here are five takeaways from the front lines of real-world change.

<h2>Embed ESG in the corporate strategy</h2>

Nearly 3 in 5 executives (57 percent) say their company has established a cross-functional working group to drive strategic attention to ESG, an increase of 21 percent since last year. Another 42 percent say they’re in the process of establishing one. 

A typical ESG working group includes executives from finance, accounting, risk, legal, sustainability, operations, supply chain and other functional areas. Increasingly, accountability for ESG performance can be most effective with an integrated governance structure that brings together all business functions. A philosophy of ownership across the business, paired with a strategic approach to governance, can establish ESG as a strategic priority highly aligned to corporate strategy. 

<h2>Assign roles and responsibilities</h2>

Only 3 percent of executives say their companies are prepared for potential increased ESG regulatory or other disclosure requirements, but many are getting ready. For instance, 81 percent of companies have created new roles or responsibilities, and 89 percent say they’ve enhanced internal goal-setting and accountability mechanisms to promote readiness. 

Who has management responsibility over ESG disclosure? Today, in many cases, it’s the chief financial officer (CFO) or chief sustainability officer (CSO), but many respondents indicate that increasingly there is shared responsibility for ESG reporting across the executive leadership team, human resources, supply chain and other functions. 

Of those executives surveyed, board-level oversight has been predominantly assigned to the nominating and governance committee, but we are seeing a trend of expanded oversight responsibility across all committees, aligned to respective remit, to drive greater integration and oversight of ESG risks and opportunities. 

<h2>Increase focus on assurance </h2>

Nearly all (96 percent) surveyed executives plan to seek assurance for the next ESG reporting cycle. To prepare for a reasonable level of assurance, 37 percent of companies are starting to apply the Committee of Sponsoring Organizations of the Treadway Commission (COSO)’s <a href="https://www.coso.org/SitePages/Internal-Control.aspx?web=1" target="_blank">internal control guidelines</a>, which can help companies measure, manage and validate ESG information with the same rigor typically applied to financial reporting.  

Respondents shared that they use a range of different frameworks and standards for their disclosures. The most common is the Task Force for Climate-related Financial Disclosures (<a href="https://www.fsb-tcfd.org/recommendations/" target="_blank">TCFD</a>) (56 percent), closely followed by the Sustainability Accounting Standards Board (<a href="https://www.sasb.org/standards/" target="_blank">SASB</a>) (55 percent). Around half of respondents also use standards from the <a href="https://ghgprotocol.org" target="_blank">Greenhouse Gas Protocol</a>, International Integrated Reporting Council (<a href="https://www.integratedreporting.org/resource/international-ir-framework/" target="_blank">IIRC</a>), and Global Reporting Initiative (<a href="https://www.globalreporting.org/standards/" target="_blank">GRI</a>).

For multinational firms, the <a href="https://www.ifrs.org/news-and-events/news/2022/03/issb-delivers-proposals-that-create-comprehensive-global-baseline-of-sustainability-disclosures/" target="_blank">rapid progress</a> of the International Sustainability Standards Board (ISSB) signals optimism for convergence of a number of leading sustainability reporting standards and frameworks and the creation of a global baseline for sustainability reporting to help meet the information needs of the capital markets, as well as serve as the basis upon which other jurisdictions can build. 

<h2>Develop a workable solution for data gaps</h2>

When it comes to sustainability reporting, access to quality ESG data now appears to be a bigger challenge than data availability. Still, a majority (61 percent) of respondents indicate their companies are prepared to disclose details about the greenhouse gas (GHG) emissions they directly produce, known as Scope 1. Even more (76 percent) say they’re ready to disclose details of their Scope 2 GHG emissions, or emissions generated by the electricity a company purchases, a substantial increase from the 47 percent who said so the previous year. 

At the same time, Scope 3 emissions — which account for GHGs produced along a company's entire value chain — appear to remain a challenge. Most respondents (86 percent) indicate they’ve run into challenges measuring them, and only 37 percent are prepared to disclose them in detail. 

To close any gaps, companies may consider focusing on the Greenhouse Gas Protocol, which currently serves as the leading standard for measuring greenhouse gas emissions and provides for methodologies to promote consistency of measurement with due consideration to the level of measurement uncertainty and data availability. 

<h2>Invest in technology for ESG reporting, disclosure and action</h2>

New technology is on the horizon for many companies as they embark on their ESG integration and disclosure journeys. Nearly all executives (99 percent) are somewhat likely or very likely to invest in new technology to prepare to meet stakeholder expectations and future regulatory requirements. 

Technology solutions can assist in accelerating preparedness in moving from reporting in accordance with voluntary sustainability standards and frameworks to enhanced disclosure in accordance with authoritative ESG standards and new regulation. 

No matter where a company is in their sustainability journey, strategic attention to ESG integration and disclosure today can help to deliver long term value to  stakeholders into the future. By implementing the insights shared by public company executives, companies can gear up for ESG reporting and work to meet stakeholder expectations while also creating long-term value. 

Image credit: <a href="https://www.pexels.com/photo/formal-man-with-tablet-giving-presentation-in-office-3760093/" target="_blank">Andrea Piacquadio</a>/Pexels

Note: This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

Gearing Up for ESG Reporting: Insights from Public Company Executives

<a href="https://www.cnbc.com/2023/03/15/what-the-silicon-valley-bank-collapse-means-for-climate-tech.html" target="_blank">The recent collapse</a> of Silicon Valley Bank (SVB) has placed climate tech into the national spotlight. SVB was a financial hub of the venture-backed sustainability world, with approximately 1,550 climate and clean technology business clients. While other financial institutions didn't always have the in-house skill to understand sustainability startups, it was among SVB’s specialties. The firm’s appetite for funding climate tech ventures resulted in an industry-wide transformation for venture capital. 

Investments in climate tech reached a peak in 2021, followed by a 3 percent drop in 2022. However, when evaluated within the context of the 35 percent drop in the overall venture capital market, these numbers indicate investors are still very much interested in climate tech — and SVB helped that startup ecosystem develop. 

Within this context, SVB’s collapse — linked to rapidly rising interest rates, combined with a run on the bank fueled by fear that spread on social media — presented a real threat to the climate and clean technology sector. 

“SVB’s collapse was terrifying to the industry," said Justin Bean, an impact-focused tech executive and author of <a href="https://www.amazon.com/What-Could-Right-Designing-Continual/dp/1732647585" target="_blank">What Could Go Right: Designing Our Ideal Future to Emerge from Continual Crises to a Thriving World</a>. "Startup founders and employees often are not making that much money, because they’re trading salary for ownership." 

And the potential impact went far further than individual startups. "We saw hard-working people out there creating innovation and sustainable abundance and are helping us compete with countries like China and Russia and helping us get ahead,” Bean said. “If the entire ecosystem was allowed to collapse, it would have been a huge hit to the U.S. during a time of great competition between nations. There is a geopolitical advantage to the U.S. being the research and development lab for climate tech. We are advancing humanity forward. For this, it was a good move by the Fed to ensure the deposits of the people banking with SVB.” 

Fortunately, the Federal Deposit Insurance Corporation (FDIC) gave depositors <a href="https://www.sidley.com/en/insights/newsupdates/2023/03/federal-banking-regulators-announce-full-deposit-insurance-coverageof-svb" target="_blank">full access</a> to their funds on the Monday morning following the collapse, including funds above the government-insured amount.

<h2>Climate tech still makes good business sense</h2>

Before the collapse of SVB, climate tech was on an upward trajectory.  It had a record year in 2021, and even today capital continues to be reprioritized across sectors into climate-friendly and clean tech companies. That trend is happening on the consumer level as well. For example, total U.S. car sales were <a href="https://edition.cnn.com/2023/01/12/investing/premarket-stocks-trading/index.html%23:~:text=Only%252013.7%2520million%2520vehicles%2520were,2015%2520and%25202019,%2520before%2520Covid." target="_blank">down</a> 8 percent in 2022, but electric vehicle sales actually <a href="https://www.weforum.org/agenda/2023/03/ev-car-sales-energy-environment-gas/%23:~:text=Global%2520sales%2520of%2520electric%2520cars,International%2520Energy%2520Agency%2520(IEA)." target="_blank">increased</a> by 60 percent. 

Renewable energy costs are also plummeting and becoming cheaper than fossil fuel energy in many markets, even without government subsidies. “It just makes business sense. We get to sustainable abundance by pushing prices down through innovation," Bean said of the growth of climate tech. "Sustainability should get cheaper because we have innovated and pushed the price down and they’re lower risk because they are circular."

Companies with higher ESG scores typically perform <a href="http://thomsonreuters.com/en-us/posts/investigation-fraud-and-risk/financial-materiality-esg/%23:~:text=It%2520has%2520been%2520empirically%2520validated,performance%2520and%2520underlying%2520financial%2520metrics." target="_blank">better</a> financially than those with lower ESG scores — and climate tech, clean tech, and other sustainable initiatives are growing and diversifying. Climate tech and clean tech companies also historically fare better during a recession, Bean noted, and government initiatives like the Inflation Reduction Act are positioned to further support the sector.

“There is a big value proposition for climate," Bean said. "When you look at standard markets, they are performing at a lower rate than climate tech markets. Climate tech is smaller but growing much faster. If you want to capture growth and hedge risk, climate is a great choice."

Bean compared current low-carbon innovations to the digital transformation of 10 and 20 years ago, saying: “There is currently competition between the new world and the old world, like what we saw with the digital transformation. There are companies like Blockbuster and Kodak that weren't paying attention and should have founded Netflix and Instagram. They were asleep at the wheel and didn’t see the future coming. We saw digital solutions perform better, take the market and grow faster than anyone had ever seen before. The growth rate of Facebook, Uber, Google and the like was record-breaking. I think we will see some of those records broken again by climate tech. This transition is happening faster than people realize.” 

<h2>SVB’s legacy and the future of climate tech </h2>

SVB was the financial institution of choice for a huge number of climate tech companies, so the question remains as to which firms will take its place. After all, SVB was a climate finance pioneer. It <a href="https://www.cnbc.com/2023/03/15/what-the-silicon-valley-bank-collapse-means-for-climate-tech.html" target="_blank">funded</a> 60 percent of community solar projects and its support of clean energy projects helped mobilize other lending agencies. 

“We are in the process of creating sustainable and circular economies. Climate tech will continue to grow and diversify,” Bean said. While SVB made a number of risky choices that contributed to its demise, its early and bold support of climate tech and cleantech transformed the sector from a niche, high-risk industry to a promising, attractive and growing sector.

Image credit: <a href="https://www.flickr.com/photos/196993421@N03/52740131461/in/photolist-2omsXDp-2omDhjs-8nXSvC" target="_blank">Alpha Photo / Flickr</a>

SVB's Collapse Puts the Future of Climate Tech Into Question

<a href="https://www.unwater.org/news/world-water-day-2023-be-change" target="_blank">Every March 22</a> is World Water Day — an observance designated by the United Nations to bring attention to different issues surrounding water and how it impacts our lives. The 2023 theme is Be the Change, an effort to encourage people to be more active in how they use, consume and manage water. 

This feels like both a straightforward task and a daunting one. Most people are unaware of where their water comes from, let alone the volume they use and how. Having that information is the first step toward more effective water management at the individual level, which can help water boards and utilities better manage the larger systems and watersheds.

<h2>Can you guess what accounts for most residential water use?</h2>

Most people do not have a clear idea of where they are using water — and so do not know where they are wasting water. Inside the home, <a href="https://www.epa.gov/watersense/how-we-use-water" target="_blank">toilets, showers and faucets</a> are the biggest water hogs. But if you have a yard, your biggest culprit is probably irrigation and lawn care. According to the U.S. Environmental Protection Agency, <a href="https://19january2017snapshot.epa.gov/www3/watersense/pubs/outdoor.html" target="_blank">about a third</a> of all residential water use in the U.S. is for landscape irrigation — about 9 billion gallons per day.

In the Western U.S., a region prone to both droughts and awash with lush green lawns, the situation is even more dire as <a href="https://www.curbed.com/2022/12/colorado-river-agreement-remove-grass-lawns.html" target="_blank">the Colorado River runs dry</a>. On background, a meter reader with Austin Water told TriplePundit that maintaining lawns accounted for 50 percent to 75 percent of many homes’ water usage — and many consumers often don't believe it until they're shown the meter reading.

Some utilities are now focusing solely getting customers to better manage their outdoor use, cutting back on indoor incentives. For example, San Antonio Water System, the city’s water utility, now <a href="https://www.saws.org/conservation/residential-outdoor-programs-rebates/" target="_blank">only offers outdoor rebates and incentives</a>. Program staff told TriplePundit that focusing on irrigation and pools would lead to greater water savings in the water-stressed city. The utility has also hired landscape experts to help residents replace turf with more native and drought-resistant plants. 

<h2>Smart metering offers more opportunity for water conservation</h2>

Another big water waster is leaks. On the utility side, more utilities are getting better at identifying and fixing leaks, but the state of the country’s water infrastructure is going to <a href="https://infrastructurereportcard.org/cat-item/drinking-water-infrastructure/" target="_blank">require significant investment</a>. On the demand side, however, if customers better understand where they’re using the most water — and how to catch leaks when they first happen — they can be more active conservationists.

Much like electric smart meters, water smart meters can help people better understand their usage. The technology is not as widespread as it is in the electricity space due to a number of factors, such as available resources and challenges in measurement that make it harder to pinpoint water usage versus electric usage (i.e., it’s easier to measure electrons than drops). But as climate change continues to put pressure on watersheds, more companies are bringing technologies onto the market.

For example, in 2022, several California water utilities <a href="https://www.govtech.com/civic/california-utilities-deploy-smart-water-meters-amid-drought" target="_blank">started rolling out</a> water smart meters to customers. While the utilities have a big lift on the supply side, demand needs to be lowered where it can. Much like with electricity — where energy efficiency is the first and best defense — water conservation is the critical component of ensuring water is available when and where it is needed.

<h2>Working along the energy-water nexus</h2>

And like energy efficiency, water conservation is a climate strategy. Treating, pumping and distributing water <a href="https://www.iea.org/topics/energy-and-water" target="_blank">uses copious amounts of energy</a>, and generating fossil fuel- and nuclear-powered energy uses a lot of water. So, by reducing water demand, people are also taking action to lower emissions systemwide, while reducing energy use can also help with water conservation. Most people don’t think about the source of electricity when they flip a light switch or the source of water when they turn on their faucets. But the fact remains that both actions are inextricably linked.

World Water Day 2023 calls for people to be more active in their water conservation. It is a good reminder that understanding where your water comes from and how you use it has ripple effects throughout the community and the system. Utilities can help people be the change. But the real change must come from each consumer.

Image credit: <a href="https://www.pexels.com/photo/person-holding-a-watering-hose-with-sprinkler-4870794/" target="_blank">Karolina Grabowska</a>/Pexels

Want People to Use Less Water? Arm Them With Information

Half a mile down the road from Henkel North America’s research and development facility in Trumbull, Connecticut, is the <a href="https://www.trumbullnatureandartscenter.org" target="_blank">Trumbull Nature and Arts Center</a>, a small nonprofit with a mission to provide nature-rich experiences to all members of its community. The center offers hands-on environmental science experiences for students and educational programming for families in the Trumbull community. It has grown rapidly in recent years, thanks in large part to collaboration with corporate volunteers from Henkel North America. 

<h2>An employee’s passion prompts an ongoing partnership </h2>

Henkel established the <a href="https://www.henkel-northamerica.com/spotlight/social-engagement" target="_blank">Make an Impact on Tomorrow (MIT) initiative</a> in 1998 to fund and support employee volunteering efforts. Employees can volunteer with nonprofit organizations benefiting a wide variety of causes, from homelessness and food insecurity to education, and Henkel provides many of these organizations with financial support and product donations. Over the past 25 years, the company has supported more than 17,000 volunteer projects in over 100 countries. 

As Henkel celebrates the 25th anniversary of its MIT program is, it shows no signs of slowing down. In 2022, the work of Henkel volunteers in North America specifically, impacted the lives of more than 110,000 people — and that work continues to grow as they move toward <a href="https://www.henkel.co.uk/company/henkel-brand" target="_blank">the mission</a> to improve life for generations to come.

An employee involved with the MIT program got the company connected with the Trumbull Nature and Arts Center — and Henkel’s interest in supporting environmental and STEM (science, technology, engineering and math) education made the partnership a perfect match. 

“Over the years, Henkel has been a fabulous supporter of our center,” Kevin Malone, president of the Patrons of Trumbull Nature and Arts Center, told TriplePundit. “They funded and built a playground that is made from 100 percent recycled plastic, which is the centerpiece of our outdoor area, and they continue to provide two main resources we rely on: financial, which is extremely important, and human resources, which is volunteer hours and everything volunteers bring to the center.”

<img alt="Henkel volunteers at the Trumbull Nature and Arts Center in Connecticut" data-entity-type="file" data-entity-uuid="5ee32b2e-09d8-47a8-848f-425e87f93292" src="/sites/default/files/inline-images/Henkel%20at%20TNAC_5-13-22_1.jpg" width="2000" height="972" loading="lazy" />

Its work with the center is part of a broader effort at Henkel North America to prioritize volunteering in the communities where it does business, said Angela Curley, the company’s senior manager for diversity, equity and inclusion in North America. “We want to be there for our community, to help build thriving communities,” said Curley, who also leads corporate citizenship, social partnerships and philanthropy work. “We do this work because it’s good for society and we want to give back. We also want to engage in projects important to our employees’ interests — we want to support their passions and their contributions.” 

Like with the center, it’s often employees who introduce the Henkel team to nonprofit and community partners through the MIT program. “One of our employees, Steve Leeper, <a href="https://www.csrwire.com/press_releases/732441-international-volunteer-day-2021-meet-henkel-employees-making-difference" target="_blank">has been involved with Trumbull Nature and Arts Center</a> for many years, so it was just natural for us to continue that partnership through MIT,” Curley said. “Sometimes it's the small, thoughtful impact that goes the longest way. Steve has been passionate and consistent about staying involved with Trumbull Nature and Arts Center, and that’s made a big impact.” 

Henkel employees regularly visit the center for volunteer days, where they beautify the grounds by planting, painting, repairing, organizing and building. The company also funded a recent expansion and continues to support the center’s educational programming for underserved students.  

“The Trumbull Nature and Arts Center is a very important part of our town and community, bringing in young families and area schools to learn and enjoy the Center’s arts and sciences,” said Leeper, facilities manager at Henkel’s Trumbull site. “We enjoy getting the Center ready for the daily visitors and seasonal classrooms. One part of our volunteer work was the funding for an outdoor classroom. This allows Center volunteers and instructors to hold classes outside, but away from the summer sun and other weather conditions.”

“Having them there shows the rest of the community that we have this support from our corporate partners and lets the community know that we are here and we have the support of an important business in town, and it adds something that we otherwise couldn’t get,” Malone said. "It is amazing to have Henkel on our team and supporting us.”
<figure role="group"><img alt="Henkel employee volunteer Steve Leeper at Nature Center" data-entity-type="file" data-entity-uuid="3dc4c5a6-59a1-4f5e-950b-6f3c1c0d915a" src="/sites/default/files/inline-images/Henkel%20employee.png" width="459" height="489" loading="lazy" /><figcaption>Henkel employee Steve Leeper has been involved with Trumbull Nature and Arts Center for many years and is instrumental to the partnership.</figcaption></figure><h2>Instilling a love for nature</h2>

As part of their partnership, Henkel and the Trumbull Nature and Arts Center work to bring natural learning to young people who aren’t often exposed to nature. 

“We know that many students in underserved urban communities don’t have the same kind of access to nature that students in suburban neighborhoods may have,” said Sheryl Baumann, executive director of the Trumbull Arts and Nature Center. 

Last year, Henkel and the center collaborated on a project for first-grade students in Bridgeport, Connecticut, focused on new ways to get kids outdoors. “Nature does exist nearly everywhere, if you know how to find it,” Baumann said. “With this in mind, we wanted to give students and teachers the tools they need to go outside and view nature in their own schoolyards, whether it's a flower bed around the school perimeter, some trees near a fence, birds flying by, or a dandelion struggling to grow through the cracks of a sidewalk.” 

The partners developed a curriculum for the program and rolled it out to multiple schools in Bridgeport during the last academic year, and Henkel volunteers packed supplies like binoculars, bug viewers and butterfly nets into backpacks to help students on their journeys.
<figure role="group"><img alt="Henkel volunteers" data-entity-type="file" data-entity-uuid="7244c55e-cc94-4630-8743-a369eea4b25d" src="/sites/default/files/inline-images/Henkel%20at%20TNAC_5-13-22_2.jpg" width="1500" height="729" loading="lazy" /><figcaption>Henkel employees regularly visit the center for volunteer days, where they help with planting, painting, repairing, organizing and building.</figcaption></figure><h2>Engaging employees while supporting the community </h2>

These ongoing initiatives further the center’s mission by increasing engagement with nature among the community’s youth and encouraging students to think creatively about environmental science.

“The Trumbull Nature and Arts Center is a great example of how our MIT program can come to life when a team of employees put their minds to it,” Curley said. “We know the easy part is the funding — the hard work is getting out and getting it done. MIT programs involve a wide variety of Henkel employees, from frontline employees to senior executives who volunteer their time for the causes they care about. We are enormously proud of our people and the things they do.” 

Supporting nonprofits like the center also affords measurable benefits for employee engagement. “We hear from our employees that it is meaningful that Henkel supports the projects that are important to them,” Curley continued. “It’s not about the amount of money, it's about supporting the work they do.”

Read more about Henkel’s <a href="https://www.henkel-northamerica.com/sustainability/corporate-citizenship" target="_blank">community support in North America</a>.

This article series is sponsored by Henkel North America and produced by the TriplePundit editorial team.

Images courtesy of Henkel and the Trumbull Nature and Arts Center

A Key Corporate Partnership Helps This Nonprofit Nature Center Thrive

As companies make bolder commitments to advance diversity, equity and inclusion (DEI), stakeholders are looking for more information to back up their claims. <a href="https://www.morningstar.com/articles/1137656/shareholders-step-up-voting-efforts-on-racial-equity" target="_blank">Shareholder resolutions</a> related to racial equity more than doubled at U.S. companies last year, many <a href="https://corpgov.law.harvard.edu/2023/02/14/2022-investor-voting-report/" target="_blank">focused specifically</a> on convincing companies to publicly disclose diversity data about their workforces. 

Likewise, the vast majority of the American public — 92 percent, according to <a href="https://justcapital.com/reports/americans-agree-that-advancing-racial-equity-starts-with-paying-a-fair-wage/" target="_blank">2022 polling from Just Capital</a> — feel it's important for companies to promote racial equity in the workplace. And they recognize data is an important tool to do it, with 76 percent of respondents to Just Capital's survey agreeing that disclosing demographic data is an important step toward advancing racial equity.  

While some corporate commitments related to racial equity have <a href="https://www.triplepundit.com/story/2023/brands-stance-police-violence/768631" target="_blank">failed to fully materialize</a>, the area of diversity disclosures in particular is one where companies are stepping up in a big way, with record levels of best-practice disclosure across the world's largest public firms. 

<h2>The state of corporate diversity disclosures</h2>

What's often missed in conversations about diversity disclosures is that most large companies already track this information because they're legally obligated to do so. All U.S. public companies with more than 100 employees are required to <a href="https://www.eeoc.gov/data/eeo-1-data-collection" target="_blank">submit annual reports</a> to the U.S. Equal Employment Opportunity Commission and Department of Labor that detail workforce data, including breakdowns by race and ethnicity, sex, and job categories. 

These reports, known as EEO-1 reports, are kept confidential by government agencies unless companies choose to voluntarily disclose them — and more companies are going just that.

Nearly 75 percent of Russell 1,000 companies disclose some form of workforce diversity data, compared to 55 percent in 2021, <a href="https://justcapital.com/reports/companies-disclosing-workforce-diversity-data-eeo-1-report-more-than-tripled/" target="_blank">according to tracking from Just Capital</a>. Within that group, 34 percent of companies publicly disclosed their EEO-1 reports or similar intersectional data last year — a more than threefold increase from 11 percent a year earlier. 

"Over the past year, companies across the Russell 1,000 have made great strides toward improving disclosure of racial and ethnic workforce demographic data," Just Capital's director of research insights, Matthew Nestler, and his team wrote in the report. 

When Just Capital last gathered disclosure data in September 2021, nearly half of all Russell 1,000 companies made no diversity disclosures at all. By September of last year, that number had fallen to 28 percent, as more than 150 companies opted to newly disclose their diversity data.
<figure role="group"><img alt="companies making diversity disclosures about their workforce has increased rapidly since 2021" data-entity-type="file" data-entity-uuid="6971a7bb-ba65-4e8f-9fe5-510ae699530e" src="/sites/default/files/inline-images/Massive%20increase.png" width="2048" height="951" loading="lazy" /><figcaption>(<a href="https://justcapital.com/wp-content/uploads/2023/02/Demographic-Disclosure-CHT_EEO-1-change-2048x951.png">Click here to enlarge</a>)</figcaption></figure>Importantly, many of these companies are skipping over the less granular disclosures, such as data about overall “non-white” or “minority” employees without racial and ethnic categories or job title breakdowns, and going right for publication of their EEO-1 reports.

Given increased stakeholder interest, it's no surprise that companies taking the lead on diversity disclosures are reaping the benefits: Companies that published their EEO-1 or similar intersectional data outperformed those that didn’t by 7.9 percent over the trailing one-year period ending in 2022, according to a <a href="https://justcapital.com/news/companies-disclosing-their-eeo-1-reports-saw-higher-2022-returns/" target="_blank">companion analysis</a> from Just Capital. 

"Publicly disclosing demographic data represents a critical initial step for companies looking to build more diverse workforces, as well as stronger returns," Nestler and his team wrote in the report. "It holds corporate leaders to account on their DEI goals and signals commitment to advancing racial equity."

<h2>The bottom line</h2>

This type of rapid change indicates that advocacy from investors and consumers is working: Business leaders are hearing their stakeholders loud at clear, at least within the context of diversity disclosures. And even as <a href="https://www.triplepundit.com/story/2023/anti-woke-legislation/764301" target="_blank">anti-woke crusaders</a> erroneously blame DEI "distractions" for everything from <a href="https://newrepublic.com/post/171045/republican-congressman-mike-collins-blames-diversity-norfolk-southern-train-derailments" target="_blank">the Ohio train derailment</a> to the <a href="https://www.usatoday.com/story/opinion/columnist/2023/03/15/silicon-valley-bank-failure-republicans-blame-diversity-woke/11472710002/" target="_blank">collapse of Silicon Valley Bank</a>, companies <a href="https://fortune.com/2023/03/15/svb-diversity-hushing-esg-woke/" target="_blank">don't appear to be backing down</a>. 

"The story the report tells may not be a perfect one, but disclosure is a crucial first step in holding companies accountable to change," Nestler and his team concluded. "From there, to ensure lasting progress on DEI, corporate leaders must ultimately go beyond demographic disclosure and measure and disclose the outcomes of their DEI efforts, including whether C-Suite compensation is tied to DEI-related progress, what resources are directed toward DEI efforts, how they drive impact in local communities, and more." 

Just Capital works to incentivize corporate behavior change on DEI issues through accountability initiatives like the <a href="https://justcapital.com/reports/2022-corporate-racial-equity-tracker/" target="_blank">Corporate Racial Equity Tracker</a> and actionable guidance like the <a href="https://justcapital.com/reports/explore-the-2021-ceo-blueprint-for-racial-equity/" target="_blank">CEO Blueprint for Racial Equity</a>. Other resources such as the business-led coalition <a href="https://www.ceoaction.com" target="_blank">CEO Action for Diversity and Inclusion</a>, and its <a href="https://www.ceoaction.com/actions/" target="_blank">Actions Database</a> of more than 1,900 insights, are also at hand to guide business leaders as they look to advance DEI within their workforces. 

Image credit: <a href="https://www.pexels.com/photo/coworkers-taking-a-coffee-break-4427813/" target="_blank">August de Richelieu</a>/Pexels

Workforce Diversity Disclosures Hit An All-Time High

A majority of consumers <a href="https://www.triplepundit.com/story/2023/lifestyle-choices-climate-change/764686" target="_blank">say they're ready</a> to change their lifestyles to help combat climate change, and more people than ever are seeking out information about sustainability on social media. A <a href="https://www.unilever.com/news/press-and-media/press-releases/2023/unilever-reveals-influencers-can-switch-people-on-to-sustainable-living/" target="_blank">new study commissioned by Unilever</a> shows that influencers have the biggest impact on consumers’ sustainability-related choices, ahead of documentaries, news articles and governmental campaigns. In fact, 83 percent of all consumers believe that TikTok and Instagram are helpful places to seek out information about sustainability, and 75 percent are more likely to add sustainable behaviors to their lifestyles after viewing social media content about sustainability.

Unilever also specifically examined the efficacy of different content styles in inspiring consumer behavior change around plastic use and food waste, comparing pragmatic and explanatory content with more optimistic and humorous posts.

While the study found that both styles were effective in spurring consumer behavior change, 69 percent of people who viewed the more pragmatic content went on to make lifestyle changes, versus 61 percent of those who watched the more optimistic, humorous content. Branded content was seen as equally engaging and authentic as unbranded content.

“People are finding it hard to make sustainable choices due to a lack of simple, immediate and trustworthy information. Our ambition is to continue to collaborate with our partners to improve the sustainability content produced by our brands and support the creators we work with” said Conny Braams, Unilever’s chief digital and commercial officer, in a statement. 

<h2>Leveraging social media to drive consumer behavior change</h2>

Unilever partnered with Behavioral Insights Team and 10 sustainability influencers to develop content that aimed to persuade consumers to use less plastic and waste less food. Unilever then showed the content to 6,000 social media users in the U.K., U.S., and Canada.

Three out of four respondents said the content made them more likely to engage in the suggested sustainable behaviors, specifically reusing plastic, buying refillable products, and freezing and reusing leftover food. Also, 72 percent of participants supported companies selling them more sustainable products and services.

“This study is a world-first of its kind and the largest online, controlled trial to test the effect of different styles of social media content," David Halpern, chief executive of the Behavioral Insights Team, said in a statement. "The behavior change potential of social media is clear, and the results show that there’s huge opportunity — providing fertile ground for further exploration in this space.” Over 75 percent of respondents said they support content creators encouraging their audiences to behave in more sustainable ways. 

<h2>More social change is needed to avert climate catastrophe</h2>

Unilever’s study found that social media is an effective tool for sustainable consumer behavior change. However, today's world of social media is more commonly used to increase spending habits and consumption levels, which are <a href="https://www.triplepundit.com/story/2023/social-tipping-points-climate-change/765886" target="_blank">key barriers</a> to fighting climate change.

To effectively use their platforms to drive sustainable behaviors, brands and influencers must encourage individual actions and <a href="https://www.cliccs.uni-hamburg.de/about-cliccs/news/2023-news/2023-01-31-pm-climate-futures-outlook.html" target="_blank">social change</a>. Unilever is leveraging the results from the new study to bolster its sustainability messaging.

“What we hear from consumers is that living sustainably is a constant, overwhelming effort and many feel ‘my act alone won’t count, anyway,’” Braams noted. However, armed with the results of the new study, Unilever is aiming to support content creators and improve their sustainability content to help drive better individual actions across their consumer base.

“Together, we are learning what is all likes and no action versus content that makes sustainable choices simple and preferred,” she said. Instead of contracting with influencers to encourage their viewers to buy and consume, companies can accelerate rates of individual change by communicating with their audiences simple ways to make better choices for the environment.

Image credit: <a href="https://www.pexels.com/photo/a-woman-video-recording-herself-using-a-cellphone-camera-12432832/" target="_blank">Anna Nekrashevich</a>/Pexels

The Social Media Secret Behind Sustainable Consumer Behavior Change

Refugees continue to flee Ukraine as the war enters its second year, and social entrepreneurship is playing a crucial role in helping them get established in their new homes. In Poland and Romania, for example, social enterprises supported by the impact investing firm <a href="https://www.nesst.org/" target="_blank">NESsT</a> are helping to provide dignified employment to Ukrainian refugees.

Vladyslava Terekhovych, 25, who goes by the nickname Vlada, is among those who are benefiting from NESsT’s investment in the region through its <a href="https://www.nesst.org/acceleration-portfolio" target="_blank">Accelerator Portfolio</a> and the <a href="https://www.ikeasocialentrepreneurship.org/en/partnerships/accelerating-for-impact/nesst/poland-and-romania-accelerator" target="_blank">NESsT Refugee Employment Initiative</a>, which invests in impact-driven small and medium-sized enterprises (SMEs) that are bringing refugees into the local economy. NESsT is partnering with Ikea Social Entrepreneurship and the Cisco Foundation on the initiative. 

Vlada fled her home in Kharkiv in April 2022, crossing the border into Romania with a friend and her family, while Vlada’s family remained in Ukraine. She is among the estimated 2.4 million Ukrainian refugees who have <a href="https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fdata.unhcr.org%2Fen%2Fsituations%2Fukraine&amp;data=05%7C01%7Csydney%40milkandhoneypr.com%7C7bce168aab98492130a508db0a36a984%7Cf3d86f8d92814426b5c03e14a399ac48%7C0%7C0%7C638115002114158451%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&amp;sdata=0MsIwh9MUuAhv72Gzk1uD%2FrHipKBiAmaot77rFwl5zk%3D&amp;reserved=0" target="_blank">permanently settled</a> within neighboring European countries since the Russian invasion on Feb. 24, 2022. Nearby countries like <a href="https://www.unhcr.org/en-us/news/stories/2023/2/63f548a44/year-volunteers-poland-still-ukrainian-refugees.html" target="_blank">Poland</a> and <a href="https://www.who.int/europe/news/item/17-01-2023-understanding-the-obstacles-faced-by-ukrainian-refugees-in-romania" target="_blank">Romania</a> have seen the largest influx of Ukrainian refugees, with citizens of those countries continuing to provide humanitarian aid in many forms.

About a month after she arrived to Romania, Vlada, a dentist who had just launched her career when the war broke out, noticed an advertisement at a humanitarian aid station for a mobile dental clinic through Merci Charity that was serving Ukrainian refugee children. 

“I decided to volunteer my help, and they asked if I could start work right then as a translator for the children and their mothers at the clinic," Vlada told TriplePundit. "Soon they put me to work as a dentist as well." 

<h2>Meeting community needs while providing employment </h2>

For Daniela Staicu, vice president of Merci Charity, Vlada was a perfect match. “We could not find a better fit for our project,” she told 3p.

Merci Charity has provided dental treatment for children in rural areas of Romania for eight years, with a focus on hard-to-reach areas and marginalized communities. It is the only mobile dental clinic in Romania, serving about 600 children a year, and last year it extended its services to Ukrainian refugee children as it quickly became apparent that dental care was the most requested medical service among refugees.

Today Vlada works two jobs with the enterprise, coordinating the nonprofit mobile dental clinic while serving as a sales assistant in <a href="https://www.nesst.org/atelier-merci" target="_blank">Atelier Merci</a>, which is part of the NESsT portfolio and produces handcrafted clothing from sustainable, vegan, and organic materials to support the charitable arm's work. The atelier's brick-and-mortar store — Altrntv, co-founded by Staicu and Merci president, Alina Tiplea — sells not only its own products, but also handmade clothing, shoes and belts created by small Romanian artisans from underserved communities. 
<figure role="group"><img alt="social enterprise shop Altrntv in Romania provides employment to Ukrainian refugees" data-entity-type="file" data-entity-uuid="bf8cc881-6229-49ba-b191-4b3763bbed80" src="/sites/default/files/inline-images/ALTRNTV%20-%20Bucharest%20%281%29%20%281%29.jpeg" width="1078" height="1347" loading="lazy" /><figcaption>Buzzy handmade goods shop Altrntv is actually a social enterprise that supports mobile dental services for rural children and jobs for Ukrainian refugees. </figcaption></figure><h2>"A circular economy company"</h2>

The profit from Atelier Merci is spun back into Merci Charity in what NESsT co-CEO Nicole Etchart calls a “circular economy company,” since the more the social business grows, the more dignified income it can provide to suppliers in Romania as well as support the work of the charity. 

“Once the war broke out in Ukraine, we began to see how many of our enterprises in eastern Europe like Atelier Merci were opening up their arms to help refugees, in this case through their NGO Merci Charity and the mobile dental clinics for Ukrainian children,” Etchart explained.  

<h2>More than a job</h2>

Through the NESsT Refugee Employment Initiative, enterprises receive financing and business assistance to help provide Ukrainian refugees with long-term employment support, including career training, quality job opportunities and additional wraparound services (e.g. mental health services, language classes, childcare and support with accessing work permits, among others). 

While she wants to return home one day, Vlada says she is grateful for the support and employment she has received through Merci Charity and Atelier Merci. Her mother, back in Kharkiv, is also a dentist.

As she shares in <a href="https://www.youtube.com/watch?v=VYHQOKMWkSE" target="_blank">this video</a> about Merci Charity produced by another volunteer, Vlada says: “Now I feel honored to bring my skills to help bring smile to these young children in a difficult moment in their lives. We ride around in these magical dental vans and bring joy.”
<figure role="group"><img alt="social enterprise shop Altrntv in Bucharest supports Ukrainian refugees" data-entity-type="file" data-entity-uuid="e3ad6115-04b2-435a-a8f1-22d7ad349747" src="/sites/default/files/inline-images/ALTRNTV%20-%20Bucharest%20%282%29%20copy.jpg" width="1000" height="1333" loading="lazy" /><figcaption>Located in Romania's capital city Bucharest, Altrntv serves as a gathering space as well as a storefront. </figcaption></figure><h2>Expanding the model to more social enterprises serving Ukrainian refugees</h2>

In the months to come, as the war grinds on, more people like Vlada will be needing help. “We know many times in these situations, refugees come to a country and they stay for a long period of time," Etchart said. "They need help with housing, food, medical attention and jobs to sustain themselves.”

NESsT is in the process of identifying additional businesses like Merci Charity as part of its plan to support 15 enterprises that work or plan to work with refugees and migrants in Poland and Romania. The initiative aims to create 2,000 jobs and improve the lives of 5,000 refugees.

“We are grateful for the support of NESsT, and we need to bring more attention to the refugees who are continuing to cross the border into Romania and need our help,” said Staicu, who told us Merci Charity aims to raise more money to expand its operations and help more refugee children. “While the narrative in the news cycle may have shifted away from the refugees, the NGOs are still doing the work and people are still needing help.”

Images courtesy of NESsT

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