Podcast: Führende Klimastrategien angesichts des wachsenden Drucks von Regulierungsbehörden, Investoren und Verbrauchern umsetzen

I mean, all of our industries are affected or affecting. the climate. So so really taking time to do that is critical. and this fits into just the general approach that is really underpinned by the regulation of companies needing to do a proper double materiality assessment and really getting at the bottom of what their key issues are and what the areas are that they really need to pay attention to. 

So if you've got that clarity, then that means that these are things that are important to your business. And so then you can. It doesn't mean that resourcing them are, is going to be easy, but it also means there'll be an understanding just as with any other business risk, and it will sit alongside those risks because it will be seen in the same length as other risks. 

But the other important thing is actually understanding where this investment needs to come. Is it. A capital expenditure is a capex or is it optics? Right? And I think sometimes that can be a challenge. and I'm thinking of examples of simple things when companies, for example, want to upgrade facilities to renewable energy sources, or they want to put solar panels on a factory, you know, just to give some simple examples, there can be some real discussions about where does that investment come from? 

And what is the payback period? and so I think, you know, really paying attention to how do these investments get signed off, get allocated, where is that, that going to come from and understanding if this is the capital expenditure or if this is an an operational expenditure is really critical. And of course. 

The real upside comes if there is any benefit  to reducing your carbon impact, which reduces cost or could even provide an upside opportunity and one area where this comes to light is with business travel, and this can be a small impact. But in our business, for example, this is a material. You know, impact of our business because of the nature of our work. 

And so where we can reduce business travel, or indeed provide virtual services, reduces our carbon footprint and of course, also then reduces the cost associated with business travel as long as we don't, of course, compromise the service to our clients. So I think those are some of the things to think about.  

Thank you so much for that. I think it's so important to have a candid conversation about how to balance, you know, climate commitments with financial goals. It's important for businesses. So, so thank you for that. On that same topic investors as well are placing greater emphasis on climate related risks and opportunities. Let's not forget that. So how can companies integrate those considerations into their broader ESG strategies to attract and retain investor confidence?   

It's a very important question. And I have to say, to my mind, the investor pressure and the investor understanding of climate risk embrace of the importance of this topic has been one of the most fundamental changes in the last, you know, 10 to 15 years in terms of driving action. 

So what I would say is lean into it. Lean into the investor requirements. I think fighting them isn't gonna do you any good. And indeed, if your investors are asking you for this that is a good thing in my experience. and I've worked at many different sized companies your investors are often partners in this. 

Many of them will have, well-resourced, or I wanna be careful what I say, but you know, at least moderately resourced sustainability departments. They have very clear expectations for what they want to see. so using their frameworks and even directly asking for the way that they would like to see things or their advice on how to go about things is a, is a wealth of resource for companies. 

So I think that's, that's one thing, but this comes back to my previous answer as well, which is doing a proper assessment. Of your climate risk is the way you're going to meet your investor. requirements and then showing that you have a plan. Developing science based targets. and then a plan to of how you're going to achieve those targets is really what by and large investors are looking for.

And that is working with external partners or doing it internally. If you have the resources and then most importantly, and finally, I think the other thing that investors want to see is third party Independent verification of the data. And of course, this is now also included in what's required by regulation. 

So these things are mutually reinforcing the investor requirements and the, you know, the, the regulation. so making sure that you have your information and data verified by a third party is critical as well.   

Again, amazing tips for our listeners there. Thank you. And you know what? It actually reminds me of an event that we were both at Tara. it was the UK leadership series in London and we were talking exactly about the crossover between, you know, the financial aspects of climate strategy and wider ESG strategy. And we had an investor as a, as a guest speaker and I always remember them saying, this is about going from value retention to value creation. 

And that phrase has always stuck with me.  Yeah, I think that that's, that's really great. I think that's true and it can be true. Yeah.   

So let's pivot for a second away from investors to another crucial stakeholder group and that is consumers. So I think it's well understood that consumers are becoming incredibly more aware and environmentally conscious and therefore demanding more from the businesses that they invest their money in. So, In your view, how can businesses effectively communicate their climate strategies and the work that they're doing in order to build trust and brand loyalty with those consumers?   

Yeah, I mean, listen, gone are the days of just being able to do kind of a pilot project or a partnership on its own or having the sustainability department do an initiative that then gets featured in a report. 

All stakeholder groups want credible. Transparent action from companies and they want you to be authentic as well. They don't want to hear stories that are obfuscating some big areas that you, your company may not be addressing. So being honest and transparent and accountable. is the way to build trust. 

And, and as you know, as a, as a marketing professional, you know, building trust is getting more and more difficult. consumers, including consumers of all kinds of media are just much more savvy and also more skeptical of all of the information sources. So it, again, this does help in terms of leaning in on needing to have credible data consistent data. 

Ensuring that the things that you as a business are working on are actually the biggest impacts and I like to think about the way a company can tell its stories and engage as like a triangle with three levels. So at the bottom, you have to have the fundamentals. You have to know your risks. You have to really have taken the time and effort to understand how to put this into your processes. 

And this is things from new product development to procurement. All of the processes of a business, you know, how is sustainability or in this case, engagement on climate fitting within your, what you do as a business and where are your most critical materials that are the most carbon intensive and what are you doing about those things? 

And then there's sort of this middle level, which is I would call engagement, which is where you're engaging with your stakeholders, your suppliers, you're engaging internally across all departments, so everybody understands what you're doing, why you're doing it and what their role is on this journey. 

And if you get those fundamentals, then at the top, you can start telling some really cool stories. And so if you start telling the story and then you scratch beneath the surface or a consumer to scratch beneath the surface, they. See that you have all this other stuff going on, that it is authentic and that you're doing your best. 

And, and I think some companies are doing this really well. I also think the complexity of large global companies means that there will be some areas where they can advance really quickly, or they can address some low hanging fruit in certain geographies. And then there's some areas where it's harder.

And so just being again, transparent about that. What are you working on? Where are the blocking points? And then when you come out and engage your consumers in your stories, or indeed, ask them to come along on the journey with you. there, there is some, some real meat there. I mean, I'm thinking this is now kind of an older example but where companies such as P and G started reducing the temperature, asking customers to, you know, reduce the temperature at which they were washing their clothes. 

I mean, that would be very difficult to do if you were a company that didn't have a robust approach to these issues underneath that kind of story. So that's where you can really engage with your, with your consumers is if you're doing your work and you're telling your story and you're asking them to come along with you on a journey.  

Again, such amazing, tangible advice, fantastic example there for our listeners. So thank you again, Tara. Now, I've got a last question for you here. And it's, look, we're entering Climate Week NYC, and I just want to know what advice would you give to organisations looking to implement leading climate strategies? And that's a big question. So, you know, just some, some priority. top tips here. You know, what should organizations be looking at? not only to meet the regulatory changes we've discussed, the investor demands that we've discussed, but also to resonate with consumers in a meaningful way. And I'm thinking here that data, It's going to be the key. You know, I'm thinking of course about LRQA’s own supply chain intelligence platform, EIQ and data led tools like that. But would you agree that data led risk management is one of the absolute top tip priority areas here?   

Yeah, absolutely. I mean, we've sort of touched on this lightly, but you know, there is a sea of data out there now. 

And also a lot of tools as you've talked about ours. And I think it is very important for companies to make very clear decisions on how they're going to collect the data, what they're going to collect. And then the other thing is, of course, when it's your own operations it can be tricky enough but you can cut, you have some control over that. 

And often you can also partner with the finance department or, you know, the finance department can even lead on this. I'm looking for, where is the best source of data and, and how can you use spend data as a, as a, as a starting point when it comes to your supply chain which is. Often one of the biggest impacts for companies your upstream scope three or, or scope three upstream, or just your, your supply chain in general is often an enormous part of a company's carbon footprints. 

So collecting that data is critical, and this has been an area that keeps evolving. Companies have been using estimates over. The years, but we're moving towards needing more and more actual data more and more close to real time data. there are proxies that are being made where actually, there might be some meaningful differences between a supplier. 

For example, that's really switched to renewables and versus a supplier that is still relying wholly on the grid that hasn't yet.  What have you so, so really getting direct data from suppliers and being able to collect that is really important. So data is a very important piece of this. And as you say, the tool is, is a great is a great tool to collect that supplier data for sure.  

But, in terms of the broader picture, I think what's important for companies to note is you can't just throw this to a department and have them just, yeah, you get on with having a climate strategy. If you want to have a leading approach to this, or even indeed just a good approach, then there's just some fundamentals, which is one, it needs to be championed at the C suite level. 

And even also at the board level, that they understand why this is important. Why is it important to look at our climate risks, measure them. And then also, once the priorities have been identified that there is sign off that the company is going to do something about these and in a time bound way, because I think that's often where climate initiatives or sustainability initiatives can slip is that people now want to be committed. 

Executives obviously want to be committed to making change.  It kind of can fall. Well, we'll do it when we've done these other things or we don't have the, you know, the resources today, but understanding why it's important. And I think coming back to the context, which is what Climate Week is about, is that we actually are on a real clock here as, as humanity. 

And so I don't think we can shy away from that. I think. The best companies are going to be leaning into understanding the importance of it and then finally getting everyone involved internal people and your external stakeholders as much as you can engage lean in on what's happening already. You don't need to reinvent initiatives. 

You can get involved in things that are already going on. And also, um. You mentioned how consumers are more savvy, but young employees are as well, right? And the new employees that are coming into the marketplace are very aware of, of the climate action of, of companies and really care about it. So lean in on that and engage your people.  

Tara, thank you so much. another wealth of guidance there.  Things are really changing out there. here at LRQA, we're saying that we're in a new era of risk management, to your point, and we call it the era of Assurance 4. 0. And what you've done today is equip us with some of the essential tools to meet that era head on. So thank you so much again for your time and your guidance. And thank you to our listeners for tuning in. you can all find lots more packed episodes on our Spotify channel or on LRQA. com. But for now, thanks for listening. Thank you again, Tara. Thanks so much to our listeners. Stay tuned and we'll see you all again soon. Thanks, Tara.  

Thanks Holly