The inaugural Sustainability Virtual Summit, which took place on November 10th and 12th, saw more than 900 people enroll and was praised by attendees as very useful. “Great webinar today about Business Value & Challenges in Sustainability. The experts discussed how to move from a report-and-comply model to leveraging sustainability as a competitive advantage for improving financial performance.” – Guillaume Féry, Solar Impulse Foundation.
From peers and industry experts, participants learned how to boost their company’s sustainability initiatives and overall performance, to embed sustainability into a company’s DNA and create real business value. There were insights into challenging regulations affecting sustainability reporting, including carbon neutrality and net-zero targets, Science Based Targets (SBTs), scope 3, ESG data and more. Participants also learned first-hand from Sphera customers how an integrated technology approach can elevate their organization, connecting data, software and consulting expertise across product life cycle and corporate sustainability management. Here is an overview of the sessions:
Day One: Market Research and Trends
Session 1: Business Value of Sustainability
Matthias Münzing, VP Corporate Sustainability Solutions at Sphera, showed participants an overview of most companies’ sustainability maturity: moving from compliance, efficiency, optimization and leadership in sustainability. Sphera’s VP of Global Sustainability Consulting, Marc Binder reviewed Godrej Industries Limited and Associate Companies (GILAC), BASF, Volkswagen and Daimler as examples of companies that have moved into leadership roles in their sustainability activities.
Annika Bruss, Senior Sustainability Consultant at Sphera, hosted the panel discussion, talking about regulatory and reporting challenges in relationship to sustainability.
Andreas Svennefjord, Account Manager, for the CDP Reported Services program, talked about the road toward science-based and net-zero emissions. He described a recent SBTi/CDP publication, now available on the SBT website, that “aims to provide clarity on key concepts, such as the role of off-setting and what the end means for companies.” It sets a certain standard for how to communicate about Net Zero.
Dr. Rajesh Singh, Managing Director India & Southeast Asia at Sphera, was asked about the challenges that industry faces. The first challenge for countries, such as India and China, is the energy mix, which is currently dominated by coal and, combined with a highly price-sensitive context as one of the largest outsource hubs, there are substantial supply-chain impacts that have to be managed. The second major challenge is a lack of climate activities in medium and small sized companies. The third challenge are the old technologies, which act as an obstacle in a sustainability transition. The last challenge is achieving systematic environmental assessment, especially with regard to scope 3 emissions.
Marc Binder added that we consumers also need to change our behavior, with fair treatment and payment along the value chain, especially in developing countries. We need to think about the social dimensions of sustainability and how each of us in our own world can do something in our consumer behavior to make an impact in environmental sustainability. We should not wait for regulatory constraints, but take initiative on our own.
There was further discussion about other impacts beyond climate change, such as biodiversity and land and water security risks. CDP and SBTi are working on ocean and land use sustainability topics to help take a more holistic, life-cycle approach.
Dr. Johannes Gediga, Sphera’s Business Development Director in Mining and Metals Sector, added that in the mining sector there is already significant reporting of much of the critical sustainability information. They report on biodiversity, land use, water usage, etc. So, there is a possibility for companies to bridge backwards to original material extraction in their value chains, allowing for improved assessment.
With the wide variety of reporting standards available, current reporting is done in a rather fragmented manner. So, organizations are looking to make the process easier and more efficient. With the need for more accurate non-financial reporting in mainstream reports, the World Economic Forum (WEF) ESG reporting framework has come up a way to measure stakeholder capitalism, common metrics and consistent reporting on sustainable value creation, which will bring greater alignment on ESG performance and on evaluating the contributions to the SDGs.
Lastly, the importance of Circular Economy was also reiterated. And as part of that idea, the Product Environmental Footprint (PEF) labeling scheme is on the horizon in the EU, a framework for calculating the environmental footprint of a product so that it may be benchmarked against competing products. All products sold within the European Union—both business-to-business and business-to-consumer products—will be labeled for comparison with regard to their environmental impact, allowing businesses and individual consumers to immediately see which products are more sustainable.
Session 2: Integrated Technology Approach
This session included discussion about integrated solutions that can be used across a business.
Colleen Marsh, Customer Success Director at Sphera, moderated the session. The panel of experts weigh in on how reporting and management software has evolved, supporting companies in significantly improving sustainability performance.
Yaowen Ma, Principal Analyst in EHS and Sustainability Technology at Verdantix, Mike Zamis, Chief Product Officer at Sphera, Jeff Ladner, VP of EHS&S Product Manager at Sphera and Brian Payer, EHS&S Solutions Director at Sphera were the panelists in this session.
Beyond the pandemic and social justice disruptions, the world has seen bush fires in Australia and forest fires in California, with record numbers of Atlantic storms during hurricane season and the worse urban flooding in the last decades in the last 500 years. At Verdantix, Yaowen Ma has observed many companies underestimating sustainability risks, with CEOs resigning and companies facing major environmental fines. They need to overhaul their integrated risk practices. Regulatory drivers are emerging, especially in the EU, but a lot of the change is driven by investors, with huge inflows of investment capital pouring into ESG funds.
ESG technology, therefore, is becoming a central focus for companies. A lot of what takes place in the market is driven from a push rather than pull. But demand has also driven many companies to adopt new Net-Zero emissions targets and full scope 1, scope 2 and scope 3 sustainability improvements so they can remain leaders in their industries. Sphera’s clients often see their sustainability efforts maturing into an integrative approach, with a focus on sustainability performance, highlighting the fact that companies need to ensure high-quality data to inform management teams to drive the outcomes they hope to achieve in sustainability.
Many companies are struggling with desperate and siloed data, workflows that should be cross functions but remain within functions, multiple systems to try to juggle data across, and all of this is occurring within the context of greater pressure from internal stakeholders and external regulators and the expectation of consumers and financial investors that advocate for better ESG metrics. So many of our clients are trying to jump to the next level of performance. They want to reduce associated risks in an integrated manner. Unifying this information is key, providing a global view of where your risk hotspots are and the ability to identify what are driving those risks—is it a people risk, a social risk, an environmental risk, a human capital risk? Site-level insights need to be actionable for us to do anything with them, and having these insights at a click leads to strategic value.
Along a sustainability maturity progression, less than one third of the companies asked don’t use integrated systems. But as they mature, becoming more performance-management focused, they need more complete, detailed, timely information. That’s where leveraging technology comes into play, to help automate and enable processes to take away the manual labor that is otherwise required, because those activities are time-consuming, burdensome, inefficient and not cost-effective. When there are shifts in a workforce and data is locked into single spreadsheets with only a few people knowing about them, there is a lot of organizational risk involved. Integrated solutions dramatically reduce that risk.
Integrating sustainability data across environmental, sustainability and stewardship programs reduces time in gathering the data and improves transparency, allowing users to see where data came from and who checked it, providing confidence in that data to make decisions. There are significant efficiencies to be gained with an integrated, global, Industry 4.0 solution, with consistencies and benchmarks useful at the management level.
Day 2
Session 1: On the Road to Net Zero
In this session, BASF and Aptar describe their roads to Net Zero in improving corporate sustainability performance by collecting data throughout the value chain, learning how to advance one’s decarbonization journey to build a competitive advantage.
Martijn Gipmans, Director of Business Development and team lead for the chemicals team at Sphera, hosted the discussion.
Dr. Michele Del Grosso, Aptar, Global Program Manager Sustainability, gave deeper insights into the sustainability initiatives at Aptar. Aptar is a packaging design and manufacturing company, focused on beauty, food and prescription medicine packaging solutions. They have five pillars of sustainability strategy: people, circular economy, solutions, operations and suppliers/partners. They want to improve decarbonization and their community, making sustainability a core part of their business. They decided on a Science Based Target approach, with goals for emissions reductions in scope 1, 2 and 3. In their scope 2 emissions they are working and planning on Renewable energy and Power Purchase Agreements (PPAs), electricity consumption reductions and green building designs. They collaborate along the upstream and downstream of their value chain, with a focus on raw materials, transportation of raw materials and final goods, supplier energy and emissions and reuse of raw materials. They have developed an energy road map and various product solutions innovations.
Dr. Jan Schöneboom, BASF’s Senior Manager of Sustainability Evaluation, spoke about BASF’s movement toward Net Zero. BASF has two corporate goals for sustainability: increasing the sales share of sustainable solutions and CO2-neutral growth. They have been continuously reducing their greenhouse gas emissions since 1990, with 50% reduction in emissions. They have set a 2050 goal for Net Zero, with three pillars in Carbon Management, reducing the CO2 emissions from their production by improving energy and process efficiency, increasing the share of renewable energies in their global power supply and developing breakthrough technologies for low emission production in a research and development program. Those are the strategic measures to reduce GHS emissions on the group level.
With increasing pressure from their customers, BASF wants to go further. Now they are conducting product carbon footprints of their entire portfolio. With such a broad portfolio of products, BASF’s carbon assessment solutions had to include a large number of raw materials and processes. They are now in a position where they can roll out their solutions to all their business units and will meet their deadline of informing their customers by 2021. Lastly, they are bringing in renewable feedstock and integrating them as raw materials into their production system, not only creating a lower carbon footprint, but increasing their share of renewable feedstock in a certified process. For their customers who use the materials to produce other products, there are no changes in the make-up of the materials. This allows greater movement toward a circular economy approach.
Session 2: Moving on and Improving Corporate Sustainability Performance
In this session, participants learned how ista and Ferguson are improving their corporate sustainability initiatives. Preyasi Patel, Sphera’s Team Lead in Corporate Sustainability Consulting, moderated the session.
Kelsey Bergan, Director of Sustainability at Ferguson stated that Ferguson is currently in the optimized stage of the sustainability curve. Ferguson is primarily a North American company focusing largely on e-commerce, with 26,000 associates and over 250 locations. Ferguson works in many different industries, including faucets & fixtures, bath accessories, fire & fabrication, janitorial supplies, HVAC, appliances, lighting, waterworks and industrial, pipe, valves and fittings. But Ferguson is probably best known for lighting and plumbing related supplies.
Ferguson focuses on three key areas in their corporate sustainability: best practices, efficient operations and sustainability products and solutions. They use the SASB Materiality Matrix to map their sustainability focus. Ferguson wants to make sure they are reducing water impacts, carbon emissions and other impacts so they can be good stewards of the planet. Their data, from a carbon emissions perspective, is segmented into scope 1, scope 2 and scope 3 emissions for their intensity metrics and total emissions. They are refreshing their goals now, doing a lot of work internally to understand what their key levers and opportunities are. Using SoFi software, they know their scope 1 and scope 2 emissions are a large portion of improvement for them, including electrifying their fleet and renewable purchasing from a scope 2 perspective. They have goals in waste intensity and total recycling—something they are constantly improving upon with the most efficient packaging. SoFi has helped Ferguson move from a reporting focus to more of a management focus, knowing the key areas that they need to focus on and what their initiatives are to move the needle on their sustainability metrics.
Dr. Simon Weihofen, Senior Program Manager Sustainability Office for ista International, spoke about where ista is along its sustainability maturity curve. ista International is a partner for digitalization and smart solutions for the real estate industry. They provide a lot of products that measure consumption data, such as smoke alarms, heat cost allocators, repeater for radio systems, water meters, pulse counters and heath and cold meters. Their main business is heat cost and water cost allocations. With 5,600 employees, mostly in Europe, they help landlords and tenants to measure and improve their consumption patterns and to decrease their heating and water costs and consumption. ista helps people contribute to climate protection and has stated the goal of becoming climate neutral by 2050 with the expectation that they will reach that goal sooner.
ista pushed beyond efficiency by shifting to Sphera’s Corporate Sustainability Software, allowing for management, analysis, target setting and discussions with the board. By automizing data collection, they now have an immediate overview and can see real-time data in discussions with management. It frees up time and drives performance to the next level.
Similarly, Ferguson was previously dealing with spread sheets. They are now moving into the optimization along the sustainability maturity curve. They are operating with a very lean team and have a lot of requests about their sustainability performance. Streamlining the data collection process and having reliable data for their stakeholders frees up time for them to focus on performance. Now they can shift to what they would like to do, thinking strategically 5 or 10 years down the line, integrating sustainability criteria into the process. They can think about what their business might like to know more about, such as product-level data, turning their attention to scope 3. They continue with internal discussions about how they can increase engagement with their stakeholders and senior management as they mature along the sustainability curve.
Main Takeaway
Ultimately, none of us can afford to see sustainability in silos. And we can’t only talk about corporate and product sustainability. We have to integrate sustainability throughout our businesses and value chains. Sustainability has to move closer to your business’s core. The companies that are far ahead have already taken this step. The further you move forward along the sustainability maturity curve, the more critical the core areas of business (e.g., finance, innovation, business models, procurement, marketing, etc.) are integrated with sustainability, never to be understood in isolation again.