As we celebrate Sphera’s sixth anniversary, I’m reflecting on our own ESG journey, and how we’ve grown to help our customers meet their ESG goals. As we’ve seen, the ESG reporting landscape has shifted greatly. With increasing regulatory, consumer and investor demand, having a strong ESG strategy is no longer an option – it’s a requirement.
The focus on companies’ ESG performance has grown significantly in the past few months alone, with the announcements of the U.S. Securities and Exchange Commission’s (SEC) mandatory climate disclosure for publicly traded companies and the European Sustainability Reporting Standards (ESRS), which falls under the Corporate Sustainability Reporting Directive (CSRD). While it can feel daunting to change corporate policies and monitor performance to comply with new regulations, I believe it also presents opportunities for growth. No matter where a company is on its ESG journey, having the right software, data and expertise is essential to forging a path forward in a world that is demanding more transparent reporting on companies’ carbon footprints.
An important step in any company’s ESG journey is finding the right partners. In the past year, Sphera added new board members and investors and forged new partnerships. A key milestone in our journey was Blackstone’s investment in Sphera in September 2021. Blackstone is one of the world’s top investment firms with almost $1 trillion in assets and is a private equity industry leader in ESG integration, reporting and engagement. We’re honored to contribute our carbon accounting solutions to Blackstone’s Emissions Reduction Program, which aims to reduce carbon emissions by 15% across Blackstone’s participating portfolio companies. With the support of a partner that has long championed ESG, we will continue our mission to create a safer, more sustainable and productive world.
In January, we expanded our board of directors through the addition of Dane Parker, former chief sustainability officer at General Motors Co., and Mark Schlageter, Thomson Reuters’ first chief customer officer and Blackstone senior advisor focusing on GRC strategy development and execution. We also welcomed David Batchelor, former vice chairman at Marsh, as chairman of Sphera’s board of directors earlier this month. I’m looking forward to working with our new board members.
Not only is improving ESG performance the right thing to do, it’s also beneficial for a company’s bottom line. Companies that view ESG as a framework for the assessment of a company’s performance and as an opportunity for innovation and growth are better positioned to address climate and regulatory challenges. In fact, a 2021 meta-analysis from New York University Stern Center for Sustainable Business and Rockefeller Asset Management that examines over 1,000 research papers on the relationship between ESG and financial performance found that implementing sustainability initiatives drives better financial performance through improved risk management, innovation and operational efficiency. Additionally, a 2015 report from Oxford University and Arabesque Asset Management examining over 200 sources found that 88% of them showed companies with strong sustainability practices experience better operational performance. Studies like these show that ESG is worth the investment and can play an important role in creating long-term value.
Setting ESG goals is only one piece of the puzzle. As we’ve seen in the past year, various stakeholders are interested in companies’ ESG disclosures and performance. To stay competitive and compliant, companies need to ensure their data is both transparent and auditable. In May, Sphera partnered with PwC to create a digital ESG ecosystem that helps organizations improve and communicate their ESG performance. We’re excited to work with PwC to help our customers make data-informed, actionable decisions that optimize their ESG strategies.
Consumers are also making data-centric decisions and are just as interested in companies’ ESG performance as investors and regulators are. Companies need to have accurate, reliable calculations of their products’ carbon footprint throughout their lifecycle. To help our customers meet this demand, Sphera was the first to bring a fully automated Life Cycle Assessment (LCA) software to market in May. This innovative solution helps companies with complex supply chains understand and manage the environmental impacts of their products. LCA automation is a game changer for companies striving to create more sustainable products, reduce supply chain emissions and improve ESG performance, which benefits both stakeholders and the planet.
While anniversaries provide an opportunity to reflect on the past, it’s important not to lose sight of the future. With the help of our partners and teammates, I’m confident we will continue to advance and help our customers achieve their ESG goals. It’s been an honor and a privilege to lead Sphera through this tremendous period of growth and change in the past year, and I’m excited about what we will accomplish next.