The tide continues to turn on climate transparency. A recent announcement from the U.S. Securities and Exchange Commission (SEC) indicates the financial regulator’s plans to mandate climate-risk disclosures for publicly traded companies in the coming years. After a decade of merely encouraging disclosure, the move is nothing short of historic. It’s an important step toward recognizing climate risk and driving disclosure changes that educate investors so they can help shape a greener future.
In the meantime, the business world isn’t sitting back and waiting for direction. I’m happy to see corporate Environmental, Social and Governance (ESG) strategy taking center stage at events around the world this spring. Already we’ve heard from some of the field’s foremost experts in ESG at the Verdantix Innovating for Sustainable Operations Virtual Summit. Speakers dug into the rapidly changing ESG disclosure regulations, as well as industry-leading sustainability strategies. April’s NAEM EHS+ESG TECH22 promises to go even deeper on best practices for climate-related data collection and digital tools to support ESG transparency. And we look forward to connecting with more like-minded ESG leaders at the Reuters Responsible Business USA 2022 and Responsible Business Europe 2022 events, which feature speakers from the SEC, the UN and some of the world’s largest corporations. Sphera is honored to participate in these events and collaborate for positive change.
As we continue to participate in ESG discussions around the world, I want to call attention to the “G” in ESG. While environmental and social are often top of mind, governance is the backbone of long-term ESG success. The importance of developing and following policies that keep people and processes safe, responsible and productive — from adhering to regulatory guidelines to managing control of work (CoW) — should never be downplayed. For the high-risk industries Sphera serves, governance policies are deeply ingrained in operational risk management procedures. ESG is helping to spread this risk management thinking to other industries as well.
Today the challenge is monitoring those policies and evolving them to meet current demands, all while achieving consistent compliance and control. This challenge is only compounded as ESG performance continues to capture the attention of investors and the public, in light of the recently announced SEC climate disclosure for publicly traded businesses, the European Union’s Sustainable Finance Disclosure Regulation (SFDR), Corporate Sustainability Reporting Directive (CSRD), and the Task Force on Climate-Related Financial Disclosures (TCFD). Once finalized, these new disclosure rules will result in new reporting requirements that will increase compliance costs for reporting companies. Though there are differences of opinion as to how climate change will affect investors and companies, one thing is certain: Regulatory change regarding climate-related disclosures is quickly approaching. More than ever before, businesses must be transparent and able to back up ESG policies and commitments with auditable, transparent data.
In this dynamic and unpredictable business environment, businesses need solutions to ensure operational risk management policies are being followed, recorded and shared. It’s not just about following local, state and federal regulations because you have to. It’s about following them because it’s the right thing to do. The days of depending on Excel and SharePoint for tracking processes and procedures are over. Companies need to provide a transparent, auditable trail to ensure accurate and repeatable results, which are the foundation of good governance. That’s why we are always focused on helping our customers gain better insights into the operational risks occurring now and emerging on the horizon.
Speaking of customers, I am proud of Sphera’s work with both Lorenz Meters and ista. Last week, Lorenz Meters and Sphera received a 2022 Innovation Excellence Award at the Verdantix Innovating for Sustainable Operations virtual summit. Lorenz Meters won in the Circular Economy Tech Enablement category for their circular business model project that utilized a life cycle assessment (LCA) performed by Sphera’s Sustainability Consulting team. And ista was shortlisted at these awards for its work in the ESG Metrics and Reporting category. ista partnered with us to implement SpheraCloud Corporate Sustainability software. This project enabled ista to collect sustainability data from all sites worldwide in a more efficient, accurate and verifiable way.
Sphera’s vision is for all businesses to view ESG and sustainability strategies not only as a compliance exercise, but also as a tool for innovation. The success of our customers proves that compliance and innovation are a strong foundation for a safer, more sustainable and productive world—no matter where you are in your ESG journey.
–Paul
Learn more about Paul Marushka.
SEC Makes Progress on Climate-Related Disclosures