Last updated 3 November 2022
The International Sustainability Standards Board (ISSB), the US Securities and Exchange Commission (SEC) and the European Commission together with the European Financial Reporting Advisory Group (EFRAG), demand greater accountability from the mining sector, retailers, manufacturers and waste management, among others. CEOs regularly ask the ISSB, SEC and EFRAG to clarify what it really means, in their opinion, to operate in a sustainable manner. Each board or commission has their own perspective on how to achieve more sustainable outcomes.
All of the proposals rely on recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) to some extent. The EU Non-financial Reporting Directive(NFRD) also serves as an important reference point. See below for descriptions of these bodies.
Quantitative data in support of net zero commitments typically focus on carbon dioxide (CO2), although governments have recently expanded their commitments to include methane (CH4). The Kyoto Protocol, however, calls for reductions among seven gases: carbon dioxide (CO2); methane (CH4); nitrous oxide (N2O); hydrofluorocarbons (HFCs); nitrogen trifluoride (NF3); perfluorocarbons (PFCs); and sulphur hexafluoride (SF6).
Current quantitative data tends to include
Quantitative data is moving into areas such as intensity targets, capital deployment, internal carbon prices and remuneration. More specific examples include
MobiCycle Tech proposes tools to capture the necessary data
Current qualitative data may include
Proposed qualitative data amount to transition risks, physical risks and climate related opportunities.
MobiCycle Consulting offers
MobiCycle Marketing offers
Current qualitative data may lead to catchy anecdotes. They may entertain everyone, but ultimately convince no one.
What is the impact of a company's business on the environment? Risk mananagement typically assesses the reverse - the impact of the environment on a business. Banks and fund managers often focus on how climate change may affect the company receiving the loan or investment. Their products do not adequately reflect the full spectrum of risks of climate change. Double materiality asks us to look at risk from both perspectives.
The EU's Corporate Social Reporting Directive (EU Directives include 2013/34/EU, 2004/109/EC, 2006/43/EC and Reg EU 537/2014) enables reporting on circularity for businesses. Our take make waste approach contributes hundreds of tons of material annually. Economic growth leads to greater damage to the planet. Less than 10 percent of the resouces we consumer are returned to the circular economy. The connection to greenhouse gas emissions is also clear. Over 70% of emissions is tied to consumption. Indicators are needed to measure and track the transition from a linear model to a circular one.
CSRD affects approximately 50,000 companies. Rather than a focus on how your business will survive climate change, you will need to ask how your business can change its model and strategy to substantially reduce its footprint. It is proposed that you will have to report yearly from 2024 (based on 2023 transactions) on at least 9 areas. Your declarations will be audited.
The Financial Stability Board (FSB) created the Task Force on Climate-related Financial Disclosures (TCFD) to identify and report risks and opportunities. Physical risks include a.) acute risks which are event-driven; and b.) chronic risks, which arise from long term shifts in climate patterns. Transition risks address the lost revenue facing companies as we move to an economic growth model that limits global warming to well below 2 degrees Celsius. In MobiCycle's view, the emphasis on risks and opportunities lead
SFRD, the EU's Sustainable Financial Reporting Directive, applies directly to financial institutions focused activities around climate adaptation and mitigation. It pushes for greater transparency and comparability and will ultimately be judged by how well it discourages greenwashing and encourages activities that support the planet. Principal Adverse Impact indicators. SFDR champions the idea of PAIs measure the impact of investments undertaken on the environment.
The Climate Disclosure Standards Board accounts wanted to merge climate metrics for 'natural' resources with annual reports. It was guided by the TCFD. As such, it asked customers to identify their risks and opportunities. On 31st January 2022, the Climate Disclosure Standards Board (CDSB) was consolidated into the IFRS Foundation to support the work of the newly established International Sustainability Standards Board (ISSB). The ISSB has a greater focus on activities.
Financial reporting drives a stable market economy and good governance. Transparency is key to ensure reporting on the planet is valued to the same degree as financial reporting.
The ISSB, SEC and EFRAG are right to reject current approaches to data for two reasons. Information is often unreliable or not fit for purpose. Mature KPIs do not reflect changes on the ground. Nonetheless, data can be a powerful motivator. The story of your ESG data should gradually mature into a grand narrative. Win hearts to win minds. Enrich your business processes and, in time, change behavior.
Many businesses struggle with the 'how' of reporting on the circular economy. Why not get started today? Eliminate waste, maintain high quality, protect biodiversity and break your dependence on material resouce extraction. Our solutions are designed to help you reduce Scope 3 emissions, protect biodiversity, minimize pollution, avoid fines and protect your reputation.