Senior executives and directors have become increasingly aware of how important transparency and precision are when clarifying commitments. While many of the older climate position statements that we reviewed did not include specific commitments, more recently published position statements generally include credible, contextual commitments to align with a particular climate scenario, the Paris Agreement, and/or national commitments.
Example 1: "The company has committed to reduce by 32% the emissions of scopes 1 and 2 (those generated by its own activity) until 2030, using 2009 as its base year. This is equivalent to reducing emissions by 42.9% for every million euros of revenue. It also undertakes to reduce scope 3 emissions (indirect, excluding capital goods, purchased goods and services) by 20% until 2030, using 2012 as the base year."21 (Ferrovial)
Example 2: "We have committed to setting science-based targets line with the globally agreed 2 °C. Our commitment is to reduce our relative footprint by 50% by 2020 from a 2004 baseline. This will be enabled by taking up opportunities to invest in and implement processes and technologies within our operations to reduce our overall carbon footprint. We will also leverage on the successes of some of our current projects to further reduce energy use in our direct operations."22 (Woolworths)
In alignment with TCFD recommendations, your position statement should identify the metrics used by your company to assess climate-related risks and opportunities (such as tonnes of carbon dioxide equivalent (tCO2e) per unit of production). Your position statement should also explain the targets used to manage climate-related risks and opportunities and performance against these targets.
Leading companies are clarifying their role and responsibility in helping others within their value chain to also adhere to limits in order to reduce the impact of their indirect activities. Hundreds of organisations have determined their Scope 3 emissions, and a growing number are disclosing their investments and funding initiatives whose activities align with their climate commitments.
Example 1: "In order to be Sustainable in a Generation, we've looked at the best-available science. It tells us we must reduce the total GHG emissions across our value chain by 27% by 2025 and 67% by 2050 (from 2015 levels) in order to do our part to keep the planet from warming beyond two degrees. So, that's our goal."23 (Mars)
Example 2: "We are directing a significant and growing proportion of our funding to help transform the economy at a rate that is commensurate with UNFCCC objectives. Since the African continent is extremely vulnerable to the negative impacts of climate change, our response includes both mitigation and adaptation components, comprising decarbonisation of our lending book in line with the required trajectory and increased funding to enable sustainable development, including provision of modern energy services, clean water and sanitation, climate- resilient infrastructure and sustainable cities."24 (Nedbank)
Unfortunately, in the vast majority of climate change position statements that we reviewed, there was no indication of who signed off on the statement or when the statement came into effect. Be explicit about whether your position statement has received the endorsement of management and/or the Board and include the date of sign-off.
In alignment with the TCFD recommendations, your position statement should identify the parties responsible for overseeing any commitments made in the statement and should clarify management's role in assessing and managing climate-related risks and opportunities. Your position statement should also clarify any expectations around reporting and/or links to compensation.
Example: "The following senior leaders are involved in implementing the management of energy and greenhouse gas emissions: The Senior Vice President, Sustainability and External Affairs reports directly to our CEO and is responsible for sustainability, health and safety, environment and community affairs, including energy and greenhouse gas emissions. The Vice President, Environment oversees compliance with environmental standards for projects, operations and our legacy properties, and regularly reviews environmental performance risks and strategic issues. The Vice President, Community and Government Relations is involved in engaging provincial and federal governments on climate policy. The Manager of Sustainability Implementation and Carbon Strategy coordinates the risk and opportunity management for climate-related risks and the implementation of our climate action strategy and energy and GHG reduction goals."25 (Teck)
Commit to a transparent cycle of review and include a timeline for the next review of this statement.