From high-profile celebrities like Greta Thunberg to events like the COP26 summit, discussions about sustainability, the environment and climate change are perhaps more visible than ever.
As the 2020s progress, corporations around the world are attempting to burnish their sustainability credentials by declaring net-zero goals and making plans to reduce the environmental footprint of their operations.
While there is a significant degree of skepticism about the many sustainability-related claims that businesses make—concrete details are often hard to come by and the dates for achieving these goals are sometimes decades away—the fact remains that they cannot be made at all. Making is instructive, pointing to a change in the mindset of some investors.
During a recent panel discussion chaired by CNBC's Steve Sedgwick, Judy Kuszewski, chief executive of sustainability consultancy Sancroft International, made the above point.
"One of the most exciting and, perhaps, unexpected events that we've seen in the past few years or so is that climate change is really a topic that investors are watching carefully right now," she said.
They were "really asking questions about the company's strategy and their future fitness ... to deal with the inevitable changes ahead of us," she said.
Examples of investors focusing on topics such as climate change, sustainability and the environment include Follow This, a Dutch organization that describes itself as "a group of responsible shareholders in oil and gas companies".
Slowly but surely, the impact of such groups is beginning to be felt in the boardroom. For example, in May 2021, Chevron shareholders voted in favor of a follow-up proposal to "encourage" the oil giant to cut its emissions.
That same month the shareholders of ConocoPhillips and Philips66 also voted for similar proposals, advanced by Follow This.
Another member of CNBC's panel, Jose Delbeke, tried to shed light on how attitudes were changing in the wake of the 2015 Paris Agreement, a landmark deal that sought to "limit global warming to below 2, preferably 1.5 degrees Celsius." wants to do, compared to the pre-industrial level."
Delbeke, who is the former director general for climate action at the European Commission, said: "I think the pressure that originally came from public officials has now gradually widened since Paris ... To include the private sector and in particular ... deal with risk and seek opportunities."
We had a lot of work ahead of us, said Delbeke, who also holds the position of climate president of the European Investment Bank at the European University Institute.
He noted how the general public was "very wary of greenwashing", a term the environmental organization Greenpeace UK calls a "PR strategy", which is used to "help a company or product to meaningfully reduce its environmental impact". without making it eco-friendly".
For Delbeke, it was important to capitalize on the moment. "We have this confidence that is now being expressed to the public and private sector," he said.
It needs to be nurtured, he argued, acknowledging that greenwashing can provoke a backlash. "I think there's a lot at stake here: companies going for net-zero ... can demonstrate, very credibly, that they're going net-zero," he said.
Referring to the EU's emissions trading system, Delbeke said that "monitoring and compliance was very important to instill confidence in the system."
"It's nice to have the concept of putting a price on carbon but... 'Is it done reliably?' That's what the general public is asking."
During the discussion, Kuszewski of Sancroft International emphasized that uniform standards existed to measure the performance of companies, but were not being applied consistently.
"There really isn't a need for new standards," she said. “There is a need for consistent application of the standards we already have, whether around sustainability reporting and indicators – by far the most widely used is the Global Reporting Initiative, used by 10,000 companies annually.”
The GRI, Kuszewski explained, incorporated the Greenhouse Gas Protocol, which in turn defined Scope 1, 2 and 3 emissions. These refer to direct greenhouse gas emissions; GHG relating to the production of electricity to be purchased and used by a firm; And all the rest "indirect" GHG.
"There is good agreement across the landscape about what ... the framework and measurement protocols should be," Kuszewski said. "It's about the application."