Explore five reasons why carbon, climate, and community actions should be considered together in your ESG efforts.
The climate crisis is one of the largest challenges facing humanity today. Intensifying storms in the Atlantic Ocean, Pacific islands disappearing, and disruptions to the global food supply caused by droughts and floods are all reasons to sound the alarm. While the climate crisis is a global issue, its local impacts are equally important to consider.
Organizations typically fixate on carbon emissions for their climate goals yet overlook the critical social and environmental impacts of their business activities. Planting trees thousands of miles away to offset carbon emissions does not fix localized damage. Water contamination, natural habitat destruction, and air pollution bare significant consequences for residents.
The work required to reverse our path on climate change needs to start at the local level. With businesses playing such a vital role in their communities, understanding that carbon, community, and climate go hand-in-hand is crucial to driving change.
1. Carbon Reduction for the Well-being of Climate and Communities
While it is an easy option for businesses looking to pay for carbon offsets, there is no perfect substitute for carbon reduction other than starting carbon accounting and focusing on carbon reduction. Carbon accounting, including Scope 3 reporting, is essential for organizations to understand their ESG performance and develop strategies to reduce emissions across operations and the supply chain.
Carbon accounting can help identify risks and opportunities for organizations to address climate change challenges. Challenges include long-term sustainable development in communities, making informed decisions to mitigate emissions, and meeting regulations that protect the environment and the people.
2. Social Accountability in Supply Chains
The end product might be great and affordable, but the social and environmental costs along the chain of production are likely more than most consumers are willing to support. Child labor in cocoa production in West Africa, deforestation in the Amazon, and conflict mineral exploitation in the Democratic Republic of the Congo are all examples of supply chain issues that, up to now, have gone largely overlooked by the mainstream consumer.
It’s not that consumers all of a sudden decided to care about these issues, but rather that these issues are getting more attention thanks to the evolution of supply chain transparency, aided by the growth of the ESG movement. Regulatory developments and market perception will require more thorough examinations of supply chains.
Gaining more in-depth supply chain knowledge and understanding where potential red flags lie will be crucial for organizations as we move forward. Knowing which suppliers to talk to, and which suppliers to drop, is all part of doing business in the ESG era.
3. Climate Injustice on the Global and Local Levels
There’s been a lot of debate over who should pay for the costs and effects of climate change. Wealthier countries are the largest polluters, but poorer nations face the brunt of the effects, resulting in a global climate injustice.
Additionally, the loss of biodiversity due to pollution, land use change, and overexploitation compound the effects of climate change. An international agreement at COP15 has set the wheels in motion for biodiversity and nature-related risk to be another mandatory component of disclosures for large organizations.
Furthermore, large factories, smelters, and refineries cause water and air pollution in the areas surrounding their properties. Disproportionately, in many countries, low-income residents and people of color make up the communities surrounding large polluting businesses — something that dates back to the redlining days of the early- to mid-20th century.
“Companies that want credit for being environmentally and socially responsible must include justice in their analysis,” says Matt Renner, vice president at Seneca Solar. “I don’t expect them all to become employee-owned cooperatives overnight, but at a bare minimum, they should focus on investing in historically disadvantaged communities.”
4. Businesses are a Part of the Local Communities
From driving essential economic activities such as providing employment, paying local taxes, and sponsoring youth sports teams, businesses of all sizes are integral to their communities. The actions they take have a direct impact on the surrounding areas, and this includes their climate actions.
Committing to environmental stewardship and responsible practices is good for business as well. Increasingly consumers wants to support environmentally and socially responsible organizations. Being a local leader in these categories is a strong way to spread awareness and positive word-of-mouth marketing. These actions also motivate others to do the same, whether that be other businesses, individuals, or public institutions such as schools, libraries, or community centers.
Showing full dedication and commitment to community actions is one-way businesses can become trusted climate leaders.
5. Community Engagement is Essential
Simply put, communities and individuals most affected by the crisis must be centered on decision-making and solutions.
“In the communities we work in, we don’t just tell them ‘hey, here’s what you need.’ We speak with them first to find out what they need, and then develop a strategy to see if that is something we can help them with,” says Renner.
Today, nearly 90 percent of Gen X consumers are willing to spend more for sustainable products. Community engagement shines a light on how organizations can align with consumer values and better interact with their community — an important symbiotic relationship.
Internal stakeholders should also be consulted on sustainability issues, including diversity, equity, and inclusion (DEI) initiatives. Engaging employee perspectives improves employee retention and encourages participation in advancing the organization’s sustainability vision.
Community engagement ensures that we prioritize Just Transition, which provides a fair and equitable transition to a low-carbon economy for all members of society. This refers to workers and communities previously dependent on fossil fuels and polluting industries.
Drive Community and Climate Efforts With FiscalNote ESG Solutions
Understanding the environmental and social impacts of business activities can be challenging to pinpoint and trickier yet to develop a resolution strategy. FiscalNote ESG Solutions combines the technology and expertise to take charge of your impact on climate and the community.
