Credible and verifiable measures are a widespread problem. A German consumer group is suing Deutsche Bank's asset management unit for allegedly misrepresenting a fund's green credentials in marketing materials. The UK's advertising regulator has banned two HSBC advertisements as misleading, for "omitting material information" about the company's work to tackle climate change.
It's not just overseas projects that are missing the mark. Here in New Zealand, climate and transport advocates sued Auckland Council and Auckland Transport this year, saying their calculations didn’t take into account the expected continued growth of Auckland – and that in fact, the city's transport emissions would increase over the next 10 years.
(That's despite Auckland Council's loudly publicised plan for a 64 percent drop in transport emissions.)
The court case failed. The judge accepted that the council plan was a high-level and aspirational document, that didn’t oblige Auckland Transport to “meet or support any specific emissions reduction target”.
What do all these problems have in common? They've announced targets. But they haven't disclosed trustworthy, verifiable, timely baselines and interventions to get there. The World Cup organisers issued a statement to the AP news service this week, saying they would explain any discrepancies after the World Cup.
Concerns like these jeopardise businesses that are seeking funding for critical and increasingly urgent climate actions. Why would investors put their money in banks and finance companies, or directly into producers and infrastructure providers, if they can't be confident that their funds will deliver what's promised?
"Sometimes the data is not sufficient to accurately estimate lifetime emissions; in these cases, more accurate data may be obtained over time." – NZ Green Investment Finance
That's prompted the development, here and overseas, of tools to help companies set their baselines, and measure their progress in achieving their targets. It's been sped up by the Government's carbon neutral programme and climate-related disclosures mandate, to drive down emissions within public and publicly listed organisations.
The creators of these tools talk of the importance of transparent and trustworthy reporting, good data platforms, data providers in the market that speed up the tracking and reporting on initiatives, and open frameworks that allow the best practices to be shared.
At NZ Green Investment Finance, that meant joining the global Green Bank Network, to share knowledge and data and understand global best practices. "We do our best to form a complete picture of emissions reductions based on available data," NZGIF's Statement of Performance Expectations says. "Sometimes the data is not sufficient to accurately estimate lifetime emissions; in these cases, more accurate data may be obtained over time."
At ASB, that is framed around Taskforce for Climate-Related Financial Disclosures report, setting out the bank's understanding of climate-related risk, uncertainty as that modelling may be, and the strategies the bank and its customers are developing in response. ASB has provided sustainability-linked loans to companies like Craigmore Sustainables, whose chief executive Che Charteris is promising to develop a proof-of-concept net-zero dairy farm by 2035. "This is a tough challenge, and one that we will achieve through internal commitment and support of our partners," Charteris says.
BNZ's strategy entails supporting its customers and suppliers, economy wide, to measure, reduce, and report on their climate impacts. It's the first New Zealand bank to sign up to the Net Zero Banking Alliance, a UN-convened group of 116 banks from 41 countries, and it provided Deloitte with the company's three year sustainability-linked loan.
The terms of that loan require Deloitte to hit gender and diversity targets, and reduce its greenhouse gas emissions by 50 to 70 percent.
Deloitte's Auckland office is just upstairs from BNZ. Up there, the consultancy's climate specialists have concluded that companies and their financiers needed a tool to support them in setting science-based targets, defining emissions abatement strategies, and managing emissions budgets to zero.
"The business case grows almost day by day, given the ramping of costs of fossil fuel based energy." – Rikki Stancich, Deloitte
Sustainability and climate director Rikki Stancich and consulting director Andrew Wood were concerned that all the protests and placards are designed achieved little more than sparking conversation. So they and their team built Accelerate2zero, a piece of software enabling firms to fully understand the impact of their emissions strategy on their balance sheet and profit and loss.
For those companies focused first on reducing their emissions, Stancich says it helps them understand their baseline, set a science-based target, and clarify what steps they need to take to get there. For those pursuing an offset strategy, it provides a clear view of their position in terms of carbon price exposure and carbon price shields.
Does she ever hear a visceral community reaction to the idea of putting a dollar value on climate impacts? "I've been working in sustainability pretty much my entire career," she responds. "And to be honest, I've found the only way that you can get any forward momentum on sustainability and emissions reduction, is to demonstrate the financial benefit, the dollar value of doing so. Without that you don't get anywhere with a business and let's face it, it is business, it is production, that causes anthropogenic emissions. So that's where we've always traditionally focused – in demonstrating the business case.
"The business case grows almost day by day, given the ramping of costs of fossil fuel based energy."
Those developing these tools are standing on the shoulders of those who have gone before. Stancich cites the Europe-based Triodos Bank as an example of what can happen when finance, people and the planet are integrated in a strategy.
"At Triodos, you turn up and the bank manager believes in what you're doing. And I know that sounds very soft and soppy, but actually, it makes a huge difference to how you work." – Glen Saunders
"Triodos is the vanguard of sustainable finance," she says. "They were the first to empirically demonstrate that sustainable investment equities outperform, and that sustainable business models are more resilient in times of economic downturn."
She gives the example of the 2008 credit crunch, when traditional retail banks had their backs against the wall, but Triodos Banks' stable deposit base provided it more capital. "Not only did this enable Triodos to weather the credit crunch; they doubled their renewable energy finance team and incurred an influx of capital as investors sought a safe haven," she recalls.
"Triodos credited this to their modest risk appetite, an aversion to complex financial instruments, and a commitment to investing only in ethical and sustainable businesses with a proven track record."