Growing climate commitments and investments in ESG factors
How to comply with new regulations and the expectations of stakeholders
July this year was the hottest month ever recorded in the world, the US National Oceanic and Atmospheric Administration (NOAA) reported in a study on the climate crisis. Combined land and ocean surface temperatures were 0.93 ° C above the last century's average. This is the highest result in 142 years, i.e. since the start of keeping records! The IPCC report, published a little earlier, emphasized that dangerous climate effects are occurring earlier than predicted and we have less time to prevent dramatic consequences.
Global warming affects every region of the Earth, many changes are becoming irreversible and failure to take immediate action to solve this crisis puts billions of people in immediate danger. The public and private sectors must work together to ensure a fair and rapid transition to a global economy with zero net emissions, - highlighted the UN Secretary General in a press release. We all need to act.
To address climate change, we need to understand it
- said Punit Renjen, CEO Deloitte,
announcing in early August the launch of a new climate education program for all 330,000 Deloitte employees worldwide.
Business has a big role to play in this and the actions and voices of their employees really do matter. Leading companies today not only set science-based decarbonization targets but also engage their customers and employees to make smarter choices. This new Deloitte initiative is part of this trend and aims to scale it up.
The program, developed in cooperation with the World Wildlife Fund (WWF), aims to inform and inspire Deloitte employees to learn about the effects of climate change and engage them in combating climate change by making responsible choices at home and at work and advising our clients in this area. The program is part of the global World Climate initiative, which aims to guide responsible climate choices within and outside our organization.
In this newsletter:
Climate change 2021 - IPCC report
On August 9, the Intergovernmental Panel on Climate Change (IPCC) published Working Group I's contribution to the sixth report (AR6), entitled Climate Change 2021: the Physical Science Basis. The report examines the foundations of past, present and future changes to the planet's climate system and the impact of human activities.
The entire IPCC Assessment Report (AR6) will be completed in 2022 when the contributions of the other two working groups that are developing an economic and social impact assessment of climate change and action to mitigate climate change will be published.
The latest report emphasizes even more clearly than before the undisputed influence of man on heating the atmosphere, oceans and land, caused by emissions of greenhouse gases. Antonio Guterres, UN Secretary General, warns that the climate crisis is creating enormous financial risks for investment managers, asset owners and businesses. He called for the public and private sectors to work together to ensure a fair and rapid transition to a global, net-zero emissions economy. Not only for the public good, but also in your own interest, to join the fight against climate change.
The IPCC report speaks of the need for decisive action. Some of them are simpler, but some require large investments here and now. Failure to act will over time come with even greater costs for the public and private sectors.
The IPCC report will certainly provide the scientific basis for the negotiations at the COP26 climate summit in Glasgow in autumn. Deloitte will also be present at COP26 with the results of the global Deloitte Climate Sentiment Index survey. In July, just before the Earth Overshoot Day, we presented the results of the Polish pilot study, which show that the vast majority of Poles are concerned about climate change.
Climate Sentiment Index
The results of the study show that as much as 81 percent of Poles declare that they are worried about climate change. Six out of ten respondents feel seriously concerned about the state of the natural environment. People with children are more likely to feel anxious about the climate. This shows more concern for the quality of life of future generations than their own. Almost three-quarters of respondents also say that their children and grandchildren will benefit from limiting climate change, and only 7% that they themselves will benefit.
Building credible climate commitments
A road map to earning stakeholder trust
What to do to gain the trust of stakeholders regarding the undertaken climate action? Make commitments that genuinely fit the company's profile and are an important part of its strategy for the future. To make this task easier, it is worth following our tips and suggestions, regardless of whether the company is just considering taking such initiatives or has already invested in them.
We conducted a quantitative and qualitative analysis and a series of interviews with sustainability directors, ESG investment specialists and our experts providing clients with assurance services in this area to learn about the market's opinion on climate obligations.
Fit for 55
The European Commission has adopted a package of legislative proposals "Fit for 55" as part of the European Green Deal, which aims to strengthen the EU's position as a global climate leader. The package aims to modernize existing legislation in line with the EU's 2030 climate target and introduce new policy measures to help bring about the transformative changes needed in the economy, society and industry to achieve climate neutrality by 2050 and to support it. , reduce net emissions by at least 55% (compared to 1990) by 2030.
The proposed regulatory framework addresses, among others, the energy sector, including district heating and cogeneration, buildings and their energy consumption, land use and forestry, the road transport sector and energy taxation.
EU Taxonomy - status
On August 3, 2021, the Platform on Sustainable Finance published a draft report on preliminary recommendations for the technical screening criteria for the EU Taxonomy, related to the remaining four of the six environmental objectives (i.e. Sustainable Use and Protection of Water and Marine Resources, Transition to Economy circular, Pollution prevention and control, Protection and restoration of biodiversity and ecosystems). A procedure to collect stakeholder feedback on draft recommendations has also been launched and can be submitted until 24 September 2021.
TNFD – Taskforce for Nature Related Dicslosures
Biodiversity loss is progressing at an alarmingly rapid pace. For this reason, a new initiative has been launched to reveal the impact of financial institutions and corporations on nature and endangered species. The Taskforce on Nature-related Financial Disclosures (TNFD) will help companies assess whether their activities pose a threat to nature.
Our events in English
Climate Governance Initiative and Chapter Zero - addressing climate change at board level
September 23, 10.00-11.00 CEST
Governance & reporting on ESG: how to get organised around this ever-evolving topic?
September 28, 12:30-13:45 CEST
The financial sector must take into account the regulation of operational resilience, sustainability and innovation
In the near future financial sector companies should focus on climate risk management, including the development of accurate and complete ESG data (environment, social responsibility, corporate governance) and a solid framework to prevent the so-called phenomenon. greenwashing. Its prevalence remains a key problem for regulators, and for companies it may be associated with the risk of incurring liability, including criminal liability. Our mid-year assessment from Deloitte’s EMEA Centre for Regulatory Strategy explores the trends and regulatory themes that we expect to shape the financial services industry for the remainder of 2021.
Investing in ESG factors may increase the valuation of companies financed by private equity funds
Investors pay more and more attention to ESG factors (environmental, social and corporate governance), according to Deloitte's Central Europe Private Equity Confidence Survey. However, much remains to be done to ensure that funds realistically incorporate these aspects into their investment strategies and business decisions. It is anticipated that companies benefiting from PE fund financing that incorporate these factors in their business models can effectively increase their valuation after an investor exits.
Sustainable development as a growth engine for the construction industry - the construction industry will play one of the key roles in achieving climate neutrality
The 100 largest construction companies in the world generated revenues in excess of USD 1.511 trillion in the fiscal year 2020, an increase of 3.7%. compared to the previous year. According to the annual Deloitte report "Global Powers of Construction 2020". The biggest challenge for the construction industry in the near future will be digitization and operating in the spirit of sustainable development.
The offer of insurers is closely related to climate change -
product innovations as the basis for development in the insurance sector
Insurance companies play a key role in supporting zero-emission technological innovation, according to the report "Climate product innovation within the insurance sector" prepared by Deloitte in cooperation with the University of Cambridge. Thanks to the activities of the industry, the social awareness of environmental issues increases, and insurance products can support ecological projects also implemented in other sectors of the economy. The insurance industry is increasingly looking at environmental issues and striving for climate neutrality. In line with government declarations, some of the companies have already decided that they want to reduce their emissions to zero.
“ESG Real Estate Insights 2021” series
ESG began to play one of the key roles in the organization's strategies and their daily functioning. To be successful, ESG factors should be incorporated into strategic decision making, transformation and reporting. Our new series of articles "ESG Real Estate Insights" has been specially designed to shed light on key ESG topics relevant to the real estate industry.
Using the extensive knowledge of Deloitte experts from Austria, Central Europe, France, Germany and Luxembourg and combining it with extensive experience in the field of real estate and sustainable development, we will present these aspects to you from different perspectives.