Larry Fink’s latest annual letter to CEOs announced a number of significant changes geared at putting sustainability at the heart of BlackRock’s investment strategy. With the incorporation of sustainable investment principles and a clear request for companies BlackRock invests in to produce SASB and TCFD aligned reports by year-end, the pressure on organisations to disclose information on sustainability performance and impacts has never been higher.
The BlackRock move is the latest in a series of developments that has brought investors into the forefront of the ESG reporting world. Greenstone has worked with its clients throughout this journey, ensuring that their sustainability data is robust enough to address the constantly evolving reporting landscape, both now and in the future.
Greenstone recently held a webinar on this topic and received some interesting questions from attendees. Below are the answers to some frequently asked questions on the implications of the BlackRock announcement on corporate sustainability:
What is BlackRock asking companies to do?
(1) Publish a disclosure in line with industry-specific SASB guidelines by year-end, if you have not already done so, or disclose a similar set of data in a way that is relevant to your particular business;
(2) Disclose climate-related risks in line with the TCFD’s recommendations, if you have not already done so. This should include your plan for operating under a scenario where the Paris Agreement’s goal of limiting global warming to less than two degrees is fully realized, as expressed by the TCFD guidelines.
What is the TCFD?
The Task Force on Climate Related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB) in 2015 in order to review how the financial sector could take account of climate-related issues. A webinar on TCFD disclosure – where to start and how to align it with other frameworks is available on the Greenstone webinar channel.
Is CDP aligned with TCFD?
CDP committed to aligning with the TCFD recommendations in 2019. A mapping of the TCFD recommendations to the CDP questionnaire is available on the CDP website. As a CDP Gold accredited software provider, Greenstone has implemented TCFD alignment into the Greenstone Enterprise software platform in addition to the CDP 2020 questionnaire content.
How does SASB define what goes into sector questionnaires?
SASB themselves have said: “SASB standards focus on financially material issues because our mission is to help businesses around the world report on the sustainability topics that matter most to their investors” You can find the relevant sector for you using SASB’s Sustainable Industry Classification System® (SICS®) at https://www.sasb.org/find-your-industry/
How big does a company need to be before it needs software to report GHG emissions?
Each company is different and the need for sustainability software to help manage GHG emissions will depend on:
(1) the maturity of the company’s reporting,
(2) the complexity of the business in terms of scope and boundaries and
(3) the internal resources and knowledge available. While companies with a few sites in one country may be comfortable using spreadsheet tools to carry out their GHG assessments, data efficiencies and accuracies often become a key driver for more complex companies moving to an online system.
Any recommendations on data points to use to run climate scenarios in a company?
Climate scenario analysis can involve a wide range of data areas and analytical approaches. Examples of business related parameters include energy demand, price of products/services, supply chain interruption, technology advancements and policy change. Further details, including a number of existing tools and data sets, is available on the TCFD Knowledge Hub.
Should we also use GRI to conduct a materiality assessment?
While SASB provides a comprehensive set of metrics for your company's industry to reporting against, they are aimed at investor audiences specifically. Many organisations still choose to conduct a materiality assessment (for example in line with GRI) to assess the material metrics they should be reporting on more broadly and to other stakeholder groups (e.g. customers, employees, suppliers).
If you would like to explore how Greenstone can help with your data collection and reporting strategy in relation to TCFD, SASB and your wider sustainability reporting strategy, please talk to us.