Sustainable Development Plans are regularly prepared by most major corporations worldwide.
A survey conducted by Deloitte in 2019 asked 1200 CFOs of European businesses about their companies' measures against climate change. The results indicate that most of the company's actions were focused on short-term cost savings. Actions were triggered by stakeholder pressure even though companies generally needed to understand climate risks more thoroughly. Companies also required a governance and steering mechanism to develop and implement comprehensive climate strategies.
Investors want climate actions to become more central to their activities. Almost 400 investors representing more than $35 trillion in assets under management have signed the Climate Action 100 plus initiative. It commits to bearing pressure on the largest corporate greenhouse gas emitters. It is this combined pressure that is pushing corporations towards sustainable planning and implementation.
Sustainable development plan
Businesses worldwide understand the need to embrace and leverage business opportunities from the transition from fossil fuels. It includes major energy producers who have understood the business value of transitioning from fossil fuels to green sources. Other GHG emitters like mining and food companies also see global opportunities in the energy transition. Companies use sustainable development plans to plan and track the shift toward sustainability.
Strategy definition
The first task for the company is to develop a strategy that will help it move toward a sustainable future. It could be an ambition to help build a more equitable and inclusive society along the company's entire value chain. It could be limited and focused on improving the environment around the company and focus on creating future opportunities for its employees and immediately proximal and dependent stakeholders. A sustainable strategy has to be integrated into the company's overall business strategy. It will only then be successfully implemented. Standalone sustainable development plans are low in impact and are a public relations exercise.
Goal definition
Companies set specific goals and targets to reduce environmental impacts, such as reducing greenhouse gas emissions, water use, and waste generation. Goals are often based on science-based targets. The targets are aligned with the Paris Agreement's goal of limiting global warming to 1.5 degrees Celsius. Companies identify and prioritize the environmental and social issues that are most important to their business and stakeholders. Goals help focus efforts on areas to achieve the greatest impact.
Goal setting is best done after stakeholder consultation. It includes employees, customers, suppliers, and communities. The discussions help companies build trust and credibility. It ensures that sustainability efforts are aligned with stakeholder expectations.
GHG Emissions reduction targets
A sustainable development plan includes emission reduction targets that are measurable and achievable. The emission reduction targets for all GHGs should be mentioned. Reduction targets for individual GHGs should be included. All targets included in the SDP are measured. Several methods are used to estimate GHG emissions reductions. The more popular methods are:
Baseline and Credit Method: A baseline for emission based on historical data is created. Credits for the reduction of emissions below the baseline are awarded. This method is used mainly by companies that use emission reduction credits in emission trading schemes.
The direct measurement method involves physically measuring the amount of GHG emitted from sources such as factories and transportation devices such as vehicles. Emission sensors help measure the emission.
Emissions can be estimated with the help of mathematical models or data from sources such as energy bills or fuel consumption. The lifecycle assessment method is used to assess the environmental impacts of a product throughout its life cycle. The technique is associated with a product or service the corporation produces or provides.
Sometimes, governments and third-party regulators provide guidelines and standards for calculating emissions. Target reduction and monitoring follow the regulations.
Energy Efficiency
Another key component in an SDP is energy efficiency. It is improved in all operations. Energy-efficient technologies and practices are implemented to bring about an overall reduction in energy consumption. Google's and Apple's Sustainability Plans aim to achieve energy efficiency using renewable energy procurement and storage solutions. Walmart is working on improving energy efficiency in its stores, distribution centers, and corporate offices. A twenty percent energy consumption reduction is envisaged to be achieved by 2025.
Renewable Energy
It is a popular component of most SDPs. Corporations and governments worldwide are aggressively replacing carbon-based energy production with renewables. Enel, one of the world's largest power-producing companies, has planned to increase renewable energy usage to 154 GWs. The company plan includes cuts in direct CO2 emissions by 80 percent compared with 2017.
Decarbonizing the energy mix will reduce carbon footprint by up to eighty percent by 2030. These changes will help bring forward by ten years net-zero for both direct and indirect emissions from 2050 to 2040. The company is closing coal plants, promoting electrification of consumption, and developing new services for end customers.
Sustainable Supply Chain
Walmart's sustainable development goals include a commitment to source twenty key commodities sustainably. The major commodities include palm oil, soy, and beef. The objective is to reduce GHG emissions in its supply chain by one billion metric tons by 2030. Coca-Cola and Pepsico sustainably source their key agricultural ingredients – sugar, tea, and coffee. It is committed to sustainably sourcing all its key agricultural ingredients.
Waste Management, Environmental Impact Assessment, Stakeholder Engagement, and Reporting and Disclosure are other components of an SDP. Nearly all major SDPs specifically target one or more of the UN Sustainable Development Goals.