ESG Model

Carbonly Is Introducing Consumer Focused ESG Model

ESG term refers to Environment, Social, and Governance factors. Sustainability reports are prepared to position the ESG factors. This reporting ecosystem is composed of three major stakeholders; Regulators, Corporates and Consumers. Big companies report their ESG impact as part of their regulatory compliance and they use multiple standards & guidelines like GRI, CDP, SDGs, and SASB, etc. to map their ESG data into meaningful interpretations.

In recent times, “impact investment” is nourishing and investors are keen to invest in sustainable businesses. Critically speaking, existing sustainability reporting models are not focused on the consumers, or somehow consumer aspect is hidden between the lines.

Carbonly has been working on the GEMS & CO2e Passport, a data-driven sustainability ecosystem It is composed of;

  1. Software as a service (SaaS) application to measure & manage the GHG emissions for carbon-managed corporates; and
  2. A mobile application offering low carbon products and carbon rewards for carbon-conscious consumers

The vision of this ecosystem is to create conscious communities of carbon-managed corporates and carbon-conscious consumers.

The question arises, How does ESG reporting fit into this data-driven sustainability ecosystem?

Let’s explore the answer in the following discussion.

Environment: GHG emissions come from several sectors as shown below. It is important to note that over 80% of emissions are sourced from electricity, Food, industrial and transportation activities.

GEMS (GHG emission management system) works on three basic principles; measure, manage and communicate. It helps corporates to measure and manage their environmental footprint according to the guidelines as specified in the GHG protocol. It offers an emission management approach that is aligned with the Paris Agreement and ensures that businesses would achieve the net-zero targets by 2050 through its embedded carbon management program.

So, the Environment factor in ESG could be measured and reported as a matrix in terms of lifecycle assessment (LCA) as shown in the following example.

Social: Traditionally, businesses were focused on the maximization of their shareholders’ wealth by any means but with the growing competition and more consumer choices; there is a transformation in business strategies with a “customer first” mindset. It has made the consumers more powerful and they have a social value — 14 days return policy or money back guaranty, are the outcomes of such social values. Even nowadays, brand value is also generated as a result of consumer social value.

Co2e Passport serves the same purpose as it creates a social value of carbon-conscious consumers via a carbon reward management system. It is a mobile application for consumers where they purchase low carbon products and collect carbon rewards. In the end, the social value could be capitalized in the shape of a carbon-conscious consumers community.

On the flip side, this reward management system creates an opportunity to form a corporate reward partners network, which is the first step in creating the community of carbon-managed corporates. Also, Corporates will have the potential to transform their corporate social responsibility (CSR) budget into marketing, advertisement, and brand creation funds.

So, the social factor in ESG could be measured and reported in terms of brand value and other carbon-conscious community initiatives.

Governance: Governance usually refers to the conduct of the business that includes lots of dimensions like corporate governance, risk management, supply chain management, materiality, and communications, etc.

GEMS provides two major features;

  1. A comprehensive system to manage the GHG emissions on the whole supply chain process — It will help to formulate strategies to manage the associated risks and opportunities posed by the supply chain activities; and
  2. Effective product communications to consumers via the carbon labels — Regular carbon audits would ensure that such labels should not be considered as greenwashing.

Above mentioned features are subject to the guidelines as specified in internationally acceptable standards.

So, the Governance factor in ESG could be calculated, communicated, controlled, and reported in terms of lifecycle assessments (LCA), product carbon footprint (PCF), and carbon labels.

Carbonly has Created Carbon Management Process (CMP)

Five step approach:

  • Step1: Quantitative Analysis Using Greenhouse Gas (GHG) Protocol
  • Step2: Formulate and implement the (CMP) Carbon Management Program Using ISO 14040, ISO 14067, PAS 2050/2060, GHG Product Life Cycle Standard and science based targets.
  • Step3: Offsetting strategy where emission reduction is limited; a collection, Consolidation, Evaluation, offsetting, and Environmental trainings
  • Step4: Certification & Labelling; Carbon footprint certification, labelling and sustainability reporting for products and services.
  • Step5: Compliance & Audit; Carbon Footprint Compliance audit.

Carbonly Follows Below Standards, Guidelines and Strategies

GHG Protocol

Science-based targets provide companies with a clearly defined pathway to future-proof growth by specifying how much and how quickly they need to reduce their greenhouse gas emissions. They have provided five corporate net-zero strategies

PAS 2050 - How to carbon footprint your products, identify hotspots and reduce emissions in your supply chain

PAS 2050 is a publicly available specification that provides a method for assessing the life cycle greenhouse gas (GHG) emissions of goods and services.

Benefits of PAS 2050:

  • Carry out internal assessment of the existing life cycle GHG emissions of your products to identify ‘hotspots’ and related cost/energy saving opportunities
  • Evaluate alternative product configurations, sourcing and manufacturing methods, raw material choices and supplier selection
  • Devise ongoing programmes aimed at reducing GHG emissions
  • Report on corporate responsibility.

PAS 2060 - Carbon Neutrality

This standard sets out the requirements for achieving and demonstrating carbon neutrality – allowing companies to improve their environmental credentials with accuracy and transparency.

Benefits of PAS 2060:

  • Meet customer, stakeholder, industry and legal expectations 
  • Reduce greenhouse gas emissions and quantify your carbon footprint
  • Identify areas of inefficiency and improve overall performance 
  • Make cost savings by reducing energy consumption and bills 
  • Gain credibility with an accurate carbon neutrality statement 

Global Reporting Initiative Standards

Their mission is to help organisations increase transparency while taking responsibility for their impacts on people and the planet, GRI is used globally as a standard for sustainability or ESG reporting.

Relationship among the ISO 14060 family of GHG standards

SASB - Sustainability Accounting Standard Board. They have developed sustainability accounting standards for 77 industries.