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Study: Companies Failing to Report Their Impact Against Planetary Boundaries
October 7, 2016
Companies have begun to recognize that climate change is occurring and that it poses a significant risk to their business. However, new research suggests that they may not be adequately addressing the problem. Consultancy Article 13 found that organizations are falling short when it comes to goal-setting and reporting against planetary boundaries and social thresholds.
As identified by Rockström et al., there are nine boundaries for Earth system processes that, if crossed, could lead to catastrophic environmental changes at a continental or planetary scale. Oxfam built upon these boundaries with eleven social thresholds into a single framework. Despite progress in reporting guidelines and recognition such as through the United Nations’ (UN’s) Sustainable Development Goals (SDGs), these boundaries and thresholds are still largely going unrecognized in corporate planning and reporting.
Article 13 investigated how organizations are translating planetary boundaries and social thresholds to make them relevant within their operations and supply chain, through a benchmark of 211 companies’ sustainability targets and 38 in-depth interviews with sustainability experts.
Among the findings, zero companies specifically reference Rockström et al.’s planetary boundaries or Oxfam’s social threshold frameworks, and just 8 percent make reference to ‘Sustainability Context’ within their latest non-financial report. 27 companies (13 percent) made specific reference to adopting science-based carbon targets designed to support avoidance of a 2-degree Celsius increase in global temperature. 30 companies (14 percent) made reference to some form of wider context, such as national goals informing their targets, and 80 companies (38 percent) cited the SDGs in their latest sustainability or corporate responsibility report.
Article 13 found that a wide range of different targets are still being set with little clarity on how and the context or science behind them. Most companies’ targets focused on climate change, freshwater, waste, gender equality, social equity, access to education, and access to health. Income, voice and access to energy were among the overlooked social thresholds.
The majority of targets are set to be achieved by 2020 (48 percent) or before 2020 (27 percent), and there is limited evidence as to whether companies are setting roadmaps for their targets to deliver impact towards 2030 and 2050. The consultancy acknowledges that a challenge remains in setting coordinated long-term targets to enable transformative impact.
While more companies are reporting in greater depth against the GRI’s principles of ‘Materiality’ and ‘Stakeholder Inclusiveness,’ Article 13 says there is a need for more guidance and practical examples of how these can be reported on. Moreover, they say more evidence is needed to demonstrate the relevance and materiality of different planetary boundaries and social thresholds.
Companies have begun to use science-based targets (at press time, 185 companies had committed to do so through the Science-Based Targets initiative, for example) for targets related to climate change and water, and are linking targets such as access to education and health to global targets. But Article 13 asserts that this practice remains limited, and that companies should strive to incorporate as much context as possible.
Ultimately, simply setting science-based targets isn’t enough. Article 13 recommends that companies consider what they currently report against the GRI’s Sustainability Context principle, review their materiality assessment in relation to planetary boundaries and social thresholds, and reassess how to measure their impact. Science- and context-based tools can be used to improve impact measurement and provide a starting place for companies to map their fair use of resources within planetary boundaries in a way that can raise social thresholds. From there, companies can engage their stakeholders to establish science-based targets within a local, national and global context, and create 5-year plans by market, brand and function.
One framework that is trying to make it easy for companies to incorporate a wider context in their reporting is the Future-Fit Business Benchmark. Organized into 21 ‘Future-Fit’ Goals, the benchmark aims to be an all-encompassing framework that outlines a science-based ‘break-even’ point and a way for companies to progress towards it. Companies including Avery Dennison, Novo Nordisk, and The Body Shop are already using it.