Rigorous decarbonization goals have run up against the realities of running businesses. Companies are falling short of targets, as a 2022 study by the CDP (Climate Disclosure Project) revealed a mere 0.4% of disclosing organizations had credible climate transition plans, with 13% making progress. We’ve made progress in regulations, investments, and technologies; and learned a lot about the complexity of this Herculean effort. However, the current state of corporate decarbonization and circularity efforts is not sustainable. 

Mainly, we recognize the imperative of closing the gap between stated ambition and substantive action to achieve circular, lower carbon practices. The three major takeaways from the climate and nature track at Davos 2024 were firstly the urgent need to “bridge the gap between knowledge and practice,” followed by instilling urgency and dispelling economic myths. While there are many factors at play on how to action these, better data and greater transparency across the board is perhaps the most essential driver to address all three priorities, and thus usher us into the next phase of the material transformation to make sustainability more sustainable. 

The Emissions Data Transparency Imperative 

The CDP, which has collected disclosures from 21,000 global organizations, reported good news that company environmental data disclosure grew by 24% in 2023; however, “a growing number of companies are responding, but more must respond with the high quality and comprehensive data needed to pick up the pace towards urgent environmental action.” Precise, relevant corporate climate data and models are increasing month by month as we accrue larger datasets and uncover and standardize precise modes of measurement. Transparency is critical if we are to act on the data to drive tangible progress; and transparency is fundamental on multiple levels, from regulatory compliance to showing progress to stakeholders.  

ESG Winds Change Direction 

Environmental, social, and governance (ESG) tailwinds were blowing strong in 2020-2022, as investors, consumers, policymakers, and regulators drove corporate sentiment toward more sustainable business practices. Then, we ran into a problem in pursuit of net-zero, when many U.S. companies came up short on their emissions targets, and actions – or, in some cases, stated actions – falling short of ambitions, and criticism ensued. Many well-intended organizations attempted to meet targets but fell short because of the sheer complexity of the decarbonization initiatives. Some sustainability-minded companies began the practice of green hushing, actively pulling back on ESG communications and marketing, sometimes to avoid public criticism and sometimes frustrated by the lack of regulatory clarity and guidance; and many due to a lack of sufficient data. Improvements in data-driven technology and processes will help organizations gauge where sustainability targets have fallen short; find the sustainability measures that have had a real impact on climate change; and unearth opportunities where they can make concrete improvements. Quality environmental data will celebrate authentic progress. 

Do Not Curb Scope 3 Enthusiasm 

Meanwhile, the EU pushed forth environmental regulations like the Corporate Sustainability Reporting Directive and the Circular Economy Action Plan while the notion of ESG rules and expectations became bitterly politicized in the US. Two years after the SEC first proposed its new rule requiring companies to disclose climate change risks and greenhouse gas (GHG) emissions, the SEC finalized its climate disclosure rule on March 6, a declawed rule that omits Scope 3 value chain reporting requirements entirely. The problem is, Scope 3 upstream and downstream represents between 60-90% of a company’s carbon footprint, depending on the industry. Regardless of the SEC’s final rule, shareholders, customers, activists, and conscientious U.S. organizations will still need to account for and curb Scope 3 emissions. Further, most large enterprises do business in the EU (and California) and will therefore be subject to frameworks. 

The vigilant collection of Scope 3 data using GHG Protocol’s international standard lets companies visualize carbon hotspots and identify opportunities for emissions reduction. Only then can companies set their short and long-term carbon reduction targets in alignment with the latest scientific recommendations, standards, and economic abatement options for decarbonization. 

Achieve Circularity with Environmental Data 

The shape of the circle in our pursuit of circular economies that do not waste resources illustrates the interconnected, highly intricate nature of preventing pollution, stopping waste growth, and allowing for carbon recycling. A circular economy becomes impossible when we cannot have transparent, holistic data disclosures. Rigorous data collection on factors like carbon footprints, supply and demand, and materials market pricing, in alignment with consistent standards, is essential to close the loop with optimal commodities recovery and reuse. As the circular economy takes shape, the transition to non-fossil fuels and recycled materials must be managed in a way that is both sustainable and meets commercial objectives for profitability and reliability. 

Only Quality GHG Data Will Make Corporate Sustainability Sustainable 

COP28 pressed the accelerator, calling for a transition away from fossil fuels for the first time. Getting to the next stage of our energy transformation requires putting a thousand puzzle pieces together with better-quality data.  Higher-quality data means consistent, auditable, reliable, and comparable data. We need to phase out the use of fragmented, opaque data. If a large company has inadequate internal emissions reporting/assessment infrastructure and has a siloed organizational approach to carbon reporting, it is delivering fragmented datasets. 

Passing the Decarbonization Test for a License to Operate 

While ROI is key to sustainable businesses, their verifiable achievements on environmental ambitions will earn them licenses to operate and provide a natural defense against regulatory and stakeholder scrutiny. Corporate proclamations on emissions and circularity targets need to be made with transparent data and based on facts. Only then can we know who are greenwashers, green hushers, and license holders to operate. Only then can a company know how it is doing and how to get where it needs to go. Only then can industries implement change at scale and realize the long-term ROI in terms of energy efficiency, airtight compliance, and reputational capital. 

Holistic, consistent environmental data intelligence will offer more understanding of how all the decarbonization, circularity, and materials transition puzzle pieces work together.