Sustainability communication - what it achieves and how to do it

Products and services no longer sell simply because they fulfill their purpose or offer good value for money. Rather, customers and business partners also expect companies to adopt a responsible attitude toward the environment and society. Today, no company would ever declare, if asked, that it is not committed to climate protection. There is also money at stake:

• The public sector has moved to exclude companies from procurement procedures that cannot provide valid information on their sustainability.
• In the case of listed companies, it has already reached the point where shareholders no longer invest if there is no information on social, ecological and economic standards and if energy from fossil sources is used. Or if the fossil portion is too high. Keyword: ESG. Environmental Social Governance has become a global trend in the financial industry.
• Savings banks and public-sector banks are preparing to request evidence of how climate-friendly and sustainable their operations are before granting loans to companies in the future. The corresponding EU requirement with defined criteria, known as taxonomy, has been launched by the EU Commission.

Today, customers, suppliers and investors are demanding confirmation that they are not becoming vulnerable due to their business relationship or investment. Employees are also interested in their employer's sustainable standards and goals, if only to avoid being associated with the "polluters" themselves.

Through the power of social media, insinuations and conjectures by individuals or critical interest groups about alleged environmental pollution or unfair working conditions along the supply chain can quickly grow into huge reputational damage. Without resilient information on the topic of sustainability, companies and brands are left exposed. If companies cannot communicate anything about their sustainability, they lose acceptance and sales.

However, statements on ecological, social and economic standards must be transparent and verifiable. Nothing is worse than "greenwashing." Suspected eco-swindling is severely punished in the marketplace. Against the backdrop of the broad social topic of climate protection, defined savings targets for greenhouse gas emissions have proven to be the strongest instrument in communications for positioning a company as a sustainable organization.

Carbon dioxide

The first and perhaps most important step in sustainability communication is knowing your own CO₂footprint. Data on greenhouse gas emissions and the savings targets derived from them are the best currency in the climate debate. But these figures have to be accurate and reliable in order to be accepted.

Here's how it works:

To determine the CO₂footprint, it is important to identify the company's energy consumption and energy sources. Initially, consumption logs of the company's own facilities, buildings and vehicle fleet can help here. For the calculation, data that has already been collected for an audit, for example according to ISO 9001, can be used.

ORCA van Loon Communications provides support in this process together with the Denkfabrik based in Bremenwhich is accredited by the Federal Office of Economics and Export Control. Experience shows that such a sustainability process begins with a workshop to identify particular CO₂drivers and potentials and to set priorities for achievable goals. In this way, it can be quickly determined where the system boundaries for the analysis have to be defined so that the effort remains within limits. Funding can even be requested for this and the costs are comparatively low.

Switching to renewable energies or aligning existing machines more precisely with demand often leads to a reduction in the industrial CO2 footprint.

Experts recommend focusing on the major drivers of energy consumption first, and then setting realistic savings targets step by step. Initial CO₂savings can be achieved by switching to green electricity and by systematically avoiding energy waste. If outdated equipment is replaced by more efficient equipment or existing machines are aligned more precisely with demand, a lot has already been achieved. There are known examples where a compressed air system runs all throughout the working week, although it is actually only needed a portion of the time. It could be shut down temporarily.

Such potential can be identified and leveraged if the technical team is actively involved in the company's climate reporting project and if administration, IT and development work closely together within the company. After all, data collection is at the heart of climate reporting.

Once the required data has been collected in a methodically clean manner, the targets are calculated using the appropriate DIN EN ISO standard or another system. Then the question arises: Which standard system suits my company and my goals? Do I use a system for environmental management or one for energy management or an Eco Management Audit? Will the result then be certified or verified? Perhaps an environmental label such as Blue Angel or Fairtrade would be best? Consultants can help you find the answer.

Along the way, the company's individual sustainability story emerges. Other services can be included, such as innovation promotion, compliance and social commitment. If the result is then communicated credibly and clearly with an official seal of approval, the company strengthens its reputation in terms of corporate responsibility and secures its future.

Sustainability communication increases the value of the company. It has a competitive advantage and

• stands out in the market in a positive way
• has better access to public tenders
• is less vulnerable to attack from environmental groups and the media
• is more attractive as an employer in the tough competition for talent and sought-after specialists and managers.

Companies consistently set sustainability goals and commit to them. Such voluntary commitments cover a broad spectrum of topics. They range from voluntary improvements in working conditions, compliance and social commitment at home and abroad to the Diversity Charter, diversity, gender equality, innovation and talent advancement, the use of renewable energies and climate protection.

Companies with their specific greenhouse gas targets are listed here as examples:

Shell: reduce CO₂footprint by 30%, by 2035, net zero emissions in the generation of all energy products; Ørsted: generate 100% of their energy from renewable sources by 2025, "zero emissions" by 2040; Unilever: halve environmental impact by 2030; Frosta AG: reduce CO₂emissions by 7.5% by 2022 compared to 2018, use only 100% green electricity; Cewe: reduce CO₂emissions by 50% by 2025 compared to 2015; HHLA: halve CO₂emissions by 2030 compared to 2018, climate neutral by 2040; Niedersachen Ports: reduce CO₂by 25% by 2025 compared to 2017; Otto Group: climate neutral by 2030.

The demand for transparent reporting on responsible corporate governance affects international corporations as well as medium-sized businesses. This applies all the more to companies that are under particular public scrutiny. These include industry, for example, with its comparatively high energy consumption, technically unavoidable emissions and simply because of the size of its plants. Retail companies are also the focus of public scrutiny because of the huge number of contacts they have with customers. Last but not least, municipal and state-owned companies are called upon not to offer an open flank to those in power in the political debate.

Sustainability communication for the industry

Meeting of the IVH Energy Efficiency Network of Hamburg Industry in November 2019 at H&R.

There is a strong commitment to climate protection in Hamburg's industry. On the one hand, because of the high energy costs in Germany - the highest in Europe. But it's primarily the sustainability targets they set themselves that drive companies to compete internationally. Since 2015, the city's large and energy-intensive metal producers, refineries, chemical and energy companies, vehicle manufacturers, food producers, logistics providers, and utilities and waste disposal companies have been working together in voluntary energy efficiency networks.

By exchanging experiences with each other, they continuously improve their energy-saving measures. They increase the efficiency of their plants by investing in plant technology and optimizing processes. On behalf of the Hamburg Industrial Association, Carl Mario Spitzmüller organizes this network work and pools the results. The 32 companies achieve a high joint savings volume. The peak value in 2019 was almost 500,000 tons of annual CO₂.

The conversion factors of the Hamburg Authority for the Environment, Climate Protection, Energy and Agriculture are used to calculate the CO₂emissions saved. In this way, the savings for the various energy sources are converted into CO₂equivalents. The results are also taken into account in the Hamburg Climate Plan.

In communication, the industry is positively positioned as a driver for technology-based climate protection, among other things due to this commitment. "Effective climate protection cannot be implemented in opposition to industry, but only together with it," Hamburg's First Mayor Dr. Peter Tschentscher has repeatedly said, emphasizing in the Hamburger Abendblatt on February 05, 2019: "I see the industry in climate protection not as a problem, but as part of the solution."

Politics

The European Union's Green Deal, presented on December 11, 2019, has given a powerful boost to the importance of non-financial reporting. The EU has committed to becoming carbon neutral by 2050. As an interim step, European CO₂emissions are to fall by at least 55% by 2030 compared with 1990 levels. In response, the German government has tightened Germany's climate protection targets. At the same time, environmental movements such as Fridays for Future made sustainability an issue for the general public.

Sustainable Development Goals (SDGs): The 17 global goals for sustainable development of the 2030 Agenda (Source: https://www.bundesregierung.de/breg-de/themen/nachhaltigkeitspolitik/nachhaltigkeitsziele-verstaendlich-erklaert-232174)

Further coming into focus were the United Nations 17 Sustainable Development Goals (SDGs)which have been in effect since January 1, 2016. They include securing the basic needs of people worldwide, the sustainable management of natural resources and the protection of ecosystems by 2030. Hardly any sustainability report is complete without the UN's colorful icons. A tip: As a company, wanting to fulfill all 17 SDGs equally right away can seem superficial. Experienced companies focus on the UN goals that are relevant for their company and describe measures that contribute to these goals.

A brief look at ESG

As mentioned earlier, investors are increasingly evaluating companies on non-financial performance and looking at ESG criteria. "Environmental" includes assessing environmentally sound production conditions. The social aspect includes fair payment and the exclusion of child labor. The "Governance" category looks at whether companies are taking action against corruption, for example.

Sustainable investments are reaching record levels. In Germany, the sustainable investment market grew by almost a quarter - 23 percent - in 2019 compared to the previous year. 269 billion euros were invested, of which around 120 billion euros were in sustainably oriented companies and a good 63 billion in sustainability funds. In 2020, the global investment volume in technologies to avoid CO₂ (carbon offset) tripled compared to 2018.

As the boom continues, one problem with the industry is revealing itself. The data on green investments and funds (ETF) are hardly comparable because standards are lacking, notes the "ESG Monitor 2020." Critical voices warn against greenwashing.

On January 30, 2021, Larry Fink, CEO of Blackrock, called for greater international standardization for disclosures on corporate purpose, dealings with stakeholders, and the preparation of sustainability reports in his „Letter to CEOs“ annual outlook, which received a lot of attention in the financial world. Now the EU is presenting a set of rules for this with the planned taxonomy.

Sowing and reaping

There are numerous definitions of the term sustainability in circulation. Basically, it revolves around the classic triad of economy, ecology and social issues. It is about the need to use our natural resources effectively and to permanently return them to regenerative cycles. As is well known, this correct idea goes back to the forestry teachings of Hans Carl von Carlowitz from 1713. And it sounds so beautifully simple: Never cut more wood than can grow back.

Today, companies define their own suitable goals for sustainable management and gain reputation if their performance is convincingly communicated.