The Future of ESG Metrics Integration in Business’ Strategy and Decision-Making
By 2035, 95% of investment decisions are expected to incorporate Environmental, social, and governance (ESG) metrics. As countries are striving to keep the increase in global average temperature to well below 2 °C - as set by the Paris Agreement - ESG factors are fundamental to strengthen the performance and the resilience of businesses vis-à-vis Europe’s decarbonisation.
At the webinar “ESG Integration in Business & Investment Decisions: how to drive decarbonisation?” on 23 February, CSR Europe brought together leading companies committed to decarbonize their products and services like Iberdrola and Pirelli to showcase their journey to set science-based targets and cut greenhouse gases (GHS) emissions.
Both companies set goals that have been approved by the Science Based Targets (SBTi) initiative:
Pirelli decided to reduce by 25% its absolute direct and indirect carbon emission by 2025 compared to 2015 and cut by 9% the absolute CO2 emissions linked to the acquisition of raw materials by 2025 compared to 2018.
Iberdrola has committed to reduce absolute Greenhouse Gases emissions by 2030 from the 2017 base-year and to reach carbon neutrality by 2050 at a global level.
The integration of sustainability in Pirelli’s management is based on a multi-stakeholder approach in which Governance, Management System & Planning, and Reporting are aligned with global standards. In parallel, ESG metrics related to human capital, economic capital and environmental capital are translated into sustainability scenarios with tangible targets, whose progresses can be measured every 2 or 5 years. Pirelli’s mission to close the loop of tire production and integrate elements of circularity in their product sustainability strategy, has allowed the company to set science-based decarbonization pathways to reach carbon neutrality in 2050.
In Iberdrola’s case, the integration of sustainability in the company’s core strategy started in 2015, following the alignment with the SDG compass and the creation of five pillars - Competitiveness; Security in energy supply; Environment; Creation of value; Social dimension - divided between Energy Sustainability, and Business Sustainability. This approach stemmed from the company’s intention to integrate environmental indicators needed for both the decarbonization process of energy production, and the creation of positive value for society. From 2018, parallel to the concept of economic dividend, Iberdrola introduced the concept of “social dividend”: a new way of providing direct, indirect, or induced contribution of value that the company’s activities have for its stakeholder and which contribution is given to the achievement of the Sustainable Development Goals.
To support companies in the integration of ESG metrics into their business strategy and operations, in 2021 CSR Europe will continue to share practical learnings and top corporate best practices in a series of exclusive ateliers and webinars conceived for the Community of Practice “Financing the Future”.
For more information:
Project Manager, Sustainability Management