Opinion Piece: Sustainability Teams are Rarely the Optimal Size.

Most sustainability functions are new to the business, and companies struggle to size them correctly. I tend to see two scenarios playing out:

1. Too lean to be effective: The team struggles to get beyond simple reporting requirements. Approx 70% of time is taken up with data gathering, reporting, and complying with standards just fast enough to get reports out the door. Forget about real time devoted to real change.
2. Too large to be effective: The team is so big they start to create work for each other. Many of the people in the function are new to the topic, so there’s a ramp up needed. Progress and change start to give way to alignment.

As a sustainability leader, when you’re building your team and negotiating headcount budget it’s useful to have a few industry benchmarks to bolster your suggestion. In the absence of any externally reliable benchmarks, I would look to two sources:

1. Speak to your peers, customers and suppliers: Go one step further in conversations around how big the team should be and try to understand within the context of the team who's doing what, how the role works and how the role definition works.
2. LinkedIn search: Look up other organisations of similar size, shape and geography to get a feel for how many people have a sustainability-oriented role type. This sounds stupidly simple, but it works.

I’m going to go out on a limb and share a benchmark based on my own experience. I’ve found that the most effective sustainability functions have a ratio of around 1.5 dedicated full-time employees for every billion dollars or revenue. But where should they go and what should they do? Another topic for another day.

Listen to our podcast for more tips on unlocking sustainability budget here.

Industry Insight: Companies are setting SBT with no idea of the cost.

Let’s picture a crazy, alternative universe where a business makes a big, long-term, and highly specific commitment to radically alter every aspect of its operations. It decides to make this public - REALLY public, with the full force of its global comms team and PR apparatus. There’s one hitch. The business hasn’t quite worked out whether this will cost $10m, $100m, $1b, or $10b.

Oh wait, this isn’t an alternative universe at all!

It’s incredibly scary that no company we’ve come across that has set/is setting SBTi targets actually knows what that target will cost them.

While this feels very daunting, you can rest assured that you are not the only one who has no clue how to go about costing you STBi targets.To hedge this, we suggest that companies start to get much more granular and precise with their ‘carbon cost’.

‍

‍

‍

Policy Pulse | The Latest Sustainability Developments: TNFD releases their final recommendations for companies reporting on nature.

What is it?

The Taskforce for Nature-related Financial Disclosures (TNFD) have just released their final recommendations for companies reporting on nature. This is the first global framework to give organisations a way to understand their relationship with nature and disclose how this affects their business. Companies are urged to report on 4 pillars:

• Governance - how the board and management consider nature
• Strategy - how nature affects the business and value chain, and the strategy to deal with that
• Risk and impact management - the process of identifying nature-related risks and impacts
• Metrics and targets - metrics used in the company’s assessment of nature and to report on progress for any science-based targets they set. Ccore indicators include total land footprint, pollutants in soil and scarce water usage.

This follows TCFD so closely that 11 of the 14 disclosures are exactly the same. But nature differs massively from climate, and the similarities effectively stop here.

Reporting on Climate vs Reporting on Nature?

Nature is more challenging to report on than climate. Here’s why:

• Nature is far more local - GHGs contribute to global warming wherever they are emitted, but nature and its impacts are location-specific. For example, the same amount of chemical pollution can have different impacts in different waterways depending on existing pollution, biodiversity richness, and levels of water stress. As a result, companies have to assess and report on nature using a far higher level of geographic granularity than for climate.
• Dependencies and impacts - Understanding complex relationships is key for assessing risks and opportunities for nature. Where climate only focuses on risks and opportunities, nature requires companies to report on dependencies and impacts. This importance of impact means TNFD suggests double materiality as the threshold for reporting.
• Ecological knowledge -  Climate single reporting metric is GHGs (simple… I wish). Nature has 5 main drivers, of which climate change is one! That’s not even considering the multitude of metrics across species risk, ecosystem integrity, water stress, etc. Reporters will need to further up-skill on other concepts such as biomes, ecosystem services, and the state of nature.

Given the difficulty of understanding and assessing nature, TNFD has released a set of further guidance on how to evaluate nature and then make required disclosures (LEAP framework).

Key considerations for business:

For business, the prospect of reporting on nature can seem daunting. Here are three main things to consider when forming your nature strategy:

• Nature requires more data, but the data is worse - companies are asked to collect data for business activities and locations in their own operations and throughout the value chain. This sounds similar enough to scope 3 GHGs but goes further to require nature and biodiversity impact data at a local level.Currently, there is no established methodology, tools or agreed set of metrics for measuring and collecting data on nature impacts. TNFD recognises this problem and is calling for a global data repository on biodiversity data. Watch the space.
• Other standards are likely to adopt TNFD - ISSB are already holding a consultation on nature reporting following the launch of their IFRS S1 and S2 sustainability standards in June. These standards effectively took on and superseded the TCFD recommendations. So it’s likely that the ISSB will do the same again and adopt TNFD. This will add more weight to what are currently voluntary disclosures, especially as national governments adopt ISSB.
• TNFD expects adoption to pick up - noting the adoption rate for TCFD after its launch in 2015, TNFD understands that the first firms will likely start with governance and report on a couple of disclosures with a reduced scope. Their main emphasis is on companies heightening their ambition over time. GSK looks to be the first company to disclose by TNFD in 2026.

Our take: there is some leeway to getting started with reporting. The best position to be in is to start building the infrastructure for collecting nature data now and ratcheting up the scope of nature disclosures over time.

Learn more

• Edie - Meeting the moment on nature disclosures: The new double bottom line
• TNFD - Recommendations of the TNFD
• TNFD - Guidance on the identification and assessment of nature related issues: The LEAP approach
• RSPB - State of Nature 2023
• Dasgupta Review - Economics of Biodiversity

Sustainability Trailblazers: How Tony’s Chocolonely Sustainability Narrative is Made Differently

A key principle for communicating your sustainability narrative is to go with simple narratives, memorably delivered. Tony’s Chocolonely does just that.  Here’s why we think their narrative hits differently:

• How the product is designed: Their chocolate bar pieces are shaped in random formations to represent the inequality and unevenness of resource distribution across the chocolate value chain. This is a powerful visual reminder, designed into their core product, of their mission to make chocolate 100% slave-free.
• How the product is packaged: Tony’s is infamous for its outspoken branding, which differentiates their bar from every other chocolate bar on the shelf. Their mission is emblazoned outside and in. Peel away the layers and you’ll find compelling mission messaging.
• How the product is produced: Tony’s has developed its own recipe for slave-free chocolate. They use their BeanTracker Tool to track the journey of every cocoa bean, ensuring that they know where it comes from and how it was produced. Tony's has even gone a step further by sharing their knowledge and tools with competitors through their Open Chain platform, to copy what they have done. As they have established their mission so thoroughly, this move only bolsters their narrative genuine commitment to making the chocolate industry more sustainable and ethical.

Tony's narrative is so powerful because it is consistent across all elements of their product. Their mission is clear and present in the design, packaging, and production of their chocolate. This consistency builds trust with consumers and allows Tony's to sell more products, at a premium.

Related resources:

• SoS #3: Maximising your Sustainability Budget (podcast)
• Build an Emissions Data roadmap: A Four-Step Guide  (guide)
• SoS #4: Avoid Unexpected Spend on Initiatives with Carbon Pricing (podcast)

Other news

• ‍EU agrees ban on ‘climate neutral’ claims by 2026‍
• Britain to Allow Big North Sea Oil Field, Despite Climate Concerns‍
• France expands climate plans with extra 7bn EUR on incentives

Events on the Agenda

• State of Sustainability Mixer with Charles Conn, Chair of Patagonia. 25th October 5.30 - 8 pm. Register your Interest here.
• Sustainable Retail Summit, 18-20 October 2023, Copenhagen

Do you have a spare 2 minutes? We’d really appreciate it if you gave feedback on this newsletter.