This November, world leaders gathered for the 2022 United Nations Climate Change Conference (COP27) to discuss the future of global climate action. As the impacts of climate change hit harder, it is now more evident than ever that climate change isn’t just a problem from which we must protect future generations, but a problem from which we must protect ourselves today.
To this end, COP27 launched the first ever comprehensive global action plan calling on governments and non-state actors to stand behind 30 adaptation goals for a resilient world by 2030. In light of this, businesses, with their dynamic capacity to power innovation and change, have a critical role to play.
To see how businesses can take climate action today, we spoke with founders Briseida Gjoza and Adeliada Mehmetaj at ConsciESG, an Albanian women-led startup established in 2022 and a BOOST grant awardee. They took part in the Women Innovators edition of UNDP’s regional acceleration programme BOOST for social impact innovation, along with 50+ other changemakers in Europe and Central Asia.
They are on a journey to launch a timely platform by the end of the year, which will provide tools and metrics to companies and investors to assess the real actions they are taking to improve their positive impact on the environment and society. “ESG stands for environmental, social and governance – a set of criteria that are used to holistically evaluate how well a business is aligned with the Sustainable Development Goals (SDGs),” explains Adeliada Mehmetaj.
Propelling climate resilience
According to the World Economic Forum, one thing companies can do to take action is to assess their climate impact and build sufficient resilience. They can study the risks in their supply chains, identifying risk hotspots, prioritizing areas for adaptation, and supporting stakeholders in their supply chains with the technical skills and financial support they need to adapt.
Based out of the Western Balkans, ConsciESG aspires to redefine ESG scoring on a global scale. To achieve the goal, the team has developed a research-based methodology for calculating businesses’ ESG impact scores, rooted in industry best practices, and their own expertise in counselling businesses on sustainable development impact. “We are confident that setting the proper scientific foundations will reduce biases and increase the transparency of our ESG metrics,” explains the team. “This in turn will enable the financial sector to make informed decisions, resulting in real, measurable progress of the business sector’s transition to a sustainable future.”
Assessing environmental factors may include looking at corporate climate policies, waste management, pollution, energy management and more. Many businesses have already committed to reducing their environmental and carbon footprint, including supply chain changes, the use of recycled materials, relocation of production, and the elimination of single-use plastic packaging.
There are different approaches to how businesses can measure ESG scores. Existing solutions are often based on subjective methodologies that rely on ad-hoc assumptions, which makes the comparison among the various indices difficult. ConsciESG, on the other hand, changes this by providing company-specific ESG Impact Scores & Ratings. Essentially, ConsciESG’s software as a service (SaaS) solution will allow companies to enter data, which reflects their current state, with all its pros and cons, in order to receive an ESG score and recommendations for improvement. “Our SaaS will allow companies and investors to access both aggregated ESG scores and more granular thematic scores, related to a company’s actions & practices in alignment with positive ESG impact. What differentiates us from others are the scores that assess positive impact instead of risk, offer granularity, transparency & are free from the dollar-value bias,” says the team.
ConsciESG is currently focused on businesses that are implementing or making the shift to ESG-informed business practices. Helping businesses become more resilient is one of the key goals of the team. However, in order to accomplish this, software alone will not be enough. Companies must learn about impact measurement and ESG scoring, how to measure and incorporate it, and how to communicate their ESG efforts. To address these needs, the team also delivers impact training and provides consulting.
Investing in climate adaptation
According to the Harvard Business Review, companies around the world are increasingly committing to climate change mitigation – pledging to reduce carbon emissions and water consumption across their operations and supply chains. But we also need climate adaptation: creating a climate-resilient business by understanding the impacts of climate change on business premises, supply chains, activities and employees.
ESG investing often refers to a set of standards for a company’s behavior, used by socially conscious investors to screen potential investments. Why is this important? Because the climate adaptation market could be worth $2 trillion per year by 2026, which could generate $7.1 trillion in total net benefits by 2030, and proactive adaptation could open up opportunities to build a more sustainable world.
ConsciESG seeks to highlight best practices and encourage impact investing in businesses with strong commitments to sustainability.“There is a significant body of research that shows that institutions, which are employing sustainable practices, have bigger financial returns,” shares Briseida Gjoza. “While we do, of course, agree that ESG integration also comes with financial tradeoffs, a positive-impact ESG focus is the right strategy to help institutions increase their profits by also realizing higher social value.”
Indeed, Ernst & Young’s 2022 Sustainable Value Study finds that “companies taking decisive action to combat climate concerns are benefiting from unexpected financial value in areas like revenue growth and earnings, with 7 in 10 seeing financial benefits that exceed their expectations”. What’s more, the most ambitious are also seeing the greatest financial benefits, being 2.4 times more likely to see a significantly higher financial return than they expected. The study also finds that among the top factors motivating companies to invest in climate change are supporting business resilience (59%), improving their ESG ratings (57%), meeting demands from their key stakeholders (56%) and responding to the scientific need to act on climate change (53%).
Besides attracting additional financing and investment opportunities, high ESG scoring with regard to climate action also has other obvious positive benefits in areas like staff retention, recruitment, brand perception and customer purchasing behavior.
By equipping businesses with state-of-the-art tools to assess how they are contributing to safeguard the environment and climate, ConsciESG can help them amp up climate adaptation and innovation efforts, and boost financial returns, while fighting climate change and helping the world’s most vulnerable.
The time to invest in climate resilience is now.