As awareness grows around the impacts of climate change, companies are increasingly expected to take responsibility for their carbon emissions and environmental footprint.
Engagement with stakeholders is a crucial part of carbon accounting for any organisation. It leads to more robust data collection, goal setting and accountability across the board. For example, proactive engagement creates transparency and helps build trust, allowing organisations to get ahead of tightening regulations, satisfy investor demands and meet consumer expectations around sustainability. Engagement also provides the first step for businesses to form partnerships across their value chains, enabling them to work together to find innovative ways to track carbon and lower collective impact on the planet.
In this article, we will explore methods of engagement with key stakeholders and provide tips to drive an organisation's climate strategy forward.
Engaging with suppliers
Suppliers play a critical role in a company's carbon accounting and emissions reduction efforts. By working collaboratively with suppliers, companies can reduce emissions across the entire value chain.
When it comes to carbon accounting, suppliers provide the emissions data associated with the goods and services they provide. This allows companies to calculate Scope 3 emissions, which are indirect emissions from upstream and downstream activities in the value chain. To facilitate this, suppliers need to measure, track, and report emissions from their own operations.
Companies can collaborate with suppliers on emissions reductions in several ways:
Set expectations and requirements around measuring and reporting emissions data through a supplier code of conduct.
Share training and resources to help suppliers calculate their carbon footprint accurately.
Work jointly on emissions reduction targets and projects, such as improving efficiency in transportation and logistics.
Ask suppliers to switch to renewable energy sources to reduce energy-related emissions.
Reward and incentivise suppliers who are proactively reducing their emissions footprint.
Having a supplier code of conduct is an important way to formalise carbon accounting and emissions requirements. Elements of a supplier code of conduct around carbon could include:
Committing to calculate and disclose emissions on a regular basis.
Pledging to reduce carbon intensity/emissions by a certain amount over time.
Using specific standards and methodologies for emissions calculations.
Sharing emissions data with the company to feed into Scope 3 accounting.
Investing in renewable energy, energy efficiency and other decarbonisation measures.
Cascading similar expectations down their own supply chain.
By engaging suppliers in carbon accounting and working collaboratively on emissions reductions, companies can amplify their impact and accelerate the transition to a low-carbon future.
Engaging with customers
Customers are a crucial stakeholder group when it comes to carbon accounting. As individuals and businesses become more environmentally conscious, they want assurance that the products and services they purchase are not contributing excessively to climate change. Companies that are transparent about their carbon emissions and have a plan to reduce their footprint can gain a competitive edge with customers.
There are a few key ways that companies can engage customers around carbon emissions:
Product labelling - Providing information on product tags and packaging about the carbon footprint of individual products allows customers to make informed choices. Certifications like Carbon Neutral or Climate Neutral can boost appeal.
Marketing and brand messaging - Highlighting environmental initiatives and goals in your marketing content shows customers you share their values. Integrating messages about sustainability and carbon reduction into brand messaging helps attract eco-conscious consumers.
Customer outreach - Directly communicating with customers about carbon reduction progress and goals helps further educate them and gain their support. This can be done through channels like email, social media and live events.
Customer feedback - Surveys and other mechanisms to solicit customer input on sustainability provides insights into areas of concern and opportunities to improve. Customers welcome being heard.
By proactively engaging customers on carbon emissions, companies can elevate their brand, meet customer demand for eco-friendly products, and work together to meet the demand for climate solutions.
Engaging with employees
Employees are a key stakeholder group that require engagement throughout the carbon accounting process. As internal stakeholders, employees have significant influence over a company's carbon footprint through their everyday work and decisions. Therefore, engaging employees in carbon reduction initiatives is essential.
Employee education and training
A robust employee education and awareness programme is crucial for gaining employee buy-in on sustainability efforts. Training helps employees understand the company's carbon impact, emissions sources, reduction targets, and their role in achieving goals. It equips them to make informed decisions that support decarbonisation across operations. Interactive online modules, lunch-and-learns and onboarding sustainability training are effective formats.
Employee engagement initiatives
Initiatives that empower employees to take climate action are impactful. Consider campaigns to solicit employees' ideas for emissions reductions, energy-saving workplace challenges between departments or volunteering programmes. Recognition for employees who develop successful green initiatives also drive engagement. An employee sustainability committee or "green teams" allow employees to lead sustainability programmes themselves.
Leveraging employees' passions and tapping into their first-hand knowledge of your operations through engagement initiatives will accelerate your company's carbon reduction and help meet stakeholder expectations.
Engaging with the public sector
Engagement with the public sector involves navigating policies, regulations, reporting requirements and partnerships surrounding carbon accounting.
Government regulations and policy
Governments around the world are implementing policies and regulations aimed at reducing greenhouse gas emissions and mitigating climate change impacts. Examples include carbon pricing programmes like cap-and-trade systems and carbon taxes, facility emissions monitoring and reporting mandates, clean electricity standards, and fuel efficiency standards for vehicles. For companies required to comply with these measures, understanding the specific regulations in the geographies where they operate is crucial. Proactively engaging with policymakers can help influence climate policies in a direction that works for business needs and stakeholders.
Partnering with government agencies provides opportunities to align sustainability strategies with public goals while accessing funding and resources. For instance, a company could collaborate with a city on an innovative project to reduce emissions across a district. Public-private partnerships on decarbonisation initiatives bring together the planning capabilities of government and the implementation capabilities of business.
Reporting and disclosure
Many jurisdictions now require companies above a certain size threshold to report their emissions and climate risks. Take TCFD as an example in the UK and CSRD as an example in the EU. Partnering with government organisations on standardised, transparent reporting helps build trust and credibility with the public sector as a sustainability leader. Disclosing climate impacts and reduction plans, such as through CDP reporting, demonstrates commitment to tackling global warming. Engaging policymakers on effective disclosure frameworks ensures that requirements are feasible for businesses to adopt.
Engaging with investors
Investors are key stakeholders for carbon accounting. As providers of capital, they have significant influence and interest in a company's carbon footprint and environmental impact. Investors are increasingly incorporating climate risk and sustainability into their investment decisions.
Overview of investors as stakeholders when it comes to carbon:
Investors seek companies with strong environmental, social and governance (ESG) practices. This includes effective carbon accounting and climate strategy.
They want to understand a company's carbon footprint across Scope 1, 2 and 3 emissions. This data allows them to assess climate risks and opportunities, and ensure portfolio companies are accurately measuring and reporting emissions data across the value chain.
Investors require transparency through carbon disclosure and reporting like CDP and TCFD. This reporting enables analysis relative to peers.
They may set carbon targets or minimum standards for portfolio companies. Companies are expected to demonstrate progress towards these goals.
Some investors actively engage with companies on climate strategy and carbon reductions through shareholder proposals, proxies and direct engagement.
Methods to engage investors:
Participate in investor ESG surveys and assessments like CDP.
Directly engage investors through meetings, calls and carbon disclosure reporting. Investors care about partnerships, policy advocacy and industry collaboration to drive broader systemic change.
Set net zero and science-based targets and communicate progress through annual sustainability reports. Investors reward companies that set ambitious carbon reduction goals aligned with climate science.
Present to investor ESG teams on climate strategy and carbon accounting practices.
Appoint board members with climate and sustainability expertise who can effectively communicate with investors. Investors look for climate competency at the board and executive level. This includes incorporating climate into strategy and risk management.
Proactively reach out to investors when new climate commitments, goals or reduction initiatives are launched. They support investment in innovative technology, R&D and new business models that capture climate opportunities.
Tips for carbon action engagement
Developing an effective engagement strategy is key to building trust and fostering collaboration with stakeholders when it comes to carbon accounting and management.
Here are some tips:
Conduct a stakeholder analysis - Map out all your key stakeholders and assess their level of interest and potential impact. This will allow you to prioritise and tailor communications.
Set clear objectives - Define the purpose of engagement and what you hope to achieve. This could include raising awareness, gathering feedback or driving action.
Develop tailored messaging - Create targeted messages and materials tailored to resonate with each stakeholder group. Consider their key interests, priorities and concerns. Emphasise the common goals and mutual benefits of engagement to encourage collaboration. Show how stakeholders are part of the solution.
Utilise technology solutions – A key benefit of investing in carbon accounting software is that it can streamline the process of stakeholder engagement, particularly when it comes to data collection, through survey and invite features.
Leverage multiple channels - Use a variety of communication channels including email, social media, forums, 1:1 meetings and events. Provide options for two-way dialogue.
Share progress regularly - Maintain open and ongoing communications to keep stakeholders informed on progress, responding to feedback and celebrating achievements.
Plan for the long-term - Build enduring relationships and trust. Avoid treating engagement as a one-off exercise. Sustained interaction is key. Review engagement activities regularly and solicit participant feedback to continuously enhance your strategy and approach.
Effective stakeholder engagement underpins success when it comes to carbon accounting and sustainability. Dedicate time to building collaborative partnerships across your ecosystem.
The bottom line: Stakeholder engagement is critical for carbon accounting
Engaging with key stakeholders is critical for the successful implementation and ongoing management of a carbon accounting programme. As we have seen, each group - investors, customers, suppliers, employees and the public sector - has an important role to play and compelling reasons to be invested in corporate carbon accounting efforts. By being transparent and proactive in sharing carbon emissions data and reduction strategies, companies can strengthen relationships and trust with these groups.
Ultimately, open and consistent stakeholder engagement ensures carbon accounting lives up to its potential - as a mechanism for driving strategic, systemic emission reductions across all aspects of business and society. Companies that embrace this approach with their stakeholders will gain competitive advantage and build future-ready organisations.