Corporate sustainability shares close ties with corporate social responsibility, yet it represents a distinct business approach. While corporate social responsibility focuses on a business’s accomplishments, corporate sustainability revolves around the strategies employed to achieve environmental, societal, and economic objectives. For businesses to ensure their viability, it’s important to promptly mitigate their environmental impact. One of the most effective methods involves reducing their carbon footprint, which begins with monitored carbon emissions.
As outlined in the leading GHG Protocol corporate standard, a company’s greenhouse gas emissions are categorized into three scopes. While reporting on scopes 1 and 2 is mandatory, monitoring scope 3 emissions is voluntary and often presents a significant challenge. Nevertheless, companies that successfully report on all three scopes stand to gain a sustainable competitive advantage. The scopes consist of:
Scope 1: Emissions that result from your direct business activities.
Scope 2: Emissions that indirectly emerge from the energy consumed in datacenters.
Scope 3: Emissions that result from indirect supply chain and all other business activities.
In this context, investments in sustainability not only help a company’s competitiveness in the market but also enhance its appeal to potential investors. Companies that neglect to showcase their sustainability efforts and fail to exhibit year-over-year progress are likely to underperform and become less attractive to investors.
Furthermore, sustainability is no longer optional, and the new Corporate Sustainability Reporting Directive (CSRD) makes it very clear that companies should not only implement ESG strategies, but also be transparent about them.
In the business realm, sustainability becomes fundamental, emerging as a vital economic component. For companies to realign their mission and purpose toward sustainability, adopting an ESG strategy is imperative. While sustainability and ESG are closely related concepts, they possess distinct focuses and governance implications. Sustainability offers a comprehensive, holistic perspective, addressing environmental, social, and economic dimensions. Conversely, ESG furnishes a structured framework for assessing specific performance criteria.
This approach uses non-financial indicators to assess the performance of businesses and organizations. ESG integration entails collecting data on a company’s policies, practices, and performance concerning environmental issues (such as impact and resource management), social issues (like employee and community relations), and governance issues (including structure and transparency).
Significant environmental challenges are unfolding, with consequences that will affect us all. This dimension from the ESG strategy is the most important, and it becomes crucial for companies to understand that they play a big role in both contributing to these issues and addressing them. Integrating environmental goals into corporate management is no longer just an option, it’s a business imperative.
The new sustainability reporting rules will begin to apply gradually between 2024 and 2028, as follows:
- • From January 1, 2024 for public interest companies with over 500 employees, the reports being issued in 2025;
- • From January 1, 2025 for large companies (which exceed 2 of the size criteria: over 250 employees and/or 40 million euros in turnover and/or 20 million euros in total assets), the reports being issued in 2026;
- • From January 1, 2026 for listed SMEs, the reports being issued in 2027.
It is unknown exactly when the EU Commission will sanction businesses failing to comply with the CSRD. According to the Commissions’ requirements within the Directive, the sanctions can be expected to be significant, and that’s why companies should be prepared to comply and make significant changes regarding their business strategies and activities.
The main goal of Microsoft Cloud for Sustainability is to accelerate business progress and sustainability advance by integrating environmental, social and governance (ESG) capabilities throughout the Microsoft Cloud portfolio and solutions offered by its worldwide network of partners. This data-driven approach is the key to a better understanding of a business’ environmental footprint and forms the backbone of any ESG solution.
Managing the environmental footprint of your business can be challenging, but Microsoft Cloud for Sustainability is the proper solution for tracking and reporting progress on sustainability pledges. Together we can achieve transparency and gain key findings that help companies to identify necessary changes and integrate sustainability practices for an improved implementation of ESG strategy.
Microsoft Cloud for Sustainability provides strategic guidance that will shape your organization’s journey, following the roadmap presented below.
Microsoft Cloud for Sustainability helps you to:
- • Integrate data intelligence
Monitor and evaluate the environmental impact of your operations and value chain, covering emissions, water usage, and waste. Data input methods include manual entry, file imports, or automated connections to data sources.
- • Create a sustainable IT infrastructure
Adopt services that reduce your energy consumption and the physical footprints of your data center (consider using Microsoft Azure). Moreover, the Emissions Impact Dashboard offers visibility into the emissions associated with the utilization of Microsoft Cloud services.
- • Minimize the environmental impact of your operations
Reduce the environmental impact of your operational systems and processes by implementing energy-efficient measures, updating transportation methods, and minimizing the environmental footprint of buildings, among other strategies.
- • Build sustainable value chains
Enhance transparency and accountability across your entire value chain, spanning from material sourcing to end-of-use. This involves increasing visibility throughout the value chain, developing more sustainable products and services, optimizing materials and product logistics.
- Furthermore, with Microsoft businesses can develop customized solutions utilizing familiar Azure and Power Platform tools. This enables them to adapt the platform to their unique requirements, crafting new formulas or reports that offer the insights necessary to propel their sustainability initiatives.