Climate Week NYC: Deploying leading climate strategies amongst regulatory, investor and consumer pressures

Senior Director for Sustainability at LRQA, Tara Norton, shares her expertise on leading climate strategies. As we mark Climate Week NYC, Tara discusses the growing regulatory pressures, the need for businesses to adapt and the importance of integrating climate risk into broader ESG strategies.

We dive into practical tips for balancing financial goals with climate commitments, the role of investors and consumers in driving sustainability, and the crucial role of data in building resilient supply chains. Whether you're looking to enhance transparency or meet global climate regulations, this episode offers actionable insights for businesses to thrive in a changing world.

Transcript

Hello, and welcome to the future in focus podcast. I'm Holly Johnston, I am the Global External Communications Manager here, and it is my pleasure to contribute to this podcast channel where we like to dive into all things risk management. so much for having me. We have such a rich selection of colleagues and leaders and external guests who we've been lucky enough to host on our show to cover so many topics for you, our listeners across the globe. And today is no different. I would like to introduce my guest, Tara Norton, who is our Senior Director for Sustainability here at LRQA. Tara, I believe it's the first time for you on our show. So thank you so much for joining us. can I ask you to introduce yourself a little bit about your background and what you and your team does within LRQA? 

Thanks, Holly. And thank you so much for Inviting me to join this podcast. I agree. We have a lot of great colleagues. So it's an honor to, to join you for this conversation. Sure. Happy to introduce myself. My name is Tara Norton. As you said, I'm the senior director in Europe working in our sustainability advisory division, and I lead projects with our clients on sustainability, how to develop strong sustainability strategies, implement, and, of course, leaning into our strengths, how to really make this happen in the supply chain and, and deal with The multiple risks in global supply chains and operations. I also lead internal sustainability for LRQA, which means our own sustainability report and making sure that we are addressing our own sustainability impact and opportunities.  

That's a good point actually. that's called Our Planet, Our Plan, which we've covered actually quite extensively on previous podcast episodes. So nice little plug there. Thank you, Tara.  now I am thrilled to have you on today's episode, not to talk about our planet, our plan, but something else. So we're launching this podcast episode in time for Climate Week NYC, which for our listeners is a charity event which takes place in New York City. Clue is in the title to promote climate actions amongst business and political leaders, also civil society representatives. It's a global dialogue, a really good opportunity to discuss some of the most prominent issues within climate strategy.  So, I want to bring you, our listeners, all of Tara's expertise to discuss an issue in particular. And that is how to deploy leading climate strategy in a rising tide of regulatory, investor and consumer pressures.  So I would love to give our listeners some really practical guidance today, Tara. So are you ready if we dive straight in?  

Yes, absolutely.  Awesome. 

Okay. So Tara, I'd love to cover first about the regulatory landscape, which we know is evolving rapidly, and I'd love to cover in your view, how important it is for companies to be adaptable in their climate strategies to respond to those regulations. So can I ask first, what are the regulations that we are seeing coming into play? And again, on that point, therefore, is it important for companies to be highly adaptable? 

You know, Holly, it's a great question and a good place to start. And this is why I love Climate Week, because it gives us a week, once a year, for the global community to really take stock of where we are in terms of the regulation, company approaches, initiatives, priorities, because this is a challenge that affects everybody.

And we all really need to lean in and do our part. because this is such a pressing issue for humanity and the planet in terms of the changing regulation. I think what we've seen over the years, first of all, is just across the globe, more formal requirements for companies to be accounting for the climate impacts.

Both in their own operations, but also in their extended value chains. and obviously, I think most of our listeners will be aware of this, but the scope 1, 2, and 3 language that's used in climate. and the companies need to now account for that, but also talk about what they are doing about it. Set targets in line with science.

So science based targets and then report year on year and increasingly that reporting is being required. as you said, not only by governments and that can be certainly in the U. S. That is, you know, federal as well as at the state level, but also super national, for example, in Europe. And then, also, at the national level, just around the world and that that isn't that is only increasing.

And I think the intention of governments is really to to level the playing field for the, uh. Actors in their own countries alongside other companies from different countries. So, so we're seeing that, that evolution and that continued formalization and that continued strengthening of, of, of the regulatory environment.

And there is a growing list of. Regulation across the sustainability spectrum and also when it comes to climate and these really come out of the Paris agreement. Also in terms of how these things are being interpreted for companies.  You know, obviously we could go through a long list, but just to give three main examples, probably the one that.

That's most hot off the press is the EU Corporate Sustainability Reporting Directive, which mandates that large companies in the EU, and this is any company operating in the EU, even if you are a U. S. company, must disclose how they're operating and managing social and environmental risks. Issues, and that includes climate.

And it's really about increasing transparency. Another really important example is the SEC Climate Disclosure Rules which have also just come into effect, which require US public companies to disclose their climate related risks and their GHG emissions only. Scope one, in scope two, but of course leading companies may wanna go further and disclose scope three and then.

Just to give another example, and this is just showing the breadth of how these regulations are coming at the subnational level, at the national level, and at the supernatural level, of course, is California, the California Climate Disclosure Requirements which has even more stringent climate disclosure requirements for companies that operate within the state.

It's important, of course, to stay on top of these regulations, but staying true to understanding your risks, knowing the data. And having honest and accountable reporting will get you a long way in terms of how companies deal with this array of regulation, which continues to change as well. your question is whether companies need to be adaptable.

I would say they need to be adaptable in the reporting. So, in other words. The way that the information comes out needs to comply with different regulatory requirements. And that's just par for the course, but in terms of the metrics and the things that are being measured and the source of data, as well as the actions that the companies are taking should be consistent.

And in fact, it will help with the, the ability to adapt the reporting. If the core information is strong and consistent. and at the same time, we're also making sure that we're running data consistently and at a consistent year on year. So having a good data platform, having a good system for data collection.

And also having a clear priority from senior management.  And actions that are being taken throughout the business  is the way that that companies are going to be able to continually adapt to these, these these requirements, because underneath it all. You know, the science is the same, right? It just may be that there is certain detail that's required in different geographic locations. 

I love that point about the core data being the important part and then it's just how you, I guess, translate that across various formats for different requirements. That's such excellent guidance. the next thing I want to cover there for is surely all of this activity, the skills, the resources, the time that you'll need to do that piece of work, that's going to take investment. So can I ask your view on What are the key challenges companies face when trying to balance those, you know, their short term financial goals with the long term climate commitments, you know, especially if it's requiring investment to meet those commitments? 

Yes, absolutely. And this definitely varies across industries. I mean, to start with, I think different industries are subject to different climate risk. so that's why doing a proper risk assessment, a scenario analysis or indeed this can fit within the. The normal risk approach that a company is taking, you know, increasingly, you know, risk models include climate as part of the standard risk modeling. 

And that I think will will only increase. But so really understanding the risk to the business and and right sizing that. I don't think that any company worth its salt today would not want to do that. I mean, any company that has resources or indeed really across multiple industries, this affects everything, transportation you know, food, beverage, manufacturing.

I mean, all of our industries are affected or affecting. the climate. So so really taking time to do that is critical. and this fits into just the general approach that is really underpinned by the regulation of companies needing to do a proper double materiality assessment and really getting at the bottom of what their key issues are and what the areas are that they really need to pay attention to.

So if you've got that clarity, then that means that these are things that are important to your business. And so then you can. It doesn't mean that resourcing them are, is going to be easy, but it also means there'll be an understanding just as with any other business risk, and it will sit alongside those risks because it will be seen in the same length as other risks.

But the other important thing is actually understanding where this investment needs to come. Is it. A capital expenditure is a capex or is it optics? Right? And I think sometimes that can be a challenge. and I'm thinking of examples of simple things when companies, for example, want to upgrade facilities to renewable energy sources, or they want to put solar panels on a factory, you know, just to give some simple examples, there can be some real discussions about where does that investment come from?

And what is the payback period? and so I think, you know, really paying attention to how do these investments get signed off, get allocated, where is that, that going to come from and understanding if this is the capital expenditure or if this is an an operational expenditure is really critical. And of course.

The real upside comes if there is any benefit  to reducing your carbon impact, which reduces cost or could even provide an upside opportunity and one area where this comes to light is with business travel, and this can be a small impact. But in our business, for example, this is a material. You know, impact of our business because of the nature of our work.

And so where we can reduce business travel, or indeed provide virtual services, reduces our carbon footprint and of course, also then reduces the cost associated with business travel as long as we don't, of course, compromise the service to our clients. So I think those are some of the things to think about. 

Thank you so much for that. I think it's so important to have a candid conversation about how to balance, you know, climate commitments with financial goals. It's important for businesses. So, so thank you for that. On that same topic investors as well are placing greater emphasis on climate related risks and opportunities. Let's not forget that. So how can companies integrate those considerations into their broader ESG strategies to attract and retain investor confidence?  

It's a very important question. And I have to say, to my mind, the investor pressure and the investor understanding of climate risk embrace of the importance of this topic has been one of the most fundamental changes in the last, you know, 10 to 15 years in terms of driving action.

So what I would say is lean into it. Lean into the investor requirements. I think fighting them isn't gonna do you any good. And indeed, if your investors are asking you for this that is a good thing in my experience. and I've worked at many different sized companies your investors are often partners in this.

Many of them will have, well-resourced, or I wanna be careful what I say, but you know, at least moderately resourced sustainability departments. They have very clear expectations for what they want to see. so using their frameworks and even directly asking for the way that they would like to see things or their advice on how to go about things is a, is a wealth of resource for companies.

So I think that's, that's one thing, but this comes back to my previous answer as well, which is doing a proper assessment. Of your climate risk is the way you're going to meet your investor. requirements and then showing that you have a plan. Developing science based targets. and then a plan to of how you're going to achieve those targets is really what by and large investors are looking for.

And that is working with external partners or doing it internally. If you have the resources and then most importantly, and finally, I think the other thing that investors want to see is third party Independent verification of the data. And of course, this is now also included in what's required by regulation.

So these things are mutually reinforcing the investor requirements and the, you know, the, the regulation. so making sure that you have your information and data verified by a third party is critical as well.  

Again, amazing tips for our listeners there. Thank you. And you know what? It actually reminds me of an event that we were both at Tara. it was the UK leadership series in London and we were talking exactly about the crossover between, you know, the financial aspects of climate strategy and wider ESG strategy. And we had an investor as a, as a guest speaker and I always remember them saying, this is about going from value retention to value creation.

And that phrase has always stuck with me.  Yeah, I think that that's, that's really great. I think that's true and it can be true. Yeah.  

So let's pivot for a second away from investors to another crucial stakeholder group and that is consumers. So I think it's well understood that consumers are becoming incredibly more aware and environmentally conscious and therefore demanding more from the businesses that they invest their money in. So, In your view, how can businesses effectively communicate their climate strategies and the work that they're doing in order to build trust and brand loyalty with those consumers?  

Yeah, I mean, listen, gone are the days of just being able to do kind of a pilot project or a partnership on its own or having the sustainability department do an initiative that then gets featured in a report.

All stakeholder groups want credible. Transparent action from companies and they want you to be authentic as well. They don't want to hear stories that are obfuscating some big areas that you, your company may not be addressing. So being honest and transparent and accountable. is the way to build trust.

And, and as you know, as a, as a marketing professional, you know, building trust is getting more and more difficult. consumers, including consumers of all kinds of media are just much more savvy and also more skeptical of all of the information sources. So it, again, this does help in terms of leaning in on needing to have credible data consistent data.

Ensuring that the things that you as a business are working on are actually the biggest impacts and I like to think about the way a company can tell its stories and engage as like a triangle with three levels. So at the bottom, you have to have the fundamentals. You have to know your risks. You have to really have taken the time and effort to understand how to put this into your processes.

And this is things from new product development to procurement. All of the processes of a business, you know, how is sustainability or in this case, engagement on climate fitting within your, what you do as a business and where are your most critical materials that are the most carbon intensive and what are you doing about those things?

And then there's sort of this middle level, which is I would call engagement, which is where you're engaging with your stakeholders, your suppliers, you're engaging internally across all departments, so everybody understands what you're doing, why you're doing it and what their role is on this journey.

And if you get those fundamentals, then at the top, you can start telling some really cool stories. And so if you start telling the story and then you scratch beneath the surface or a consumer to scratch beneath the surface, they. See that you have all this other stuff going on, that it is authentic and that you're doing your best.

And, and I think some companies are doing this really well. I also think the complexity of large global companies means that there will be some areas where they can advance really quickly, or they can address some low hanging fruit in certain geographies. And then there's some areas where it's harder.

And so just being again, transparent about that. What are you working on? Where are the blocking points? And then when you come out and engage your consumers in your stories, or indeed, ask them to come along on the journey with you. there, there is some, some real meat there. I mean, I'm thinking this is now kind of an older example but where companies such as P and G started reducing the temperature, asking customers to, you know, reduce the temperature at which they were washing their clothes.

I mean, that would be very difficult to do if you were a company that didn't have a robust approach to these issues underneath that kind of story. So that's where you can really engage with your, with your consumers is if you're doing your work and you're telling your story and you're asking them to come along with you on a journey. 

Again, such amazing, tangible advice, fantastic example there for our listeners. So thank you again, Tara. Now, I've got a last question for you here. And it's, look, we're entering Climate Week NYC, and I just want to know what advice would you give to organisations looking to implement leading climate strategies? And that's a big question. So, you know, just some, some priority. top tips here. You know, what should organizations be looking at? not only to meet the regulatory changes we've discussed, the investor demands that we've discussed, but also to resonate with consumers in a meaningful way. And I'm thinking here that data, It's going to be the key. You know, I'm thinking of course about LRQA’s own supply chain intelligence platform, EIQ and data led tools like that. But would you agree that data led risk management is one of the absolute top tip priority areas here?  

Yeah, absolutely. I mean, we've sort of touched on this lightly, but you know, there is a sea of data out there now.

And also a lot of tools as you've talked about ours. And I think it is very important for companies to make very clear decisions on how they're going to collect the data, what they're going to collect. And then the other thing is, of course, when it's your own operations it can be tricky enough but you can cut, you have some control over that.

And often you can also partner with the finance department or, you know, the finance department can even lead on this. I'm looking for, where is the best source of data and, and how can you use spend data as a, as a, as a starting point when it comes to your supply chain which is. Often one of the biggest impacts for companies your upstream scope three or, or scope three upstream, or just your, your supply chain in general is often an enormous part of a company's carbon footprints.

So collecting that data is critical, and this has been an area that keeps evolving. Companies have been using estimates over. The years, but we're moving towards needing more and more actual data more and more close to real time data. there are proxies that are being made where actually, there might be some meaningful differences between a supplier.

For example, that's really switched to renewables and versus a supplier that is still relying wholly on the grid that hasn't yet.  What have you so, so really getting direct data from suppliers and being able to collect that is really important. So data is a very important piece of this. And as you say, the tool is, is a great is a great tool to collect that supplier data for sure. 

But, in terms of the broader picture, I think what's important for companies to note is you can't just throw this to a department and have them just, yeah, you get on with having a climate strategy. If you want to have a leading approach to this, or even indeed just a good approach, then there's just some fundamentals, which is one, it needs to be championed at the C suite level.

And even also at the board level, that they understand why this is important. Why is it important to look at our climate risks, measure them. And then also, once the priorities have been identified that there is sign off that the company is going to do something about these and in a time bound way, because I think that's often where climate initiatives or sustainability initiatives can slip is that people now want to be committed.

Executives obviously want to be committed to making change.  It kind of can fall. Well, we'll do it when we've done these other things or we don't have the, you know, the resources today, but understanding why it's important. And I think coming back to the context, which is what Climate Week is about, is that we actually are on a real clock here as, as humanity.

And so I don't think we can shy away from that. I think. The best companies are going to be leaning into understanding the importance of it and then finally getting everyone involved internal people and your external stakeholders as much as you can engage lean in on what's happening already. You don't need to reinvent initiatives.

You can get involved in things that are already going on. And also, um. You mentioned how consumers are more savvy, but young employees are as well, right? And the new employees that are coming into the marketplace are very aware of, of the climate action of, of companies and really care about it. So lean in on that and engage your people. 

Tara, thank you so much. another wealth of guidance there.  Things are really changing out there. here at LRQA, we're saying that we're in a new era of risk management, to your point, and we call it the era of Assurance 4. 0. And what you've done today is equip us with some of the essential tools to meet that era head on. So thank you so much again for your time and your guidance. And thank you to our listeners for tuning in. you can all find lots more packed episodes on our Spotify channel or on LRQA. com. But for now, thanks for listening. Thank you again, Tara. Thanks so much to our listeners. Stay tuned and we'll see you all again soon. Thanks, Tara. 

Thanks Holly