09/21/2023 | Press release | Distributed by Public on 09/21/2023 09:52
By ALISON PEPPER EVP, GOVERNMENT RELATIONS, 4A's
You'd have to be on a pretty strict break from the news this summer to miss the fact that our climate increasingly seems to be careening towards extremes. Wildfires raging in Canada blanketing the East Coast and Midwest in smoke, weeks of 100+ degree temperatures suffocating the Southwest, flooding devastating large portions of the Northeast, prolonged drought conditions in the West, Midwest and parts of the Mid-Atlantic, abnormally high ocean temperatures in the South - no part of the country was left untouched this summer.
And while it's true that many of the above occurrences represent natural disasters as old as well, the Old Testament, it's also equally true that it's increasingly difficult to deny that the severity of these disasters isn't just inching up year-over-year, records are shattering at a rapid clip.
Governments around the world, and increasingly here in the U.S., are finally starting to respond. The late 2022 passage of the Inflation Reduction Act (IRA) in Congress has already resulted in billions of dollars in private and public investment in renewed domestic manufacturing in the renewables space, as well as accelerating an electric transition in American homes via tax credits for solar panels, heat pumps, etc.
But it's on the emissions reporting front where we're really starting to see an acceleration of government action, internationally and domestically. Europe's Corporate Sustainability Reporting Directive (CSRD) went into effect in January. Among many other things, the CSRD requires a company to report their Scope 1, 2, and 3 emissions. In March of 2022, the Securities and Exchange Commission (SEC) issued proposed rules around climate disclosure that calls for mandatory reporting around Scope 1, 2, and 3 emissions (although, there is a bit of leeway around reporting Scope 3 emissions).
And just last week in California, the California Legislature passed the "Climate Corporate Data Accountability Act" which would start requiring companies with over one billion dollars in annual revenue to report their Scope 1, 2 and 3 emissions. Governor Newsom has until October 14th to sign the bill into law. The law saw the public support of large companies such as Apple, Ikea, and Microsoft.
In adland specifically, industry initiatives like Ad Net Zero are asking participants to agree to setting Science Based Targets initiative (SBTi) goals, a process that requires emissions reporting. And, this week, the 4A's announced a partnership with London-based climate success platform 51toCarbonZero (51-0) to help our member agencies establish their carbon footprint.
There is still a lot of ambiguity as to how all these new reporting requirements will ultimately be interpreted by courts when the inevitable legal challenges arise, how any gaps in Greenhouse Gas (GHG) protocol guidance might be bridged, as well as outstanding questions around the scope of coverage (in the U.S. at least). But one thing is becoming clear - it's increasingly likely that your company is going to be doing business in some jurisdiction either now or in the future where these new reporting requirements are in place.
In the midst of all these new emissions reporting laws, it's worth keeping one very clear North Star in mind - all the emissions reporting in the world is completely meaningless if companies don't act on the data to start reducing emissions. Reporting is not the end goal - reduction is. Think of reporting as table stakes to play, and reduction as winning. And then get started.