As more businesses look to instill greener practices, it is important that there are appropriate standards in place to regulate the journey to Net Zero. Many of these businesses will look to sustainability certifications to formally validate the efforts they are making by showing that they adhere to the latest regulatory landscape.

This landscape is tricky to navigate and is continuously evolving. In this blog we will look at the regulatory evolution in the sustainability space as well as a selection of the certifications that are available to businesses today.

 

Regulation:

Since the first environmental legislation was introduced in the UK in 1974, policy makers and governmental bodies have worked to ensure that regulations have evolved to keep pace with scientific developments and the rapidly changing nature of business and consumption.

 

Some of the key regulations that have been developed include:

Global Reporting Initiative (GRI) (1997)– An international independent standards organisation that helps businesses, governments and other organisations understand their impact on the economy, environment, and society. It aims to increase accountability and enhance transparency within an industry. There are currently more than 14,000 GRI reporters in over 100 countries.

 

Paris agreement (2015)– A legally binding international treaty on climate change that was adopted at COP21. The agreement works on a 5-year cycle of increasingly ambitious climate action to help limit the global temperature increase to 1.5°C above pre-industrial levels.

 

UK Environment Act (2021)– Deals with targets, plans, and policies for improving the natural environment. This includes issues such as resource efficiency, air quality, nature, biodiversity, and conservation.

 

UK Sustainability Disclosure Standards (UK SDS) (2024)– Created in line with the International Sustainability Standards Board (ISSB) at COP26, the UK SDS forms the basis for any future requirements in UK legislation for companies to report on risk and opportunities related to sustainability matters.

 

Certification

Certifications differ from environmental regulations as they are the formal validation of the adherence to sustainable practices. Certifications can cover the whole business, or they can relate to specific areas such as greenhouse gas (GHG) emissions or social impact. There are many key driving factors for businesses to acquire certifications from enhancing brand value to demonstrating progress to external stakeholders.

 

Here is a selection of ESG certifications:

B Corp – This certification body looks at 5 key pillars of the organisational structure (Governance, Workers, Community, the Environment, and Customers) to generate a score out of 200 with regards to the company’s overall sustainability. In order to be certified as a B Corp, a business has to score a minimum of 80 points. As of April 2024, there are now 2000+ UK B Corp certified companies. All the tools needed for the assessment can be found online and are free to use, therefore businesses are able to prepare their application without submitting for certification. Recertification takes place every 3 years in order for businesses to maintain their B Corp status.

 

Planet Mark – This is a carbon emissions focused certification that demonstrates a business’s commitment to measuring and reducing their carbon emissions, ultimately contributing to their environmental, social and governance (ESG) criteria. They also offer the option to measure the social value of a company. Recertification can be done after one year but requires the completion of carbon calculations. Unlike B Corp, the tools needed for the certification are not free to use so companies would need to contact the Planet Mark team to create a personalised action plan.

 

ISO 14001 – This is an internationally recognised framework that outlines the requirements for an environmental management system. Allowing businesses to continually improve their environmental performance. So far there has been more that 500,000 certifications in over 18 countries around the world to ISO 14001 which highlights how widely accepted and acknowledged this certification is on a global scale. Certified organisations will undergo yearly audits to ensure they maintain the required standards of environmental management with a recertification audit taking place every 3 years.

 

EcoVadis – This is an ESG rating tool with a supply chain focus. The assessment uses a materiality approach by looking at the environment, labor, human rights, ethics, and sustainable procurement. EcoVadis assess these factors via 3 metrics: policies, actions, and results, to provide a score out of 100. This score is correlated to a medal that is awarded to the business, with the highest being platinum, which is only awarded to the top 1% of companies. So far, they have analysed over 100,000 companies across 175 different countries.

 

Conclusion

This is by no means an exhaustive list of sustainability regulations and certifications that are available to businesses. We hope that it has given a flavour of what is out there and will spur you on to find the right certification for you.

Our team is constantly striving to stay up to date with the regulatory landscape for our own business and our clients. We also need to be aware of the different certifications to ensure all our projects are certified to the latest and highest standards. Progressive regulation and third-party certifications are critical to achieving a greener future.

 

If you have any questions on this topic or on sustainability in Investor Relations more generally, feel free to reach out!