Mandatory ESG Disclosures: Preparing for the Future
E S G W h i t e p a p e r
Preparing for the Future
The SEC has been clear about its intention to finalize and apply its proposed rules on ESG Disclosures for Investment Advisers and Investment Companies. The agency’s recent actions signal a desire to prevent and punish greenwashing by implementing stricter disclosure requirements for companies who market their products as being sustainable, ethically sourced or otherwise socially responsible. SEC Chair Gary Gensler has suggested that investors should be able to assess data on sustainability performance of ESG funds in the same way that consumers use food and nutrition labels. The proposed ESG rules follow closely on the heels of the SEC’s proposed rules on climate disclosures. Even without specific ESG disclosure rules, the SEC has pursued enforcement actions for false and misleading statements in ESG disclosures, forcing businesses to be more transparent and forthcoming about their impacts on the environment and society.
How Does This Impact a Company's Supply Chain? Transparency strengthens innovation.
Firms will creatively seek to fill their portfolios with verifiably environmentally and socially responsible investments.
An unhealthy or misrepresented ESG nutrition label will put a company at risk of losing investors and significant competitive advantage.
Failure to comply with the SEC’s coming requirements will put a company’s brand and reputation at risk. Companies that wish to attract lenders and investors on the best terms will have to be transparent, accurate, and committed to ESG. Even companies that might not be subjected directly to SEC disclosure obligations may face pressure from other stakeholders, whether it be from consumers or because they are part of another company’s supply chain. Even privately held companies may have to provide full and accurate ESG information so other companies with whom they do business can assess and report the full impact of their value chain.
Preparing for the Future Cont.
Shippers and customers who have publicly declared a climate reduction plan will need to ensure they know how they will actually meet their goals and commitments and track their progress—before they announce those goals. In many cases, this will require independent or third-party verification to ensure credibility and transparency. Navigating uncharted areas can be frightening, especially for those willing to set ambitious ESG goals. Fortunately, shippers and customers do not have to go it alone, because they can look up and down the value chain for support.
For example, the savviest shippers are turning to Scope 3 emissions sources in their supply chains to help make progress in meeting their own carbon emission reduction goals. Focusing on Scope 3 emissions, which comprise emissions generated outside of the direct control of the business, such as from suppliers, partners and consumers, companies often can find efficient ways to reduce their carbon footprint. The global environmental impact reporting non-profit organization CDP notes that supply chain emissions are on average 11.4 times higher than operational emissions.
MODE has already conducted a thorough GHG Inventory Audit of its Scope 1 and Scope 2 emissions as a baseline, and is setting ambitious goals for emissions reductions, in order to assess its own environmental footprint and reduce its contribution to climate change. This is just the first step towards MODE’s company-wide carbon management plan, which also aims to include Scope 3 emissions management.
Supply chain emissions are on average 11.4 times higher than operational emissions.
A McKinsey report suggests that the “typical consumer company’s supply chain creates far greater social and environmental costs than its own operations” and that “consumer companies can thus reduce those cost significantly by focusing on their supply chains.” Pivoting your supply chain toward greener solutions can have a substantial impact on your company’s journey toward sustainability.
It's Never too Late to Start
MODE also works with sustainability-minded shippers to create environmentally friendly strategic solutions that can further your organization’s sustainability goals and optimize transportation, yielding both ecological and financial benefits. We do this through a variety of methods, such as utilizing carbon calculators to analyze transitioning over-the-road shipment to Intermodal. On average, rail has 75% lower emissions than trucks, and we can help you make the case for transitioning certain shipments from OTR to intermodal. To ensure capacity, MODE partners with all Class 1 railroads, giving us the most access to rail assets as well as private assets in the market.
We utilize innovative technology to optimize your supply chain, and we can work with you to reduce fuel usage (and subsequent cost) through consolidation, route and/or asset optimization and flexibility to adapt to changing conditions. We relocate inventory to allow for efficient routes for co-loading and optimize networks to recommend distribution center locations that minimize distance. This method reduces empty miles, avoiding“deadhead” runs. MODE stands ready to collaborate to improve your carbon footprint intelligently, so you can get the credit you deserve for making your business more sustainable.
It is never too late to start measuring and reducing carbon emissions. At the same time, it always makes sense to develop and implement a plan for doing so. MODE can help guide your journey toward a sustainable future, whether by converting to energy-efficient loads or minimizing total loads. As one of the leading U.S.-based transportation 3PLs, MODE has advanced technology to create and identify opportunities for you to access ESG-friendly transportation. We can also assist you with identifying carriers who share sustainable business values that complement and support your goal of building a sustainable global supply chain.
On average, rail has 75% lower emissions than trucks.
One of the largest food and beverage companies in the world named MODE as its sustainability partner of the year! As an EPA Certified SmartWay® Logistics Company Partner, MODE measures, benchmarks and tracks our efforts to increase efficiency and fuel economy to create a cleaner, more sustainable future. We are thrilled to share with you that MODE presents favorably with respect to CO2 and NOx rankings. We are honored that we have obtained SmartWay’s top-rated recognition, and we are more motivated than ever to work together to create a healthier planet for everyone.
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ESGinfo@modeglobal.com
help!