Communicating climate: the challenges and opportunities

Communicating climate became a governance priority last year when the government passed legislation mandating climate-related disclosures for about 200 publicly listed companies and some other entities.

Yet, few are grasping the reputation-building opportunity that excellence in climate reporting provides. One of the best and most logical ways to become a trusted and admired business is to tell a holistic story of the impacts and achievements of your business, and the learning along the way, to critical stakeholders who really matter.

Reporting standards regulation is reaching new levels and now is the time to get ahead of the curve and embrace the opportunity.

New Zealand’s External Reporting Board (XRB) is consulting on new mandatory reporting standards to be introduced in December.

Additional regulatory requirements are coming down the chute. In August, the government launched a National Adaptation Plan – a long-term strategy to deal with the effects of climate change. It includes a focus on the public sector and businesses needing to reduce the long-term economic costs, and seize the opportunities of a changing climate. NZX has also recently released for consultation a revision of its ESG guidance.

The pressure is mounting for boards to embed climate considerations in their business strategies, and tell their climate story in a way that meets reporting requirements and supports reputation.

Companies that are true to their purpose and measure progress against environment, sustainability and governance metrics are positioning themselves to build long-term, sustainable value, while protecting their social licence to operate.

More than that though, well planned and executed climate communication will protect and enhance an organisation’s reputation.

Forward-looking companies and organisations are already taking their climate reporting up a notch. They are using principles and standards frameworks to give structure to their narrative.

It requires discipline, rigour and planning to tell your climate story, and show you are really thinking about what it means to have a positive impact on your communities, environment, and your bottom line.

For some boards, it will be a challenge they have yet to meet.

In July, PwC issued its review of New Zealand climate-reporting performance. The results were sobering.

The review found that companies barely scored a pass mark for reporting on risks to their businesses associated with climate change. An analysis of NZX companies with March balance dates found only three out of 15 discussed the impact of climate-related risks in their financial statements. Some were failing to link the narrative in the front sections of annual reports with the numbers and data in later sections.

Others, however, have shown what quality climate reporting and communications looks like and they have been recognised for their efforts. Sanford, the Port of Tauranga, Fonterra, Transpower and Zealandia-Karori Sanctuary Trust are among those whose annual reports and sustainability reports have won Australasian awards.

Their reports were praised for:

• Conciseness in telling their stakeholder engagement story, and the external verification of their data.
• Using international reporting frameworks to provide a comprehensive analysis and commentary on their strategy, governance, and a range of environmental, social and economic measures.
• Holding themselves accountable and discussing where they have yet to meet the climate goals they have set themselves.

Each organisation has gone beyond data and standards and established the story they need to tell about their particular climate challenges and opportunities.

They have demonstrated the importance of understanding what their stakeholders consider to be issues and addressing them – because they are listening. They are aware that a cookie-cutter approach that only ticks regulatory boxes will deliver little more than radio static: it might be heard, but it’s more likely it will be turned off.

Communicating effectively

When we use the phrase “climate story”, let’s be very clear: it is a story rooted in verifiable facts – not fiction.

In seeking to tell their climate story, organisations need to adhere to some core principles:

• Be measured and realistic.
• No one expects perfection from the outset, but they do respect candour, and they respect progress and honesty.
• Set reasonable expectations as you begin communicating your climate position – remember that you are setting the stage for reporting in future years.
• Be honest, authentic and a little bit bold – look through your numbers to the story they tell.
• Be accessible and comprehensible.
• Avoid marketing speak and jargon.
• Be aware of your stakeholders’ information needs and interests.
• Avoid engaging in a box-ticking exercise.

Know your audience

Before considering what to say about climate, there are two vital questions every board needs to ask: ‘Who are we talking to’? and ‘How are we addressing climate risks and opportunities in our business strategy’?

It sounds simple to the point of banality, yet failure to truly define your stakeholders and understand their issues, concerns and points of view will result in communications likely to misfire, enrage or be ignored.

So take the time around the board table and with management to be specific. Only then will your organisation be able to frame its climate communications respectfully and accurately – meeting not only your reporting requirements, but also your stakeholders’ needs for clarity, relevance and transparency.

Those that excel at telling their climate story also find ways to make it personal. They recount the achievements of their own people as they embed climate in the way the organisation conducts its business planning and operations, and delivers value.

The Lexicon

Taking the first steps towards communicating climate is easier when you know who you are talking to – and when you use the toolkit available to help your organisation tell its climate story.

Chapter Zero and the IoD have published a wealth of resources and regularly host events that promote awareness and share the knowledge available in the governance sector.

The XRB and other regulatory bodies, such as the Financial Markets Authority, are also providing guidance.

This year, Anthem has worked with Chapter Zero to develop another component of the toolkit.

It’s called The Lexicon – an information resource for directors who want to upskill and support the global goal to achieve net-zero carbon emissions by 2050.

The Lexicon is available at www.chapterzero.nz  

Now is the time to take a director’s lens to your organisation’s climate story. By stewarding its development, your board will secure the opportunity to marry strategy, data, and regulatory compliance in a compelling narrative that builds respect for efforts to meet New Zealand’s target of achieving net-zero carbon emissions by 2050.