You can't help but have seen some of the news from the recent UN Climate Conference of the Parties (COP 26). It had been two years since ministers last met, and they were under more pressure than ever to reach an agreement on multiple objectives. On Friday 12th November, the global event closed for the last time in 2021, but before we dive into the main takeaways, what exactly is a COP?
In short, the COP is the gathering of government representatives from almost all countries in the world to agree on a strategy to tackle climate change. The first COP was held in Berlin in 1995. This year, the 26th meeting was organized by the UK in Glasgow. The main objective was for countries to update their plans for reducing carbon emissions. Other subjects discussed during the two-week-long meeting included how to strengthen adaptation and resilience to climate impacts and scaling up climate finance.
Here are the main takeaways of the conference:
At Payhawk, we believe that climate action and sustainability are essential and not just endeavors for big financial institutions and banks. Many big corporations, and the financial sector, in particular, are aligning their corporate strategies with environmental, social and governance (ESG) principles, and we recognize the need for growing businesses to play their part too.
Investors, for example, are now looking not only for economic returns but also for a positive social and environmental impact from their investments. Recent graduates are also looking to work for companies that have an ethical and sustainability focus. To be sustainable and to measure your mark has become a norm, not a trend or greenwashing.
Business owners, or CEOs, might ask themselves; why should my business become more sustainable? And what are the benefits? A recent paper from McKinsey mentions that including ESG principles can create value in your company in five different ways by letting you:
PwC has surveyed private equity investors in the Global Private Equity Responsible Investment Survey for the past seven years. Results show that more funds are flowing to sustainable-centric companies and how sustainability issues are becoming a central topic in board meetings and as part of the mission for many companies. ESG has gone from being considered a super-specific area of compliance, or a specialist product, to becoming an overarching framework that informs the strategic thinking of the entire firm.
Commonly, companies can mix up purpose and sustainability (ESG). As this Harvard Law paper mentions, purpose comes first and then sustainability is a contributor. Purpose is defined as producing profitable solutions that solve the problems for people and the planet. Think about your business; what is its purpose? At Payhawk, we try to solve the expense management headache for companies to empower people to focus more on their careers and less on finance admin. Find out more here.
Now, you might think that many corporate promises are only made to attract more clients and are far from achieving any kind of global good. The truth is, this does happen and will continue to happen unless there's a regulated market or a standard that all companies can follow.
In March 2021, a new regulation came into effect in Europe. The EU's Sustainable Finance Disclosure Regulation (SFDR). It regulates the disclosure of sustainability efforts of fund managers, insurers and banks that provide sustainable financial products and services. Another way companies can demonstrate that their actions are well-intentioned is by having a stamp of approval from an established certification body, such as B Corporation, 1% for the planet, FSC, among others.
At Payhawk, we've started the process of becoming a B Corporation. The first step of this certification is to analyze the impact of the company. A free tool called the BIA assessment is available where you can measure your impact in the day-to-day operations and your business model today and establish your goals for the future. We plan to have the assessment ready by the end of the year so we can start the process to become fully certified and make impactful sustainability decisions.
Whether you have tens, hundreds, or thousands of employees, we’re making your business spend work for you, giving you control over spending at scale with a single solution. Say goodbye to tedious finance tasks, and schedule a demo with us today.