Published on January 23, 2023, 1:09 pmUpdated January 23, 2023 at 1:12 pm
What if 2023 marks the death of carbon neutrality? From 1 January 2023 and within the framework of the Climate and Resilience Act, claims of carbon neutrality of a product or service in an advertisement they are considered illegal if they cannot be proven.
The conclusion is clear: “net zero” promises have failed to deliver progress fast enough to decarbonise the economy. Companies will have to go further, in favor of ways of actually reducing their direct and indirect carbon emissions, supported only by data capable of measuring the impact of the measures implemented.
Corporate sustainability
Like the digital revolution that occurred more than two decades ago, this transformation will be imperative for any business seeking to survive and thrive in a future shaped by climate concerns and in an environment where progress is increasingly controlled by regulators and NGOs .
By anticipating supply chain and climate risks and mitigating the financial risk posed by volatility in carbon markets, carbon data is the path to corporate sustainability. However, this implies the adoption of an innovative emissions accounting strategy.
This shift in approach requires working collaboratively with the various key functions of a company – finance, information systems, CSR, strategy – to operate a rapid and effective transformation, empowering all internal stakeholders of the organization.
Competitive advantage
2023 also brings us closer to the forthcoming entry into force of regulations and the verifiability of carbon data (TCFD framework, SFDR, European taxonomy, etc.), in a context in which regulators, financial institutions and NGOs are increasingly demanding in terms of terms of transparency. Last November, the European Financial Reporting Advisory Group (EFRAG) presented draft European standards for sustainability reporting to the European Commission.
The Corporate Sustainability Reporting Directive came into force this month and will oblige more than 50,000 companies in Europe to report their extra-financial information related to ESG criteria every year between 2024 and 2028.
While implementing these multiple regulations pose undeniable challenges, they set standards that other international markets will eventually replicate. Foreign traders wishing to trade in Europe will largely have to comply. The paradigm shift has already begun and by adapting quickly thanks to reliable and transparent climate data, French and European companies will have a great competitive advantage.
Europe as a global investment leader
Another major climate challenge will emerge in 2023: the regeneration of biodiversity. Our ability to collect and analyze biodiversity data is the only lever that will allow us to identify companies that have a real and positive impact on its regeneration and that need to be funded.
Given this observation, climate technologies should continue to grow exponentially beyond carbon data alone, dominating venture capital financing cycles. Climate-conscious investors should therefore remain optimistic and confident despite the widespread recession. In this perspective, both in terms of funding and number of start-ups, Europe should gradually establish itself as a world leader in investments.
Everything suggests that 2023 will be a year of “transformation”. To protect their financial health, their supply chain, and avoid greenwashing charges, companies will face an injunction: transform to last. Transparency, granularity and audibility will be the keywords for the next few years.