"Towards a Sustainable Future: Connecting Financial Disclosures and Design Solutions for a Plastic-Free World"

Alfred Tang

Hatched by Alfred Tang

Jul 31, 2023

4 min read

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"Towards a Sustainable Future: Connecting Financial Disclosures and Design Solutions for a Plastic-Free World"

Introduction:

In recent years, there has been growing pressure from investors and financial institutions for more consistent and comparable data across all sectors and industries to support investment decision-making. To address this need, the International Financial Reporting Standards (IFRS) Board of Trustees has established the International Sustainability Standards Board (ISSB) with the aim of developing a global baseline for sustainability-related financial disclosures. This article explores the connection between the ISSB's proposed standards and the design solutions for reducing plastic pollution, highlighting the importance of aligning financial and environmental considerations.

The Importance of Consistent Global Standards:

The ISSB's exposure drafts of the standards, released in April 2022, aim to provide stakeholders, particularly investors, with clear, consistent, and comparable information about a company's sustainability and climate-related risks and opportunities. These standards leverage the existing framework of the Task Force on Climate-related Financial Disclosures (TCFD) and require disclosure of governance structures, strategic choices, risk management approaches, and ESG (Environmental, Social, and Governance) and financial metrics across thematic and industry-specific domains. By incorporating this information into general-purpose financial reporting, the ISSB standards seek to establish a consistent global baseline for sustainability-related financial disclosures.

Connecting Financial Disclosures and Design Solutions:

While the ISSB standards primarily focus on climate-related disclosures, it is essential to recognize the broader sustainability landscape. One pressing issue in this regard is plastic pollution. Each year, millions of tonnes of plastic end up in our oceans, threatening marine life and ecosystems. Design solutions play a crucial role in reducing plastic pollution by finding innovative ways to minimize plastic waste and promote recycling.

Governance and Strategy:

The ISSB standards emphasize the importance of understanding governance processes, controls, and procedures used to monitor and manage climate-related risks and opportunities. Similarly, in the context of plastic pollution, effective governance is vital to ensure a comprehensive approach to waste management and recycling. Companies should establish responsible bodies to oversee plastic waste reduction efforts, ensure skilled personnel are involved, and integrate plastic reduction strategies into their broader strategic decision-making processes.

Risk Management:

The ISSB standards highlight the process of identifying, assessing, and managing climate-related risks and opportunities. In the context of plastic pollution, risk management involves identifying the sources of plastic waste, assessing their impact on the environment, and implementing measures to mitigate these risks. It also requires companies to disclose the methodology used for prioritizing plastic reduction efforts and any changes to this methodology over time. By integrating risk management practices, companies can effectively address plastic pollution and minimize their environmental footprint.

Metrics and Targets:

The ISSB standards emphasize the importance of measuring, monitoring, and managing climate-related risks and opportunities. In the case of plastic pollution, this translates into measuring and disclosing the amount of plastic waste generated, monitoring progress towards reduction targets, and managing the organization's performance in minimizing plastic pollution. This includes disclosing emissions from the organization's supply and value chains (Scope 3 emissions) in addition to direct emissions (Scope 1 and 2). By setting ambitious targets and utilizing industry-based metrics, companies can drive meaningful change and contribute to a plastic-free future.

Actionable Advice:

  • 1. Integrate sustainability considerations into financial reporting: To align with the ISSB standards, companies should incorporate sustainability-related financial disclosures into their general-purpose financial reporting. This will provide investors and stakeholders with a comprehensive understanding of the company's sustainability performance and its ability to manage climate-related risks and opportunities.
  • 2. Foster collaboration between finance and design teams: Companies should encourage collaboration between their finance and design teams to develop innovative solutions for reducing plastic pollution. By combining financial insights with design expertise, organizations can identify cost-effective and sustainable alternatives to single-use plastics, promote recycling initiatives, and minimize their environmental impact.
  • 3. Support policy initiatives and industry collaboration: Companies should actively support policy initiatives and collaborate with industry peers to drive systemic change in plastic waste management. By advocating for stronger regulations and participating in industry-wide initiatives, organizations can contribute to the development of a circular economy that reduces plastic pollution and promotes sustainable practices.

Conclusion:

As the world faces increasing environmental challenges, the need for consistent and comparable data on sustainability-related financial disclosures becomes more evident. The ISSB standards provide a foundation for aligning financial and environmental considerations, allowing investors and stakeholders to make informed decisions. By connecting these standards with design solutions aimed at reducing plastic pollution, companies can play a crucial role in creating a more sustainable future. It is through collaborative efforts, innovative thinking, and responsible governance that we can pave the way towards a plastic-free world.

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