EthoWork is now an EcoVadis Training Partner!

2 January 2024

EthoWork is happy to announce that we have been chosen as an Approved Training Partner of EcoVadis, the leading provider of globally trusted business sustainability ratings. 

As an EcoVadis Training Partner, we can:

Contact us today for assistance with your EcoVadis assessment process!

The ABCs of Upcoming California Sustainability Regulations 

by Susan N. Spencer, EthoWork Learning

31 October 2023

4 min read

Many of us are reading about the upcoming onslaught of new sustainability policies and regulations. Due to consumer and climate/regulatory demand, state, federal, and regional governments are now developing new approaches to address businesses' environmental practices. Many of these bills are currently held up in Congress or at the State legislature level. However, in California, two bills have already been signed by Governor Gavin Newsom: The Climate Corporate Data Accountability Act (SB 253) and the Climate-Related Financial Risk Bill (SB 261). As such, it's time to start paying attention to what these new laws and regulations may mean for your business - and those in your value chain - going forward. In this article, we'll take a look at the recently-passed California "green" legislation and what it means for companies big, mid-sized, and small alike.

California’s Climate Corporate Data Accountability Act (SB 253)

California's SB 253, or the "CCDAA," is a new state law that requires all large companies doing business in California with annual revenues exceeding $1 billion to report their greenhouse gas emissions (GHGs) each year. Companies of this size will be required to report their Scope 1, 2, and 3 emissions.

For fashion companies specifically, the Climate Corporate Data Accountability Act is the first law in the U.S. to require textile and apparel companies to report their Scope 3 emissions, which often account for the majority of a brand’s emissions. The CCDAA/SB 253 will take effect on January 1, 2026, and the first round of reporting will be due in 2027. Scope 3 emissions reporting would not be required until 2027 on 2026 data. All emissions reporting data by company will need to be independently verified and will be housed on a new publicly-available registration site overseen by the California State Air Resources Board (CARB). 

This climate transparency law will hold large companies accountable for their carbon emission impacts throughout their supply/value chains, while providing investors and consumers with the information they need to make informed purchase decisions.

California's Greenhouse Gases: Climate-Related Financial Risk Bill (SB 261)

California's Climate-Related Financial Risk Bill (SB 261), or the "CRFRA," will apply to companies with annual revenues over $500 million, a considerably lower financial threshold than SB 253. The purpose of this law is to examine a company's financial risk caused by climate change, and will require companies to prepare and submit climate-related financial risk reports that are aligned with the recommendations from the Task Force on Climate-Related Financial Disclosure (TCFD). These risks are commonly known as "physical" and "transition" risks. 

Physical risks are those risks caused by the actual physical effects of climate change. This can include natural events such as rising sea levels, changes in temperature, or other extreme weather events that may interrupt operations, destroy property, and ultimately increase operation costs.

Transition risks are risks that are associated with transitioning to a lower-carbon economy. They can include technology innovation, new government regulations, and even consumer preferences. The idea here is that transition risks may lead to lost market share, stranded assets, and/or increased competition for a company and therefore should be reported.

The first report for the CRFRA/SB 261 will be required to be prepared and reported to the California State Air Resources Board (CARB) by December 31, 2026, with reporting taking place every other year afterwards. Moreover, companies will need to make their reports available to all stakeholders on their websites.

The Bottom line for Companies Doing Business in California

The bottom line is that tens of thousands of companies doing any form of business in California will need to start disclosing their Scope 1, 2, and 3 GHG emissions and/or climate-related financial risk information - mandated by the State government. EthoWork can help you to better understand these new regulations, and help you to partner with the best and most cost-efficient environmental measurement platforms in the marketplace. We'll also help you to assess your materiality and climate risks, set realistic sustainability/climate goals, and even help you to mitigate your climate risk. We're here to help - no matter if you're a large brand, mid-sized licensee, or a small, upstream supplier or manufacturer who finds itself needing to report to companies who are directly impacted by these new laws - Just contact us.

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What is the difference between ESG and sustainability?

By Susan N. Spencer, EthoWork Learning

9 October 2023

3 min read

ESG is quite a buzzword these days. But for a company, does it mean the same thing as sustainability? In this article, we'll take a look these two related concepts.

Help Me Understand ESG!

'ESG' stands for the Environmental, Social, and Governance practices undertaken by an organization. It's a set of criteria that investors and businesses can use to evaluate a company's performance and impact in these areas. The operative word here is 'investors': ESG is involves financial metrics and reporting. 

On the 'E' side, a company's Environmental practices and their impacts are assessed. This includes examining their carbon emissions through the use of greenhouse gas calculations, their resource conservation efforts, and their current and planned efforts to combat negative environmental outputs throughout their supply/value chain.

The 'S' of ESG refers to the way a company treats its people, or the 'Social' aspect. Another common term for this is CSR, or "Corporate Social Responsibility." Here, we are looking at a company's practices toward its employees throughout its supply chain and headquarters operations. This includes everything from labor/employee health and safety in contracted factories, to diversity, equity, and inclusion (DEI) practices and corporate community engagement.

Lastly, the 'G' of ESG examines a company's leadership and Governance practices. It looks at the structure of an entity's business ethics, shareholder rights (if publicly held), its board of directors, and even its executive compensation. Transparency for all stakeholders, including the end consumer, is the operative word here.

How Does ESG Relate to Sustainability?

Simply put, sustainability is a much broader and more encompassing concept than ESG. While it also includes economic, social, and environmental aspects similar to ESG, sustainability refers to the ability to meet the needs of the present without compromising the ability of future generations to meet their own needs. 

Economic sustainability focuses on the ability of a company to be financially viable in the long term whilst still doing its best across specific sustainability initiatives. It involves monitoring a company's resilience, profitability, and resource allocation.

Social sustainability is similar to the "S" in ESG, meaning that we are also looking at the treatment of workers, employees, and management throughout a company's owned and contracted supply chain. It looks at frameworks such as the UN's Sustainable Development Goals (SDGs) and how a company's efforts align with them on key issues such as human rights, well-being, and social equity.

Environmental sustainability also focuses on minimizing negative environmental impacts and promoting responsible resource use; specifically broader and longer-term goals. An example of this might be a company's declaration in their annual sustainability report that they aim to be carbon neutral by 2030, or seven years out.

What Does this Mean to Me? What Actions Should I Take?

Think of ESG as a "subset" of sustainability. It zeroes in on the three key areas of a company's environmental, social, and governance policies and implementations that are important for assessing the performance and behavior of companies from an investor's perspective. Given the upcoming onslaught of California, New York, U.S., and EU environmental regulations pending and currently being implemented, it will be important for a company to develop and implement ESG measurements, reporting, and initiatives both on a mandatory and voluntary basis. 

It's important to consider both the financial/ESG and larger sustainability lenses for your company. Remember, sustainability looks at the "big picture" of how a company considers its economic, social, and environmental aspects within global frameworks for long-term operational decision-making responsibility.  A company's sustainability report should not only show the measurements gleaned from its ESG efforts, but also align its long-term sustainability goals to larger global social, economic, and climate targets, such as the UN SDGs and the United Nations Framework Convention on Climate Change goals.

If you need help in deciphering, measuring, creating, and/or implementing your ESG/Sustainability strategy, EthoWork can help. Contact us today - it's what we do!