Sustainable Business and Finance: The vital role of certification

BSI Group ANZ managing director Charlene Loo.

Certification has a vital role to play as businesses navigate their sustainability journey, says BSI Group ANZ managing director Charlene Loo. BSI Group is a UK-based global organisation that works on setting and certifying standards.

She says certification gives organisations clear guidelines on reducing carbon emissions and managing environmental impacts. “It is all about building trust, but along the way it does other things. The process raises awareness inside organisations as they prepare for certification. It promotes internal accountability.

“It is about understanding, thinking and reading through the process, then as you get more awareness you can be prepared for the challenges.”

Loo says that for larger organisations a byproduct of the process is that it encourages innovation.

“They go through the process, then they look at the production line or at the product life cycle and they identify areas where they can adopt low carbon technologies or more energy efficient practices.

“Organisations going through certification become more creative in this space because they are now looking for that energy efficiency to meet a standard. In the past, there may have been hurdles in the way of getting those efficiencies. This gave them the excuse of not changing anything. Certification means they now need to have those energy conversations and that leads to change.”

Creativity can come from technology. Organisations can, for example, use the Internet of Things to monitor processes.

“This means there is less need for people to travel to check on things in remote places. I think we’re heading in the right direction in terms of awareness and being creative, being innovative and coming up with the technologies that are going to help.”

Often the motivation for sustainability reporting comes from an external source but this leads to other benefits.

Loo says: “Now that countries are starting to mandate sustainability reporting, certification provides assurance that the reporting has been verified by a third party. In many ways it is also a risk mitigation strategy for most companies: while they are going through the certification process, they will be able to identify areas where they can improve.”

For most organisations, certification starts by being all about building market trust and confidence.

“Consumers, investors and other stakeholders want to see a piece of paper that shows a business is addressing climate change, doing the right thing and is accountable for what it pledges to do. Having third-party verification is key – we call it a trust factor.”

Businesses often advertise their certifications in their marketing. Loo says large companies use it when they are required to produce sustainability reporting, but it turns up in other places.

“You can see it, for example, in many supermarket products – it becomes a marketing tool. Products are often labelled as carbon neutral.”

In many cases the small print attached to the marketing explains the standards used to justify the claim.

It’s no longer enough for a business to demonstrate that its internal processes are carbon neutral, it now must show that its suppliers also meet standards. These are known as scope 3 emissions. Loo says scope 3 means understanding the supply chain and moving towards sustainable procurement, which involves another set of standards.

Many BSI Group customers are moving to become carbon neutral. Some aim to get there by 2030, others are on a path to 2050. They have made their commitment and are starting by looking for gaps in their existing processes.

Loo says they also face social sustainability issues such as dealing with matters like the UK’s Modern Slavery Act.

Depending on the countries they operate in they must deal with different sets of legislation. There are also various industry sector standards and expectations to manage.

“This is where we come in. It is where international standards are great, they cover most of the things everyone is looking for.

“Many companies operate internationally, they have supply chains, which means following international rules and best practice makes everything that much easier. Often, when a client comes for us, they are looking for guidance on how to get to those standards”.

Certification becomes a way of promoting accountability. There are environmental standards, standards for greenhouse gas emissions and carbon neutrality.

“Organisations are implementing the standards, they have processes in place to measure, manage and reduce environmental impact. The certification is there to show they are hitting quantifiable targets. This leads to transparency because the figures they publish are verified and certified by an independent third party.”

Loo says this is more challenging for smaller companies.

“Like it or not, there is a learning process. There is awareness about what you need to do.

“The larger companies look at their supply chain and that puts pressure on the small and medium-sized enterprises [SMEs] and they need their supply chain to comply as well. It’s not easy but once they start doing this they soon realise they have now expanded their scope and their marketability to their customers.”

Ultimately, certification helps businesses set measurable targets, mitigate risks and boost their reputation in an increasingly eco-conscious market.

While certification started with a focus on quality management, it evolved to tackle sustainability.

Now, that sustainability remit has expanded to include organisational culture and employee wellbeing.

“There is a move to look at people’s wellbeing, prioritising mental health, offering flexible work policies and safe work environments. These are also part of sustainability.

“Many organisations are benefiting, because they’re going back to the basics, looking at internal processes and creating improvement.”

She says BSI Group customers are looking for support not just in compliance but in embedding sustainable practices throughout their operations.

This now extends to cybersecurity.

Online crime frequently shows up in surveys such as the Mood of the Boardroom as one of the issues that keeps New Zealand business leaders awake at night. Loo says it has become one of BSI Group’s main areas of activity.

“We provide customers with expertise, guidance and tools that promote resilience, transparency and trust”.

Data protection is critical. She says once an organisation has customer data, many employees might have access.

“Certification is a way of showing that you have the right systems in place to give customers confidence about your dealing with their data.”

● BSI is a sponsor of the Herald’s Sustainable Business and Finance report