Effective benchmarking has long been a key tool to radically transform businesses, allowing decision-makers to recognize strengths and weaknesses in comparison to competitors. Across all sectors, benchmarking various metrics – from production costs to design to inventory management – is a standard approach for improving business performance.
Now, as environmental impact comes under increasing scrutiny from regulators, investors, and consumers alike, it is imperative for organizations to extend their benchmarking practices to climate strategies. Two key drivers highlight the urgency of this shift:
- Growing importance of competitive edge.
Verdantix research shows that firms are increasingly looking at their climate strategies as a source of competitive advantage. To gain that edge, they need to understand in detail how their climate performance compares to their competitors. This is useful at both the surface level – underscoring the areas of outstanding performance that organizations can promote as ‘best in class’ – and at greater depth – demonstrating where, and perhaps even how, firms need to improve. - Convergence of reporting standards.
Regulations and reporting standards have now converged to a point where it’s feasible to compare firms’ climate disclosures at a meaningful level of detail. The Task Force on Climate-related Financial Disclosures (TCFD) has been crucial in this, providing a common backbone for climate disclosure requirements across much of the world. In the UK, for example, over 1,300 of the largest businesses and financial institutions are required to make TCFD-aligned climate-related financial disclosures. As more organizations report to similar frameworks, the cohort of comparable competitors grows.
Like all benchmarking processes, there are certain features that are necessary to make the analysis valuable. Organizations should seek out climate benchmarking that is detailed enough to provide actionable insights and robust enough to hold up to scrutiny. As they deal with the twin challenges of data complexity and greenwashing suspicions, climate leaders also need a space safe enough to disclose thoroughly and truthfully. To book a demo of the Verdantix Climate Benchmark tool and learn about the programme, click here, or to find out more about how climate benchmarking can facilitate competitive success, watch the webinar here.
