Investors Are Advised to Look at Systemic Issues Rather Than Singular Solutions | GRI

INTERVIEW with Anna Krotova, Senior Manager – Standards, GRI. For further expert opinions please use the question-level hyperlink. What actions do you find relevant to make the recovery as resilient as possible, and how would you assess the circular economy-related investment opportunities in this regard?The pandemic is seeing sustainability considerations come to the fore like never before. Stakeholders – including policymakers and investors – are raising expectation levels on companies to demonstrate how their business practices can increase resilience and reduce risk.That’s why companies that embrace circularity – and are able to quantify and communicate how they are reducing, reusing or recycling waste – can improve their performance and resilience, and in turn their appeal to investors. Already back in 2017 scientists warned of what they termed ‘circular economy rebound’ arguing that ‘circular economy activities can increase overall production, which can partially or fully offset their benefits’. Against the backdrop of the sustainable recovery discussion in the EU, do you find that the respective risks are properly considered? Reporting is about truly understanding the company’s material topics and how they are addressing their most significant impacts. Reporting that follows this approach, on efforts in support of circularity, helps ensure that associated impacts and risks are appropriately considered and disclosed.Materiality assessment is a dynamic process which doesn’t stop with one reporting cycle. Good reporting practice ensures companies keep track of trade offs and their impacts as they change over time and address those. How does SDG investing relate to circular economy on reporting level?The Sustainable Development Goal 12 calls for the adoption of sustainable consumption and production practices – something that companies cannot fully assess and communicate without effective sustainability reporting. Embedded in this is the need for organizations to implement environmentally sound waste management practices and to identify opportunities to prevent and reduce waste, through reuse and recycling.The new GRI Waste Standard provides any businesses around the world with the tools for reporting on these key factors – information that is highly relevant for any investor assessing how an organization is contributing towards SDG 12. Can plastic waste be seen as an investment opportunity?There are many questions and concerns, from a sustainable investment standpoint, when it comes to plastic waste. Not least because plastic itself is a non-renewable substance whose material properties weaken with every re-application.

The reality is that the huge volumes of plastic production and consumption around the world remain at unmanageable and environmentally damaging levels, and the infrastructure and technology to manage these volumes does not merit the scale of the problem. That is not something that creative circular economy solutions alone can address. When making investment decisions, investors are advised to look at systemic issues rather than singular solutions.

How does the GRI Waste Standard help the investment industry to foster circular economy?In order to make informed decisions, investors need comparable disclosure on relevant issues. In the case of waste, they want to know how companies are managing the negative impacts and risks (costs) and leveraging opportunities (positive impact) associated with waste generation, both within the firm and along the value chain.Some investors want to understand if companies are identifying efficiency opportunities in their approach to waste management and appropriately responding to the risks of waste generation. Are levels of waste increasing or decreasing? How is it being treated? What proportion is recycled versus disposed of? Investors who take a more systemic view want to know the upstream and downstream impacts, and what efforts companies are taking to turn these into circularity opportunities.The GRI Waste Standard accommodates that and enables consistent communication of the status quo of waste management in an organization – as well as its ambition to become a more circular business and the efforts it is taking in this regard. This allows investors to direct their investments towards companies that are embracing circularity, or to engage with companies to encourage them to reduce negative waste-related impacts. brief bioAnna Krotova works in the Standards Division at GRI. She leads the development of Standards covering environmental issues, such as water, waste, and biodiversity, to ensure they steer organizations toward addressing present-day challenges through transparent reporting.Prior to joining GRI in 2016, Anna was a consultant for environmental services firm Metabolic, and worked in stakeholder outreach for the International Finance Corporation. She holds a Masters in Industrial Ecology from Delft University, and a Diploma in Environmental Policy, Lomonosov Moscow State University. aboutThe Global Reporting Initiative (GRI) is the independent international organization that helps businesses, governments and other organizations understand and communicate their impacts. The GRI Standards are the world’s most widely used for sustainability reporting.