Latest research with board directors of FTSE 350 listed companies has found that more than half (54%) are very concerned and 45% are quite concerned that growing regulatory scrutiny on companies regarding greenwashing poses a potential risk to their organisation.
The research commissioned by Kana Earth, a new company building an open, auditable and scalable ledger for UK carbon offset units providing transparency and assurances for buyers, found nearly all (97%) of respondents expect the level of pressure from retail/institutional investors over the progress of their ESG strategy to increase over the next three years.
Forty-seven percent say scrutiny will increase substantially, while half say there will be a slight increase. Respondents expect investor pressure to take a variety of forms with the majority (69%) expecting to see more shareholder votes against directors’ reappointment/appointment.
More than two-fifths (44%) say investors will vote against remuneration packages if they are dissatisfied with ESG progress; 30% say there will be an increase in resolutions to enhance ESG strategy/reporting; 2% say investors will want to see links between remuneration and ESG enhancements.
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While respondents showed a high level of confidence in their company’s ESG strategy – 46% rated theirs very favourably and 50% rated it favourably – there were concerns among FTSE 350 directors about the challenge of complying with new regulations on climate change and environmental issues.
Forty-four percent of respondents say regulatory compliance “is one of their biggest challenges”, half say it is a major challenge and just 5% say it is a challenge, but they have the resources to meet it.
To help communicate efforts to transition to carbon neutral to shareholders and regulators, more than two-thirds of respondents say a visual way of illustrating that their products and services have been carbon offset – for example using a green kitemark – would be very important to their business over the next five years. Just under one-third say it is quite important.
Andy Creak, CEO and co-founder, Kana Earth Ltd said: “There is growing demand from investors and regulators for companies to be clear and transparent in their climate-related reporting. Companies need support in meeting their carbon emission reduction responsibilities. Kana Marketplace provides an easy process for UK Corporates to buy carbon units across multiple projects, project types and time periods and with the ability to evidence their purchases on their own website.”
The Kana solution
Kana has been developed to help address many of the challenges facing the UK carbon offsetting market. It has implemented the UK Nature Carbon directory that will integrate with all the codes, developers, verifiers and registries to provide a single view of all projects that are looking for investment through to those who are generating Carbon Units for sale.
Kana is developing an investment platform that provides asset managers with the technology to create transparent collective investment products that would invest in future UK Nature Carbon Projects. This will enable project developers to obtain low friction private capital that could work in addition to public grants or as replacement funding.
It is also developing a single legal framework that will allow a buyer to purchase carbon units across multiple projects, time periods, project types and codes in a single low friction transaction. This will allow embedded carbon shortfall insurance projects to be available to manage the different risks across a buyer portfolio.
Kana Earth’s core carbon principles (CCPs) align with the Integrity Council for Voluntary Carbon Markets (ICVCM) principles for identifying high-quality carbon units. The CCPs form the basis of the Integrity Council’s Assessment Framework, which elaborates criteria for evaluating whether carbon credits and carbon-crediting programs reach a high-quality threshold.
Once established, Kana intends to leverage ICVCM’s assessment of each Code and publish their findings. Until this assessment framework has been implemented, Kana has assimilated 18 high-level comparison points to represent the Code’s published positions against the 10 CCPs.
