What are the most widely used sustainability frameworks?
The most widely used sustainability frameworks include the Global Reporting Initiative (GRI), Carbon Disclosure Project (CDP), Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD), and the UN Sustainable Development Goals (SDGs).
The wine industry, a sector deeply intertwined with natural resources and local communities, is increasingly adopting various sustainability frameworks to address environmental, social, and economic impacts. These frameworks provide structured approaches for wineries to measure, manage, and report their sustainability performance, enhancing transparency and fostering responsible practices.
Here’s how the specified sustainability frameworks are applied in the wine market:
1. Global Reporting Initiative (GRI)
Application in the Wine Market:
GRI Standards provide a comprehensive framework for reporting on a wide range of sustainability topics, including economic, environmental, and social impacts. Wineries can use GRI to:
- Broad Reporting: Report on their overall sustainability performance, covering everything from water and energy consumption in vineyards and cellars to labor practices, community engagement, and economic contributions.
- Stakeholder Engagement: Communicate their impacts to a broad range of stakeholders, including investors, customers, employees, and local communities, demonstrating transparency and accountability.
- Materiality Assessment: Identify and prioritize the most significant sustainability issues for their specific operations (e.g., water scarcity in a drought-prone region, pesticide use, fair labor practices for seasonal workers).
- Performance Tracking: Establish baselines and track progress on key sustainability indicators over time.
Example: A large wine producer might use GRI to publish an annual sustainability report detailing their efforts to reduce greenhouse gas emissions, improve water efficiency, ensure fair wages for vineyard workers, and support local educational programs.
2. Carbon Disclosure Project (CDP)
Application in the Wine Market:
CDP provides a global disclosure system for companies, cities, states, and regions to report their environmental impacts, particularly concerning climate change, water security, and deforestation. For wineries, CDP is crucial for:
- Climate Change Disclosure: Report on their greenhouse gas (GHG) emissions (Scope 1, 2, and 3), climate risks (e.g., extreme weather affecting grape harvests), and opportunities (e.g., renewable energy investments).
- Water Security Disclosure: Detail their water usage, water-related risks (e.g., water stress in wine-growing regions), and water management strategies (e.g., efficient irrigation, wastewater treatment).
- Investor Confidence: Many investors use CDP scores to assess a company’s environmental responsibility, influencing investment decisions.
- Target Setting: Set ambitious environmental targets, such as science-based emissions reduction goals.
Example: A winery might report to CDP on its efforts to reduce its carbon footprint by transitioning to renewable energy, optimizing logistics to lower transportation emissions, and investing in drought-resistant grape varietals. They might also disclose their strategy for water management, including initiatives to conserve water in vineyards and cellars.
3. Sustainability Accounting Standards Board (SASB)
Application in the Wine Market:
SASB Standards focus on financially material sustainability information relevant to investors. For the alcoholic beverages industry, SASB identifies specific topics that are likely to have a material financial impact. Wineries can use SASB to:
- Investor-Focused Disclosure: Provide concise, comparable, and decision-useful information to investors on sustainability topics that are likely to affect their financial performance.
- Industry-Specific Metrics: Report on metrics specific to the alcoholic beverages industry, such as:
- Energy Management: Energy consumption and renewable energy use.
- Water Management: Water withdrawal and discharge.
- Responsible Drinking & Marketing: Programs and expenditures related to responsible consumption.
- Packaging Lifecycle Management: Recycled content, recyclability, and weight of packaging.
- Environmental & Social Impacts of Sourcing: Labor practices in supply chains, biodiversity impacts.
- Risk Management: Identify and manage sustainability risks that could impact financial performance, such as water scarcity leading to higher production costs or reputational damage from unsustainable practices.
Example: A publicly traded wine company would use SASB to disclose the financial implications of its water management practices, its investments in energy efficiency, and its efforts to ensure ethical sourcing of raw materials, which are all factors that can impact its bottom line and investor appeal.
4. Task Force on Climate-related Financial Disclosures (TCFD)
Application in the Wine Market:
TCFD provides recommendations for companies to disclose climate-related financial risks and opportunities through their existing reporting processes. While the TCFD has fulfilled its initial remit and disbanded as of November 2023 (with the IFRS Foundation taking over monitoring), its recommendations remain highly influential. Wineries can apply TCFD principles by:
- Governance: Disclosing the board’s oversight and management’s role in assessing and managing climate-related risks and opportunities (e.g., how the board considers climate change in strategic planning).
- Strategy: Identifying the actual and potential impacts of climate-related risks and opportunities on their business, strategy, and financial planning over the short, medium, and long term (e.g., impact of changing weather patterns on grape yields, opportunities from carbon capture technologies).
- Risk Management: Describing how they identify, assess, and manage climate-related risks (e.g., developing climate resilience plans, assessing supply chain vulnerabilities to climate change).
- Metrics & Targets: Disclosing metrics and targets used to assess and manage relevant climate-related risks and opportunities, including Scope 1, 2, and 3 GHG emissions and targets for emissions reduction.
Example: A winery would use TCFD to report on how climate change is impacting its vineyard locations, the financial risks associated with extreme weather events, and the strategies it’s implementing (e.g., shifting to new grape varietals, investing in irrigation technologies) to mitigate these risks and capitalize on new opportunities.
5. UN Sustainable Development Goals (SDGs)
Application in the Wine Market:
The 17 UN Sustainable Development Goals (SDGs) provide a universal call to action to end poverty, protect the planet, and ensure peace and prosperity. Wineries can align their sustainability efforts with the SDGs by:
- Strategic Alignment: Identifying which SDGs are most relevant to their operations and developing strategies to contribute to those goals.
- Impact Measurement: Measuring their contributions to specific SDGs.
- Communication: Communicating their positive impacts to a global audience.
Relevant SDGs for the Wine Industry include:
- SDG 2: Zero Hunger: Promoting sustainable agriculture practices, supporting local food systems.
- SDG 6: Clean Water and Sanitation: Efficient water use in vineyards and cellars, wastewater treatment.
- SDG 7: Affordable and Clean Energy: Transitioning to renewable energy sources for operations.
- SDG 8: Decent Work and Economic Growth: Ensuring fair labor practices, safe working conditions, and supporting local economies.
- SDG 9: Industry, Innovation, and Infrastructure: Investing in sustainable technologies and infrastructure.
- SDG 12: Responsible Consumption and Production: Reducing waste, promoting sustainable packaging, closed-loop systems.
- SDG 13: Climate Action: Reducing greenhouse gas emissions, adapting to climate change impacts.
- SDG 15: Life on Land: Protecting biodiversity in vineyards, responsible land management.
Example: A winery might highlight its contribution to SDG 6 by implementing precision irrigation systems that reduce water consumption by 30%. They could also demonstrate alignment with SDG 8 by offering fair wages, benefits, and training to their employees, and contribute to SDG 12 by using lightweight, recycled glass bottles and promoting their recycling.
By integrating these frameworks, wineries can create a more robust and credible approach to sustainability, benefiting not only the environment and society but also their long-term business viability and brand reputation.
Reactions: Paula Rook paula@flyingwinewriter.com