Most large and medium-sized organizations are feeling the pressure to improve the ways they manage and disclose climate risk — but most don’t know where to start or who should take responsibility.
The key to climate success begins with looking outward. There is a wealth of insight and guidance contained within the climate disclosures of your competitors, industry leaders, and other climate-forward companies. Capitalizing on this knowledge through competitor benchmarking is a strategic move that can benefit companies at the beginning of their climate journeys, as well as those on the paths toward climate leadership.
This article explores how benchmarking can help organizations define success, craft strategy, and engage stakeholders on climate. It also dives into how technology can accelerate and improve traditional benchmarking methods.
Benchmarking demonstrates what ‘good’ means
In an emerging space like climate risk management, it can be difficult to define what ‘good’ looks like. Many leaders aren’t sure how their climate risk management stacks up against competitors or what they should be aiming for. And without a clear definition of success, it’s difficult to know which steps to take next.
This is where benchmarking is critical. It reveals what your competitors and industry leaders are doing and gives you a clear picture of what strong climate disclosure and risk management looks like. Comparing your organization’s climate data against best practice industry examples — or even against competitors that may be just one or two steps ahead — gives a clear picture of your performance relative to the rest of your industry.
How technology can help
Benchmarking is typically conducted manually, either by in-house teams or external consultants. While the number of data points that humans can collate and analyze is finite, artificial intelligence (AI) technology can parse through thousands of data points in a fraction of the time, allowing for more thorough and comprehensive climate benchmarking assessments.
Benchmark identifies risks and best practices
Benchmarking doesn’t just reveal the gaps between your climate performance and that of your competitors. It also provides crucial insights into closing those gaps without having to reinvent the wheel or pioneer entirely new pathways.
Analyzing the disclosures of companies in your sector can bring light to material climate risks that you may have overlooked or vulnerabilities in your value chain. It can also offer best practice examples for managing climate risks in the form of proposed strategies and action plans. In this way, benchmarking is one of the foundations to being able to build an effective climate strategy. Studying your competitors’ disclosures may also offer helpful ideas for conducting climate change scenario analyses.
How technology can help
Manually benchmarking is traditionally limited to a handful of competitors or industry leaders, but leveraging technology can significantly broaden this scope. By analyzing disclosures across a number of industries, technology allows organizations to model best practice examples from all over the private sector, offering valuable insights and guidance in virtually the same amount of time. Access to broad and thorough data allows organizations to quickly scale their climate competence.
Benchmarking improves stakeholder engagement
Internally, benchmarking is critical for defining materiality, informing strategy, and measuring progress. However, it’s also a helpful tool for engaging and communicating with key stakeholders.
From a market perspective, benchmarking gives you the competitor data you need to show clients that your organization has a competitive advantage from a climate perspective. This is particularly helpful for organizations whose clients are pushing for climate progress across their supply chains and Scope 3 emissions reductions. Demonstrating strong ESG and climate risk management can make you the supplier of choice for these progressive clients. It can also give an added boost to marketing and PR efforts for consumer-driven brands.
Climate disclosures that are grounded in industry data and comparisons can give your investors the context they need to feel confident about your climate risk management. And finally, competitor data can be a strong motivator, helping sustainability and risk management teams get buy-in on climate action from C-suite and board leaders. Gap analyses that use competitor data to highlight where your company is falling short on climate is a simple but powerful way to bring them on board.
How technology can help
Traditionally, benchmarking is a time-consuming manual exercise that’s performed once a year at most. But the world of corporate climate risk is evolving quickly, which means companies often end up working off outdated assessments. Technology solutions like Manifest Climate offer peer-tracking capabilities that keep you up-to-date with how your competitors and industry leaders are managing climate risk. With real-time insights into your competitors’ climate activities, your strategy will always be informed by the latest data, and benchmarking will become a continuous process rather than a one-time exercise.
Benchmarking with technology is key to climate progress
Benchmarking is a crucial first step toward climate maturity. AI-based technology can automate data collection, rapidly analyze large data sets, and help company teams stay up-to-date on competitor and industry developments.
If you’re interested in learning more about Manifest Climate’s data-driven benchmarking capabilities, book a free demo today.