Imagine you and your company having to navigate all the ESG & sustainability regulatory requirements, guidelines, frameworks, and standards around the world. The headache is already coming, right?
If only someone bothered to analyse all this data and show you and your company a viable and manageable path to compliance and regulation, you might think.
And someone did bother.
That someone is SpectrEco, a US-based tech company founded and invested by American companies Spectra Holdings and Sustainadility LLC and led by serial entrepreneur and impact investor Faraz Khan.
And Spectreco doesn’t just promise you compliance. The company demonstrates a competitive advantage combined with a sharp focus on return on investment.
“We have developed a technology that makes it easy to understand the sustainability requirements that exist and are coming, and what you need to do to live up to them – and we demonstrate it to your customers, investors and stakeholders,” says Faraz Khan.
A colossal change
If you’re a regular reader of Impact Insider, you may know Faraz Khan for his uncompromising columns on climate and business. But he also has a life outside our columns.
Faraz Khan started his career in the banking sector, began investing in impact orientated startups and in 2009 established Seed Ventures – an investment company that invests in social enterprises in emerging markets.
He is on the advisory board of ICCIA, University of Lincoln business school and visiting professor of social impact & policy at St. Mary’s University in London, and he was recently awarded an MBE by King Charles for his efforts to strengthen the relationship between Pakistan & United Kingdom in the space of climate advocacy, social impact, and enterprise.
Now he’s the CEO of SpectrEco, which aims to help companies through what Faraz Khan sees as a necessary transition to a more socially and environmentally sustainable world – backed up by technology and AI.
“The world needs a change of colossal dimensions. And regardless of whether you are an individual, a public company or a business, it would be delusional not to take it seriously. For companies, this change will be of decisive business importance,” says Faraz Khan.
Now comes the legislation
For decades, companies – pushed by consumers and employees – have worked to make their operations more sustainable. And voluntary standards have emerged. But now voluntary transition is being if not replaced more so enhanced by regulatory backed transition. And this is a game changer, says Faraz Khan.
“In life you either do something because it is a law or because you see a value in it. Unfortunately, for centuries businesses have neglected to do the right thing and focused on shareholder value rather than stakeholder value. Now comes the legislation that forces companies to do the right thing,” says Faraz Khan.
With Europe leading the way, governments worldwide are tightening the requirements for companies’ social and environmental performance. Already from 2024, large companies must report in significantly more detail on their work with sustainability. And this is the development that SpectrEco taps into.
Because these new and upcoming requirements – not least on the social dimension – cause headaches in the business world and business in the consulting industry.
“There are consulting companies that don’t focus on simplifying and empowering businesses. We make it easy to get an overview and strengthen your organization. You don’t need someone from outside to tell you how to run your business,” says Faraz Khan.
77 industries analysed
SpectrEco offers a technological solution. Using artificial intelligence, the company has analysed 77 industries and their connection to all regulations, standards, requirements, and framework tools within sustainability and ESG worldwide.
The basis is the voluntary reporting that has taken place over the past ten years. On the back of that, SpectrEco has developed a technology which can map what any company within the 77 industries needs to do to comply with legislation and live up to standards the transition towards net zero – regardless of where in the world it operates.
SpectrEco has initially launched its solution within three sectors: real estate, infrastructure, and hospitality.
“These three industries account for around 40 percent of the world’s CO2 emissions. So, it was natural for us to focus on the biggest emitters and create solutions for them. And then we will gradually bring in more industries,” says Faraz Khan.
Your team can do it alone
In practice, SpectrEco provides a tool that maps a business’s performance – on the social, environmental, governance and across sustainability parameters – and empowers the businesses to comply and meet the requirements of standards and legislation with shareholder and stakeholder approach.
The data can be taken directly into the company’s sustainability reporting with the help of AI and new technology.
There is a gap between the real interventions and the impact they create and the claims from companies. SpectrEco aims to help companies reduce this gap.
“The minefield of greenwashing still exists, and the world has had enough of that. Technology oriented governance mechanisms reduce greenwashing tactics and claims,” Faraz Khan says.
For the first few years, SpectrEco will be there to support the company. After that, the company will be able to take on the task on its own.
“Within a very short time you will not need external advisers. Your internal team will be able to handle it themselves,” says Faraz Khan.
A financial reward
The whole exercise is about more than just compliance, emphasises Faraz Khan.
“We also focus on creating economic value for the companies. It’s about the potential gains they can achieve by moving towards a more sustainable operation across their supply chains”, he says.
The technology SpectrEco bases its model on demonstrates that customers choose companies that think and act sustainably.
Correspondingly, institutional capital flows in the direction of companies that can convincingly demonstrate that they have control over the social, environmental and governance dimensions of ESG.
“Access to ESG-compatible capital is opening up for those types of companies,” says Faraz Khan.
And thirdly, he highlights that companies’ ESG performance will have an impact on share value in the listed environments. Businesses’ sustainability and ESG performance along with financial performance and sentiments is impacting the share prices now, and in coming times it will be more evident.
“So, if you move wisely into the transition the business world is undergoing, you will be rewarded financially. If, on the other hand, you choose to continue with status quo without technology and data, there is a great risk of losing,” says Faraz Khan.
Bringing sustainability and ESG into the core of your business is becoming a business critical investment, he adds.
Climate change will affect us all
SpectrEco has established offices in Atlanta in the USA, in Lahore in Pakistan and in Lisbon in Portugal. From here they will offer their services – first to the Nordics and the rest of Europe.
“Because here, ESG and the transition to sustainability are embedded in the regulatory regime,” says Faraz Khan.
The United States, which is going to witness one of the largest investments in infrastructure in its history, is gearing up despite anti-ESG rhetoric.
And in the spring of 2024, SpectrEco plans to open an office in Riyadh in Saudi Arabia to cater to the Middle East from there.
“Although they have not built ESG into their legislation, development is moving at a very fast pace. They are building entire cities on the principles of ESG and sustainability,” says Faraz Khan.
His basic point is that the world is connected. And the transition we are going through because of climate change will affect business everywhere. Companies are wise to prepare for that, he believes.
“If you sit in Denmark and think that you will not be affected by floods in Pakistan or India, it is petulant. If you sit in Bangladesh and think that you will not be affected by forest fires in the USA or Australia, it is delusional,” he says:
“Wherever a climate disaster occurs, it will affect the rest of the world – through the food supply, strained ecosystems or pressured local communities. Seeing it as a local threat is a wrong approach. So, I hope that the movement that is going on will be taken seriously by everyone now. It will become a reality. And it is literally becoming law all over the world.”
High hopes for the COP 28
Faraz Khan has high hopes for the upcoming COP 28 that begins in Dubai later this week.
“I believe the coming COP 28 is going to be a significant event as it will determine a road map for this planet on several fronts,” he says.
SpectrEco will be at the COP 28 to share the company’s opinion on the decisions and commitments by the global stakeholders.
“Let’s make sustainability a norm and not an anomaly across formats for our future generations and improve on our deliberate efforts to leave a better world simply because it is the right thing to do,” Faraz Khan says.
