Everywhere we look, climate change is affecting our lives. One of the areas it has had the biggest effect is business. It is no longer enough for companies to pay lip service to “giving back”; businesses have a real responsibility to lead the way in making changes, and consumers are holding them to account. The media have taken notice as well. The Guardian newspaper has updated the language it uses when writing about the environment, changing the key term “climate change” to the more urgent “climate crisis.”
As governments finger-point and struggle to find an international consensus, private industry is in a prime position to drive sustainability, particularly as it represents 75 percent of global GDP. The most forward-looking companies are realizing it is no longer a choice between profits and sustainability goals. In the future, these two issues will become intrinsically linked as consumers and investors ask more of the companies they interact with.
A recent United Nations CEO study found that 71 percent of CEOs believe that with increased commitment and action business can play a critical role in contributing to the UN’s Global Goals. To encourage this strategic outlook, the study has dubbed the next 10 years “The Decade to Deliver.”
Some companies and industries are taking sustainability seriously. In one recent ranking of sustainable companies, Kering SA – owner of fashion brands Gucci and Yves Saint Laurent – was found to source more than 40 percent of its products from certified sustainable sources.
Even Finnish petroleum refinery and marketing company Neste has put 50 percent of its investments into the development of renewable biofuels, converting that investment into 50 percent of its profits.
The two companies take second and third place on the Global 100 list, respectively, after the world’s most sustainable company, Danish bioscience firm Chr. Hansen Holding, which derives 80 percent of its profits from natural food preservatives.
Even businesses and industries usually targeted for the damage they cause to the environment working on innovative ways to improve sustainability, if only to secure their future.
Royal Dutch Shell was threatened with legal action last year by environmental group Friends of the Earth for committing to invest only 5 percent in sustainable energy despite being labelled one of the world’s 10 biggest carbon emitters.
But that doesn’t mean the oil giant isn’t making progress. In fact, the Anglo-Dutch firm has also promised to halve the carbon footprint of the energy it sells by 2050, a decision that was mainly the result of pressure from shareholders — the perfect example of the new influences on business practices.
BP achieved a 2.6 million ton reduction in its greenhouse gas emissions between 2016 and 2018, and it is aiming for a 3.5 million ton reduction by 2025.
As a country aware of its hydrocarbon-based economy, Qatar, although blocked by neighbors UAE and Saudi Arabia, has also emphasized sustainability through innovation. Qatar recently hosted its annual Qatar Sustainability Summit, bringing together thought leaders and specialists to look for ways forward on everything from the Earth’s resources to energy and green business opportunities.
It goes to show that companies around the world are realizing that their business strategies must include sustainability at their core. Socially conscious consumers are no longer willing to line the pockets of companies unless they see them showing a strong moral responsibility. And investment banks like UBS are directing their wealthiest clients to such opportunities.
Companies face increasing pressure to reduce their carbon footprint, become more sustainable and show a responsible attitude to the environment and the Earth’s resources. But this also presents an exciting opportunity.
The private sector has the chance to step up and lead the sustainability agenda, succeeding where nation states are failing. Companies have the resources and the impetus to tackle the global climate crisis, driving innovation and becoming the leaders of a global movement.
It doesn’t just make good business sense, it’s also the right thing to do.
Ryan Patel is board director and a senior fellow at the Peter F. Drucker School of Management at Claremont Graduate University. Follow him on Twitter @RyanPatelGlobal.