Just over a year after the global pandemic began, Earth Day is upon us again. The reason this year feels different is because it is. Empowered consumers demand sustainability transformation, and a record number of brands have responded in a big way by announcing net-zero or carbon-neutral commitments, establishing targets to reduce greenhouse gas emissions and investing in climate action. Today, environmental sustainability strategy is about much more than corporate social responsibility (CSR); it’s about technology and business innovation, systemic risk mitigation, and sustainable growth. It is about transformation. Why is this year different?
- Climate risks are increasing as our collective window to mitigate them shrinks. Last year alone, the world suffered $210 billion in weather- and climate-related losses, including historic wildfires, floods, and hurricanes globally and a record 22 separate billion-dollar events in the US. Climate risk is investment risk, according to Larry Fink. Today, more firms than ever use the TCFD (Task Force on Climate-related Financial Disclosures) framework to voluntary disclose their climate-related risks and opportunities. Soon, more governments will mandate it (see chatter in the UK and the US).
- The global transition to a low-carbon economy is unfolding before our eyes. Strategic environmental, social, and corporate governance (ESG) initiatives are now necessary for profitability, innovation, and resilience. Chief sustainability officers have popped up for the first time at firms like Boeing and HSBC to head corporate sustainability strategy, a good sign that sustainability has broken through the chains of CSR. From chief risk and strategy officers to CEOs, climate action and adaptation goes all the way up to the board.
Ready Your Sustainability Transformation
This next wave of transformation is for the planet, and it won’t be easy. Like digital transformation, this shift requires an end-to-end overhaul of how most businesses operate and deliver value to customers. For Ford, that means $1 billion toward a new electric vehicle manufacturing center to reinvent the wheel. For oil and gas firms like BP, it’s a pivot to energy services and renewable sources. As for others, it means developing and adopting green technology, policies, and processes that integrate sustainability into the business. Your sustainability strategy must include:
- Sustainable business innovation and transformation. Rethink everything. Voluntary carbon offsets and renewable energy credits may help this quarter, but they won’t as a long-term strategy. We are entering a new economy — one that finally favors green, in more ways than one. Like business resilience, decarbonization is a major competitive advantage. As a VP of sustainability recently noted in a research interview, “In order to be profitable, firms will have to do things differently.” JPMorgan Chase committed $2.5 trillion to finance climate action.
- Efficiency improvements for reduced impact. Local supply chains reduce risk and please customers. Less energy output leads to lower bills — direct value. Physical renovations also provide the opportunity to weatherize assets against new extremes. And efficiency accelerates your path to carbon neutrality. As you improve business efficiency for the planet and progress toward net-zero, publicly monitor your performance. Costco’s 10-point climate action plan is detailed on its website. You want your employees, and your customers, to be proud of what they do.
- Carbon offset minimization. The best type of carbon offset? None. Reduce your emissions instead. The second-best? Credible standardized offsets that avoid or reduce emissions today (while you reduce emissions, too). Offsets to combat climate change must do so immediately. Nature-based offset solutions help because forest and ocean technology is tried and tested, the oldest and wisest. For now, avoid man-made carbon removal-based offsets. Carbon capture and storage technology at scale is just not there yet, and we really don’t have time to spare.
- Transparent climate action to combat low stakeholder trust. Forrester Analytics survey data shows that transparency is top of mind for firms investing in sustainability. Climate risk and sustainability reporting with CDP and the TCFD is up, and more than 3,000 brands are certified B Corps. Greenwashing hurt the last “green” wave; that won’t happen again. Consumer trust is paramount in the age of the customer. Use this opportunity to build it, and provide a great experience to your stakeholders, including the planet. Impossible Foods isn’t shy about the environmental footprint of its sustainable food product that uses “96% less land, 87% less water, and generates 89% less emissions” than a “real” beef burger.
We have a lot of research on sustainability to support your efforts today, with much more in progress! Schedule an inquiry with us to accelerate your green journey, or reach out to share your climate change strategy and contribute to our research: firstname.lastname@example.org and email@example.com.
Register for our complimentary webinar, Incorporating Sustainability Into Your Tech Strategy, on 19 May, to learn more.