There is a limit to resiliency. Predictions of a warmer world have now become a horrifying reality. Sustainability is the key to our survival.
Heartbreaking images of the devastation caused by tropical storms and hurricanes like Ida remind us that extreme weather conditions, fueled by climate changes, are getting worse. Instead of being a once-in-a-century event, they are occurring at an alarming frequency with much shorter return periods. Unprecedented heat in places like the Pacific Northwest, recurring horrors of fires, drought and extreme rain elsewhere are wreaking havoc on lives, property and businesses.
The Intergovernmental Panel on Climate Change (IPCC) report stated that unless we make rapid, immediate, and large-scale reductions in greenhouse gas emissions, the planet will not reach the much-discussed 1.5°C threshold. The frequent disasters and uncontrolled global warming rates lead to economic problems on a global scale, affecting the sustainability and survival of the nations. We are running out of time and global environmental bodies are working with governments to help in the race to save the planet.
Businesses are feeling the heat of not stepping up and committing to sustainable goals. Even for those who understand the ramifications of climate change and its role, efforts are in nascent stages. Our recent global sustainability survey found a clear gap between the intent and implementation of environmental, social and governance (ESG) and sustainability strategies. Companies are struggling to progress on their ESG reporting promises and disclosing their corporate sustainability efforts.
But there is good news as well. Despite many conflicting goals and complex challenges, businesses, including energy-intensive industries, want to become more sustainable. The severity of the Covid-19 crisis has shown us that a long -term, sustainability strategy will offer better chances of surviving a world with limited resources and less credit. Both nations and businesses that opted for the sustainable route have had a better revival rate than others.
Before creating sustainable business models, it is imperative to understand the sustainability risks and their relevance to business and stakeholders. Unless they align with climate science, they cannot reach fruition.
What The Survey Says
Senior executives and business leaders in multiple industries have stated that environmental sustainability is a top-of-mind or major concern. But while they have set sustainability goals, concrete action to achieve those goals is lagging.
Large companies with over $1 billion in revenue are ahead in the sustainability maturity curve than their small and medium-sized counterparts. Since they have better resources at their disposal, this is not a surprise. They have systems and processes along with dedicated specialists in place to address the sustainability issue. But despite the heartening progress, their efforts are not comprehensive.
Emissions reduction in the value chain is a key element for a sound decarbonization strategy aligned with the Paris Agreement goals. But only 13% of surveyed organizations have identified all relevant Scope 3 categories and completed corresponding hot-spot analyses.
The results converge to show that the path forward lies in dedicated technology to accelerate these efforts. But before we get to the solution, let us see what is impacting change.
What is Influencing Sustainable Change?
Investors and regulators: Increased regulations are pushing companies to look for more circular and sustainable solutions. Global investors representing over $14 trillion in assets are urging companies to be more accountable. They expect transparency on climate strategies to advance their net-zero-aligned investing efforts. New regulations, such as the Paris Agreement, the EU (European Union) Green Deal, President Biden’s Executive Order on Climate-Related Financial Risk, and other governmental carbon and climate neutrality regulations are pushing for increased environmental measures.
The regulations, in turn, are leading global organizations to announce net-zero and decarbonization targets. Companies need to be strategic about their sustainability efforts to stay ahead of these regulatory changes. They need to step up their efforts on climate-related commitments and actions and transparently disclose their ESG obligations to meet consumer, governmental and investor expectations.
Environmental concerns: Climate change is real and environmental concerns are expanding.
Regulators and governments are not the only stakeholders. A growing number of customers, consumers and even employees are pressuring companies to be eco-friendly and more sustainable. As demand for environmental considerations builds, they question traditional methods and push for more sustainable business practices.
Efficiency and responsibility go hand in hand.
Cost-efficiency is still a key consideration for most companies. Therefore, the focus on sustainability may be a clash between profit now and long-term strategies. For many businesses, sustainable materials or processes are too expensive, so companies are lagging in adopting those practices. Lowering the cost of sustainable products would make the biggest difference in helping companies meet their sustainability goals – something for governments to consider. It is worth noting that reducing the high cost of energy consumption will lower costs and improve sustainability efforts, especially for energy-intensive industries.
Pandemic harsh reminders
The unprecedented COVD-19 virus wave that has swept across the globe is primarily a global health crisis. But that wave of devastation did not stop there. It has had immense social and economic repercussions as well. The pandemic plunged the global economy into the worst recession since World War II, with many economies set to experience the effects for a long time to come. The World Economic Forum`s research shows that the pandemic has served as a litmus test for firms serious about a low-carbon future and those who are not. Businesses can overcome this crisis by focusing on long-term sustainability over short-term profits while shaping their future resilience and profitability.
What Are the Biggest Challenges to Sustainability?
Lack of visibility
As mentioned above, business leaders have set and committed to sustainability goals, but implementation is lagging. One major reason for this is the lack of transparency and visible communication of those throughout the organization. There is a lack of visibility in monitoring sustainable practices in their processes and their subcontractors and supply chains. Ethical sourcing of labor and employee well-being need to be addressed as well. It is no wonder that they have not taken concrete steps to realize their sustainability goals.
Sustainability Can Be a Complex Issue
Regulations on health, safety, and sustainability are increasingly becoming stringent and sustainability is just one aspect of the deeply complex system. Business leaders deal with competing pressures to control costs, maintain efficient processes with suppliers and subcontractors, and reduce energy costs and carbon footprint. This is even truer of energy-intensive industries.
All of this is on top of developing scalable, greener, healthier, and more technologically advanced systems. The industry recognizes the need to address these urgent and often competing issues, especially within their supply chains or Scope 3 emissions that comprise more than 70% of a company’s overall environmental impact.
How Businesses Can Become More Sustainable
There are many ways for companies to accelerate their sustainability and ESG efforts. First, they must create a long-term strategy that considers sustainability in every process from start to finish. The next step is to implement business practices powered by relevant data to track, measure, and reduce emissions and waste throughout the project lifecycle.
Tools like dedicated sustainability software and data can help accelerate progress. It can help them reduce operational risk and costs, attract new investments, and increase revenue if properly implemented. LCA (Life Cycle Assessment) is another powerful tool that offers a systematic analysis of the environmental impact of a product or solution throughout its life cycle. It helps incorporate sustainable practices into all areas of business, helping it become more resilient.
A Sustainable Future is Good for Business and For Our Planet
As more executives realize that sustainable choices are good for business, more companies will set sustainability commitments and adopt sustainable practices into more aspects of their business. Their efforts, in turn, will have ripple effects on the communities they serve, leading to a greener, healthier, and safer planet Earth.
→ To learn more, download Sphera Insights: Sustainability Survey 2021.