3 Lessons on Growing a Resilient Business Post-COP21
In the post-COP21 landscape, many are the forward-thinking business leaders asking themselves the same questions: How can I adapt to the new challenges brought on by climate change and this new climate agreement? How can I grow and remain competitive while doing so? What best practices can I draw from to combine my environmental, social and business goals?
To shed some light on these questions, and bring a great deal of experience-based insight along the way, our recent webinar in partnership with GreenBiz (Why Tackling Climate is Good for Business), brought together the expertise of key sustainability players at Ecofys, NASDAQ and Accenture.
Here are three lessons we learned from our speakers, on nurturing a resilient business post-COP21:
1. Building a climate resilient business is possible, if you develop the right strategies
As Sarah Hendel-Blackford, Senior Consultant at Ecofys, pointed out, average global temperatures have risen by 1°C since we began keeping records in the 1880s. Climate change is happening ‘a lot faster than expected’, with the last 20 years of the 20th century being the hottest in the last 400 years.
Known consequences of climate change include sea level rise, constrained freshwater sources, deterioration or loss of key land and marine ecosystems (etc.), and today’s businesses are already feeling the negative impacts of extreme weather events driven by climate change (exacerbated by the globally interdependent nature of our supply chains). Severe flooding in Thailand in 2011 for instance, had global effects on the electronics and automotive industries: Toyota attributed dropping from 1st to 3rd place in the ranking of largest global car manufacturers due to the flooding, and Sony delayed the launch of a new camera.
In addition to this, the regulatory and policy context is changing fast and requirements to increase resilience and reduce vulnerability are becoming the norm. Sarah highlighted an 87% increase in reported adaptation policies and measures across 41 high income countries between 2010 and 2014.
In this context, the ability to address risks depends on how prepared, alert and responsive a business can become. Key steps include preparing to realize market opportunities and building resilience to safeguard raw materials which may be vulnerable to a changing climate (i.e. warmer, wetter winters).
In particular, businesses can work towards an integrated, low carbon and climate resilient strategy by: 1) Understanding current vulnerabilities and risks and how these change over time; 2) Identifying critical points of intervention to build in adaptation measures and resilience (within the company and between key stakeholders); and 3) Diversifying supply chains to build in flexibility and resilience for faster recovery and to realize new market opportunities.
2. Examples of positive organizational change may come from unexpected contexts (and that’s good news)
Key actors in the development of the financial industry are fostering positive change by bringing sustainable companies to the market.
Evan Harvey, Director of Corporate Sustainability at NASDAQ is proof of this. NASDAQ is combining its traditional role of bringing companies and investors together to raise new capital with the goal of finding and developing sustainable, innovative businesses listed in its markets (i.e. solar and renewables): ‘By bringing smart new-generation companies to market, that employ people that care about this and that create products and services that address the problem directly’.
As stock exchanges have quasi regulatory ties to tens of thousands public companies, and often act as best practice facilitators, they too can play a key role by fostering environmental, social and governance (ESG) disclosure and creating financial products that help develop markets sustainably. Stock exchanges can therefore request companies to disclose ESG, sustainability and climate change data as a rule prior to being listed (on direct and indirect emissions, water management and energy or carbon intensity for instance).
Exchanges can also implement ESG guidance in the form of best practices or opt-in certification programmes, in addition to hosting investor summits, publishing white papers and generally using their podium to educate investors and companies on where their expectations intercept.
The fact that the second-largest stock exchange in the world is incorporating a strong sustainability perspective to its activities is proof that the importance of addressing ESG and climate change related challenges is not a ‘niche’ issue, it spans across a truly vast range of sectors and industries (which is only likely to keep expanding).
3. Tracking environmental data is critical in driving business performance and sustainable decision-making
‘What gets measured, gets managed’. Michael Nicholus, Global Operations Environment Director at Accenture knows this well, adding ‘there is a lot of business value in being very transparent about how a company is managing environmental performance’.
Tracking key metrics and KPIs is crucial in achieving this. As a professional services company, Accenture’s operations don’t produce a physical output, yet environmental impacts exist, must be managed, and come in the form of indirect emissions from Accenture’s business delivery model: business travel and office electricity.
Accenture works on three axes to reduce electricity consumption and decarbonize its energy portfolio: 1) Renting efficient buildings versus inefficient ones (Accenture does not own facilities); 2) Improving the energy efficiency of buildings already part of the portfolio; and 3) Powering specific buildings with renewable energy. As a result of applying these strategies, 2014 was the most energy-efficient year in the company’s history. Since 2007, an estimated 530,000 megawatt-hours of electricity have been saved, and over 330,000 metric tons of related CO2, avoided.
In part, this has been achieved thanks to Accenture’s data management processes, powered by Enablon, allowing the company to deeply analyze its portfolio, from country level, to city and building level, all the way down to electricity consumed per square meter of office space. Through this viewpoint, priority locations have been targeted, reducing energy costs (to the tune of 65 million dollars).
As Nicholus puts it: ‘the ecological sustainability aspect often time does align with the business aspect’, and the right data, enablers and technology play a key role in making this possible.
To dig into the details, you can access the full webinar recording here.