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Businesses must choose sustainability

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For many years, sustainability initiatives have been a secondary focus for some businesses, and not on the agenda of many others. In recent years, however, growing awareness around climate change, aided by the signing of the Paris Climate Agreement in 2016, has forced businesses to increasingly prioritise matters of sustainability, writes Mathias Lelievre, CEO at ENGIE Impact.

ENGIE Impact’s analysis of CDP disclosures reveals that there has been a three-fold increase in average annual carbon reduction targets and that the average time needed to achieve these goals has decreased to just over eight years today, compared with twice that just 15 years ago.

Microsoft and Intel are just two examples from this year of the global brands that have announced aggressive sustainability commitments. Companies such as this are setting new standards for businesses to reach and have helped establish the reduction of carbon emissions, energy usage and waste as business imperatives.

It has been an uphill battle to get here though. For years sustainability initiatives were deemed unaffordable or too complex. Now, senior organisational decision makers and boardrooms have realised that not implementing sustainability transformation programmes and tackling environmental impact is what’s unaffordable, given the consequences of failing to act.

Key decision drivers

In recent years, businesses have realised that their duty is not only to shareholders, but all stakeholders. The Davos Manifesto 2020 set out that fulfilling human and societal aspirations as part of the broader social system is a major part of the purpose of a company. They must do more than deliver a return to shareholders – they must do the right thing for employees, communities, and consumers.

Unilever’s announcement in late 2019 that it is cutting plastic use to appeal to Gen Z consumers is clear evidence of this growing trend. It’s not just the younger generations demanding change though; research from the Center for Sustainable Business tells us that two-thirds of consumers across all age groups are willing to pay more for sustainable goods.

Employees are also demanding change. In 2019, thousands of tech giant employees organised walkouts as part of global climate change strikes to protest corporate actions that don’t go far enough.

Sustainability is becoming a non-negotiable for a growing number of employees.

It’s crucial that businesses satisfy employees and engage them on this matter, because research shows that companies with high employee engagement are 20% more productive and 21% more profitable than low engagement groups.

To add to this, there is mounting pressure from investors. Shareholder revolt over Barclays’ fossil fuel financing, for example, resulted in the bank pledging to become carbon zero by 2050. Prior to this, BlackRock, the world’s largest fund manager, announced sweeping changes that place more focus on sustainable investing, which CEO Larry Fink believes will drive stronger returns than non-sustainable funds. Clearly, responsible investment is on a steep upward trajectory and businesses must adapt to this.

Implementing meaningful change

As of 2018, 79% of companies in CDP targeted sectors had disclosed emissions targets. Of these, only 24% were on track to achieve their goals. Any transformation is inherently complex, but sustainability transformation poses unique challenges. The fact only a quarter of businesses are on target suggests that the majority aren’t implementing the bold projects needed. The standalone retrofits and siloed strategies are falling short.

Critical to making progress is the role of data. Previously, companies wouldn’t have the data required to make informed decisions. So, even before their well-intentioned changes were made, they were at a disadvantage. And then, if changes were made, they were failing to effectively measure return on investment or outcomes of their initiatives.

Nowadays, verified data and sophisticated analytics are enabling companies to establish what changes they need to make to reduce carbon emissions sufficiently, use resources more efficiently and minimise waste. Modern technology means this data can be captured across countries, enabling businesses to align activities at different sites around the world and, where necessary, tailor sustainability initiatives per location to ensure each site implements the right changes for them.

The cost of technology previously prohibited this approach for many businesses, but increasing affordability has enabled the business case to reconcile the business imperative with the sustainability imperative. Cost is no longer a barrier – there are affordable and profitable paths to transformation.

We created ENGIE Impact to help businesses who can’t do this for themselves. Environmental matters are firmly on the agenda but going from strategy to implementation is very complex because of the different pieces of the puzzle that need to come together. Often, organisations need support in identifying and implementing the most efficient and cost-effective options.

An important part of this is to engage with executives and organisational leaders to set tailored strategies and specific roadmaps to achieve sustainability and zero-carbon objectives. This buy-in of executives can’t be underestimated – 80% of projects fail without executive support.

Buy-in of executives isn’t enough though – sustainability programmes must engage every department within a business. A holistic approach to corporate responsibility, rather than a series of siloed activities, maximises impact. Each member of the organisation must understand their role in working towards more sustainable operations and act in a manner that supports and advances company sustainability objectives.

There has never been a more urgent need for sustainability transformation. But there’s also never been so much opportunity around it. More and more top business leaders are moving quickly and with great force to implement financially sound projects that push their organisations to achieve more growth with less resources. It’s critical that business accelerate their transformations as best they can, or risk missing out on the opportunities.

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Mathias Lelievre
Written By

Mathias Lelievre leads ENGIE Impact’s vision to accelerate the sustainability transformation for corporations, cities, and governments around the world – he’s a strategic leader with more than a decade of global experience in both the private and public sectors. Prior to joining ENGIE, he worked for the French Ministry of Economy and Finance for almost four years in senior positions.

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