Facing the Biggest Challenge of All Time: Where to Start?
Climate change has been firmly on the agenda in recent months. The UN Climate Action Summit convened in New York and Global Climate Protests took place across the world. Whether the changes are due to human activity is still a matter of fierce debate, but if, as we expect, consumers start choosing what they buy — and from whom — based on the quality of their sustainability credentials, then all businesses will need to respond.
The coming years are likely to see a wave of transformation programmes focussed on improving sustainability. Key to building these programmes will be the availability of data and resources that organisations can use to prioritise areas of their operations to benefit the business and the planet as a whole. From our research, we’ve identified 3 key areas to prioritise when planning sustainable operations: 1) resource management, 2) greenhouse gas reductions and 3) risk assessment.
A recent study has found that a 4.5C increase in earth temperatures could cut global domestic product by as much as $72 trillion, drawing attention to the long-term economic effects of global warming. As part of this, the consequences of climate change on global resources through unpredictable weather patterns, such as increased floods, drought, fires and storms, can greatly disturb supply chains and the availability of raw materials. This can mean greater challenges — but also opportunities — for all businesses in the coming decades as measures can be taken to simultaneously reduce the cost to the planet while reducing the risks and costs to operations.
For example, there is a growing case for businesses to integrate climate resiliency into their operations and shift away from the take-make-dispose economic model to that of the circular economy (CE), where resources are reused and redeployed, extending their life for as long as possible. The circular economy is expected to not only benefit the environment, but also add economic value and growth while decreasing costs.
Big businesses operating close to this economic model include Unilever, who pledged to source 100% of its energy from renewable sources by 2030; Adobe and Facebook, who have committed to 100% renewable energy; BP who are deploying new technologies and investing in energy efficiency; and HP, where efforts are being directed towards their supply chain in China to improve resource efficiency and reduce emissions in factories.
Greenhouse Gas Reductions
Added to this is the growing trend to decrease overall greenhouse gas emissions. According to the Intergovernmental Panel on Climate Change, we emit 140 million tons of pollution worldwide, which is equivalent to as much energy daily as 500,000 atomic bombs would release every 24 hours. Thus in May 2019, the UK became the first G20 country to make it a legal requirement for greenhouse gas emissions to reduce to net zero by the year 2050. Not only is this an ambitious aim, but writing it into law means major shifts will need to happen across all areas of society, and for businesses in particular, it can require marked changes across operations, materials and product sourcing, supply chains, through to the practices of employees and customers.
A recent report issued by Imperial College London has mapped out transport, heating and diet as the most significant areas affecting carbon emissions. Providing stats on the high level of emissions of these areas, the report states that household consumption accounts for nearly three-quarters of carbon emissions and that shifts to plant-based eating could reduce diet-related emissions by 73% and would require 70-80% less farmland.
Risk Assessment and Environmental Reporting
In addition to reducing emissions is the importance of using climate data for risk assessment, resource management and supply chain, particularly for the private sector where little research has been done on the challenges faced. Access to data on climate risks and early warning systems can help protect resources and supply chains and assist businesses in planning investment opportunities and portfolios more effectively, particularly in identifying risk in key trouble areas. Gaining market advantage is therefore about being able to assess, communicate and adjust CO2 emissions as well as evaluate any climate-induced risk factors to protect value- and supply-chains and investor demands.
One way of measuring emissions and communicating environmental performance is through metrics and key performance indicators (KPIs). Resources such as the environmental reporting guidelines issued in the UK provides set KPIs, procedures and legal regulations for businesses to report on sustainability progress and targets.
Alongside KPIs are forms of reporting or accounting like Triple Bottom Line, later referred to as ‘integrated bottom line’, which encourages companies to consider people, profit, and planet simultaneously in one balance sheet. The aim of this kind of accounting is to provide a comprehensive view of a company’s performance and put environment at the core of its reporting. Businesses using TBL would be expected to ‘give back’ and commit to minimising environmental impact through their operations.
However, the limitation of these accounting practices is the difficulty in applying theory to practice and also equalising people, profit and planet can be tricky. Additionally, environmental reporting can lack standardisation and may not always outline the main challenges of the business or where its greatest environmental impacts are.
Turning Challenges into Opportunity
While businesses can use metrics and accounting to evaluate their carbon footprint, this is only one small step. Go-to resources like Project Drawdown are also valuable for providing sector-specific research on the most viable climate solutions. Covering everything from food, transport, electricity generation, land use, buildings and cities, the site illustrates how climate-induced challenges can be turned into opportunity by showing what materials, technologies and practices can create sustainable and environmentally-friendly solutions.
The 2017 Global Opportunity Report also identifies and ranks a range of sustainability options and the potential impact on both the public and private sectors. Arguing that risk and challenge can be made into opportunity, the report is useful for evaluating cost-effective and adapative climate solutions for businesses.
To conclude, with documented evidence of shrinking sea ice, shifting seasons and earth temperature levels 1.5 degrees above the pre-industrial average, the awareness of climate change and the need to respond is abundantly clear. The ripple effect of new legislation and carbon emission targets will require significant changes from government, businesses and consumers alike.
If organisations are to bring the right priorities and generate tangible results for their transformation programmes, then using internal/external data sources to establish a base is going to be essential. In this article, we identified resource management, greenhouse gas reductions and risk assessment as three main areas that businesses can prioritise when planning sustainable operations. This takes into account a range of factors such as climate resilience, resource planning, supply chain management, environmental reporting and natural capital approaches in the emergent circular economy.
But this is just one perspective. As the climate change debate changes and evolves, other input on this topic can help move the conversation forward. If you have any comments on this subject and the three areas we’ve outlined, please write to us as we’d love to hear from you.