In April 2021 the UK Government announced it will be setting the world’s most ambitious climate change target in law – cutting emissions by 78% by 2035, compared to 1990 levels. There is no doubt, the UK has raised the bar on tackling climate change. Meeting this new target will require business leaders to stand strong under huge pressure and face the challenge head on. And the financial services industry in particular has a crucial role to play in the transition to a green economy. The question is, though, how can the C-suite take decisive action on climate change? Here are five ways they can set their company up to reach net zero, contribute to the bigger goal of limiting global warming and, ultimately, limit further impact of the climate disaster.
- Role model sustainable behaviours: Financial services firms who are serious about becoming more sustainable, inclusive, and socially responsible must consider ways to embed these objectives into the organisation and start initiating behavioural change right away. Most successful companies have a mission statement and a purpose, so one way to start would be to consider whether these statements align with their ESG goals. Another route is to become a B-Corp, a for-profit company, which commits to creating a positive impact on society and the environment through its operations. It is worth noting that recertifying UK B Corps (B Corps must recertify every two years) reported an average growth rate of 14 per cent, 28 times higher than the national average of 0.5 per cent.
Without a doubt, organisations who fall short on the sustainability agenda will fail to function in the tough realities of the years ahead. Business chiefs must live and breathe sustainability. As Mark Carney has previously stated, “Firms that align their business models to the transition to a carbon-neutral world will be rewarded handsomely; those that fail to adapt will cease to exist.” Unless green-thinking and action runs through the veins of business, we will fail to prevent the catastrophic uncoiling of climate change. Titans of business may exist as a small collective, but remember, positive change has always been driven by the movement of the minority.
- Bust myths: One of the biggest misconceptions out there is the belief that a mission or purpose that embeds ESG commitments costs more. Prioritising ESG doesn’t have to cost the earth – indeed robust actions and transparent behaviours can be adopted with little cost, and yet the value add can be exponential. The key here is to set the record straight amongst the c-suite community, busting any of those long-standing myths, so that they can prioritise ESG commitments.
- Go 100% clean: Renewable energy has a dirty secret. It is often presented as entirely positive. However, ‘renewable’ is not always the same thing as energy from non-polluting, sustainable or carbon neutral sources. In fact, many energy providers use ‘renewable’ to describe energy from ‘dirty’ sources including biomass, which involves burning wood or waste and releasing both solid carbon particles and greenhouse gases like carbon dioxide (CO2) into the atmosphere. While none of the ‘renewable’ energy providers have been deceitful necessarily, some are not entirely clear about their sources. This means making informed decisions can be harder for customers. Energy is the foundation of any business, and if you are serious about reaching net zero, it is that businesses responsibility to power its people with energy that has no adverse impact on the environment. This means reduced or no carbon emissions, and no high-level radioactive waste emissions.
- Innovate: When it comes to sustainability, one of the biggest tech developments is the capacity to create, capture and transmit data. Learning and acting on this data is a critical feature of the sustainability agenda. The reason is because advanced analytics supply businesses and organisations with insight into how efficient they are, ultimately helping to pinpoint opportunities to reduce environmental impact. Artificial intelligence (AI) and Robotic Process Automation (RPA) developments are also making a significant contribution to the sustainability agenda, helping optimise operation efficiency and process accuracy. But innovation is not just about data. Businesses must innovate their thinking too. They need to be open to and commit to collaborating in green finance, invest in clean technology and use their powerful voices to back social movements that call for positive change. And it’s the c-suite who must lead this charge.
- Avoid token pledges: Too many companies have embraced a “box-ticking” culture that encourages the adoption of increasingly standardised ESG activities. Grand pledges and unclear claims will not only erode public trust and invite backlash against a company and its executives, but they will also impede the combined effort needed on the Race to Zero. Companies who are serious about becoming more sustainable and greener, must consider ways to embed these objectives into the organisation and start initiating behavioural change right now. Making pledges towards Net Zero is all well and good, but who is going to deliver on this down the line? C-suite executives need to avoid token pledges and ensure they aren’t leaving their future leaders with a poisoned chalice. It’s time to take action now.
Companies have always needed to amend their strategies to respond to market conditions, but climate change is a different beast because the timescales of the most harmful impacts are far beyond most strategic plans.
If the world has learnt anything because of a year in a pandemic, it’s that it is entirely possible to collaborate to make instant change. As, not only did the lockdown trigger the largest ever fall in carbon emissions, but it has also left us safe in the knowledge that businesses can create new working models, and at speed. Excuses are now futile, and frankly the time is now upon us to take decisive action to tackle the climate crisis.
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