It's hard to imagine a year when climate change could be in the news more than this one. Record heatwaves, fuel crises, floods - it seems like every week there's new evidence that we've reached a tipping point. But how is the business and finance world responding? That was the question the White Marble team set out to answer at Climate Week NYC 2022 - the 14th annual summit that brings together the most influential leaders in climate action from business, government, and the climate community. Hosted in conjunction with the United Nations General Assembly and the City of New York, the week involved over 500 events showcasing some of the biggest names in finance, tech and business. The seven days were packed with panels and talks, with topics in consideration ranging from carbon pricing to investing in renewables.
White Marble attended four insightful panel that featured sustainability leaders such as Microsoft, Unilever, Nike and S&P Global. The talks covered everything from how to communicate sustainability targets to consumers, to the integration of nature-based business solutions and the need for universal terms for sustainability While a great deal was covered, we came away from the events with four emerging themes that really stuck out in all of them:
The need for internal carbon pricing
Carbon markets offer means of encouraging companies to reduce their emissions, by creating economic incentives for them to do so. There are several different types of carbon market, including some that allow companies to buy and sell emissions credits. These types of markets have been around for decades but they’re currently gaining traction as investors focus on shifting towards sustainability. The price of carbon is determined by both the supply and demand of carbon allowances and offsets, and thus it serves as a valuable reference point for companies to build out contracts against.
Furthermore, multiple sustainability leaders raised the importance of accounting for carbon emissions on an internal level when making product development decisions. As Elisabeth Brinton from Microsoft attested, establishing an internal price on carbon incentivizes the business to embrace sustainable processes.
Fostering engagement from employees
Engaging employees in climate-based issues is an important part of building a successful strategy in this area. Employees are powerful agents of change, so here are some ways companies are fostering sustainability in the workplace:
Encourage innovation. Innovation is key to driving change, whether it’s in processes, products or services. Companies can encourage innovation by providing the resources needed to develop new ideas and support their implementation.
Simplify language. The language around sustainability can be confusing for employees because it has so many different meanings and uses. Simplifying the language will make it easier for employees to understand what sustainability means for their company and how they can contribute. For example, Natura&Co (owners of The Body Shop, and largest B Corp in the world) discuss sustainability thematically through concepts such as ‘halting deforestation’ so the impact feels more tangible.
Link compensation to sustainability targets. This encourages employees to work towards sustainability through innovation and simplification by offering incentives such as higher salaries, or bonuses based on performance metrics that relate to sustainability goals.
Focusing on the supply chain & holding suppliers accountable
The supply chain plays a key role in achieving sustainable business practices; it can help reduce costs and improve competitiveness through increased efficiency. 'However, businesses must understand that implementing changes across supply chains requires collaboration across all levels of the organization, as well as what is often an extensive supplier network.
Supply chain sustainability can extend further by integrating multiple metrics into decision-making processes across all functions of an enterprise, from engineering to marketing. A successful approach will require strategies that target environmental concerns such as greenhouse gas emissions, biodiversity loss and water scarcity while also addressing social issues such as labor rights violations or child labor.
One issue faced by many companies is how to hold these suppliers- who are often based in other countries - accountable to meet sustainability targets. Nike, 95% of whose emissions come from their supply chain, are overcoming this by fostering long-term relationships with manufacturers on the condition that they meet carbon targets. This way they can provide better rates for more sustainable suppliers alongside ongoing education and support.
Using sustainability as a competitive advantage
“A company that sees ESG risk is also in a position to see the opportunities in addressing those risks”
Sustainability is increasingly being seen as a competitive advantage for many companies. The message is clear: sustainability can help you do business better.
To get buy-in from senior stakeholders, ESG teams must integrate sustainability concerns while making the case for a business opportunity. With investor focus increasingly shifting towards this area, climate change is being spoken about in boardrooms across the globe and is becoming an imperative consideration to maintain business value.
Nikita Singhal from Lazard Asset Management, a researcher of NYU CPG companies found that products marketed as more sustainable saw lots of growth. Sustainable disruptors such as renewable energy and elective vehicles have bought huge opportunity to consumers and investors so internal sustainability initiatives should be treated as such.
White the transition to Net Zero provides complex challenges for businesses, we took away some tangible advice from these industry leaders:
Data is key. Make sure you are putting systems in place to measure your environmental impact so you have a baseline from which to measure.
Look at the broader social picture. You must understand that every business will have it’s own unique weak point.
Don’t do it alone. Many companies are going through the same journey and coming up against similar challenges, so by sharing learning we will reach our goal quicker.
Know where you are with carbon lenses. Feeding back to the point of data, being able to quantify your carbon emissions is vital in our fight against climate change.