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Too big to fail… and 10 things business should do to save the planet

Yesterday, an intense two weeks was kicked-off in Paris as world leaders meet at COP21 to start negotiating a new global climate deal. The mood is positive; an agreement will be reached. But whether targets will be sufficiently ambitious to avoid dangerous climate change and keep global temperature in check is yet to be seen. So while governments are busy haggling over details, business should pick up the clear signal and start looking beyond Paris. Here are 10 things business leaders should urgently do.

By Cecilie Hultmann and Anne Louise Koefoed.

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When the financial crisis swept across the globe in 2008, governments were quick to bail out large economic institutions to avoid the collapse of the global economy. Faced with the current climate crisis, the stakes are much higher. This time, if negotiations fail, we risk the collapse of fundamental earth systems upon which humanity depends, possibly causing a downward spiral of environmental meltdown, intensifying natural disasters, increasing social instability and skyrocketing economic and social cost. This time, we cannot afford to rely on government action alone. The planet is simply too big to fail.

Fortunately, climate change has emerged at the top of mainstream business agenda[1] in recent years, and leading companies are in many ways far ahead of regulation. However, the vast majority of global business is still sitting on the fence. Now the time has come to mobilise every company in every corner of the world to create a new economic model which safeguards the future stability and prosperity of global society.

Here are the 10 things business should do to help save the planet.

1. Develop a long-term vision

The new Sustainable Development Goals offer a practical framework for business to contribute to societal needs.

The Sustainable Development Goals offer a practical framework for business to contribute to societal needs (UN 2015).

In a time of rapid environmental, social and economic change, short-term corporate planning horizons represent a risk to company value creation and resilience. Investing in understanding the long-term risk and opportunity picture, and building organisational capability to adapt to changing circumstances, is key not only to business success but will transform companies into forces for good. Businesses should develop visions for the long-term that is aligned with sustainability priorities, such as the UN Global Compact principles and the Sustainable Development Goals (SDGs).

2. Redefine the company purpose

Rethink the purpose of the company to ensure that it meets the needs of the 21st century. Abandon ‘shareholder value’ as the dominant business philosophy and the long-held view that business is purely about maximising short-term profit. Replace it with the principle that business can and should balance profit with broader value creation that serves the interest and needs of stakeholders and society at large.

3. Aim for net positive value

Assess the company’s environmental and social footprint, determine and manage material impacts so as to ensure that the company delivers net positive value across a broader set of ‘capitals’ beyond financial. Use the framework of the new Sustainable Development Goals to assess how the company contributes to societal goals, and respond in strategy with targets aligned with science (e.g. the Planetary Boundaries framework).

4. Establish a strong accountability system

Good governance is a precondition for demonstrable results. A good accountability system involves formalising board oversight of non-financial performance, adopting governing documents on material issues, linking executive compensation to non-financial performance (e.g. GHG emissions and energy efficiency) as well as engaging actively with stakeholders, including regular dialogue with own employees.

5. Set in motion the transition

Plan the shift towards a sustainable mode of business which penetrates all aspects of production and operations, towards a circular ‘cradle to cradle’ approach.  Embed sustainability in core business decisions, processes, management systems and culture, and extend requirements to suppliers to drive sustainable practices amongst smaller companies. Set clear and measurable targets (e.g. on emissions reduction) so that performance can be monitored, and pursue third party evaluation for trust and credibility of approach and outcomes.

6. Advertise responsibly

Corporate advertising practices drive excessive demand, and companies have a responsibility to stop fuelling senseless consumerism and delink human worth from acquisition of material goods. Business should take bold steps to move towards more value-based and sustainable marketing [2] and encourage responsible consumption.

7. Embrace transparency

With 6 billion smartphones expected on the market by 2030, combined with the continued explosion of social media platforms, the Internet Age’s demand for radical transparency is here to stay. Companies should openly communicate material non-financial impacts – both good and bad – thereby getting a jump on competitors and regulators, and score points with consumers that look for responsible products / demonstration of social and environmental performance.

8. Look for opportunities

The transition to a sustainable future is paved with opportunty. New report out in January 2016. (www.globalopportunitynetwork.org)

The transition towards a sustainable future will offer a world of opportunities for those with the right mindsets. Explore how your company can make profit while solving pressing societal and environmental challenges (such as the water and climate crisis, inequality, unemployment and poverty). Shift attention, resources and investments towards new practices, products, resource uses and technologies that are win-win for society and business, and support and scale radical new business models.

9. Lobby responsibly

Political leaders have a tough time making the bold political decisions needed. Business leaders can de-risk political decision-making by publicly voicing support for regulation that is aligned with sustainability priorities. Companies should urgently stop lobbying against climate change regulation.

10. Nurture collaboration

In a world of increasingly complex, multifaceted and trans-border challenges, more organisations are realising the value of collaboration. Companies, particularly those operating in high-risk regions (e.g. suffering from severe water scarcity or heightened risk of conflict), will benefit from engaging with peers and others to share experiences and know-how, and best-in-class approaches to shared value practices benefitting the company as well as the community of operation. More than ever, stakeholder engagement is vital for building trust and can add credibility to new solutions offered in the market place.

A future by design

One thing is certain. Change is coming, whether we like it or not, either ‘by disruption or by design’. COP21 marks an historic opportunity to ensure a smooth transition towards a future that is better, brighter and more desirable for all of humanity.

This is not only the most fundamental moral obligation of our generation; it also makes business sense. Proactive businesses that embark on the transition early will be more resilient to change, whether regulatory, environmental or other. Moreover, the path to a sustainable future is paved with opportunity. No doubt, the companies that will excel in the coming decades are those that will manage to combine the pursuit of profit with meeting societal and environmental needs.

But there is also a far nobler and more inspiring motivation. In 1919, a group of business leaders and financiers met to establish the International Chamber of Commerce, determined to bring economic prosperity to a world that was still suffering from the devastation of World War I. They called themselves “the merchants of peace”.

Perhaps time has come to revive the business statesmanship of the past and go back to the original purpose of business to build nations, and through trade strengthen connections among the peoples of this world, so as to foster stable, prosperous societies where both people and commerce can flourish.

 

This article is a synthesis of findings from two reports: ‘A Safe and Sustainable Future: Enabling the Transition’ (DNV GL 2014) and ‘IMPACT: Transforming Business, Changing the World’ (DNV GL and UN Global Compact 2015), as well as interviews with several hundred international experts including those profiled in the two books NEXT: A Safe and Sustainable Future (2014) and NEXT: Sustainable Business (2015).

Visit the microsite GlobalCompact15 to read more about IMPACT and NEXT, or visit our publications page to download all reports.

[1] See Level 3 Finding 2 in IMPACT: Transforming Business, Changing the World (2015)

[2] Pavan Sukhdev, Corporation 2020: Transforming Business for Tomorrows World (2012)

[3] In the words of environmental economist Pavan Sukhdev.

7 Comments Add your comment
Avatar Hailee Shay says:

I know it seems like your little efforts aren’t going to make much of a difference to our planet when you are just one person, and there are billions of people in this world. But your efforts do matter, any effort matters.
I found a great article on water conservation. It’s about its importance and super simple things you can do at home that will end up saving tons of water. I highly suggest checking it out.
It’s just as helpful as this post was.
You can find that here: http://lawntechutah.com/lawn-care/water-conservation/11-ways-to-help-water-conservation/

Avatar Mark Trexler says:

Why should business do these things? That’s the key question that tends to get overlooked. Because it’s business’ role to save the world? Is that the role of policy-makers? Is it because there is so much profit to be made in saving the world? How can that be given the un-level playing field if carbon is not priced (which can only happen with policy). So again, what is the motivation for business? It’s very easy to say “here is what business should do,” much harder to say “why business should do it.”

Avatar Keesje Crawford-Avis says:

Great article and I would urge those in small businesses and start ups to take note as much as big business. It’s easier to make this thinking part of the culture from day 1 than when it’s too big and wieldly. I do agree about the ‘fluffiness’ to a degree but I don’t think that’s the fault of the article but the context. It’s just too easy to say and not do. The accountability question will continue to stay a question until consumers recognise these principles (especially the one about profit not being the sole driver) as mainstream and necessary rather than just additional benefits to attract ‘lefties’. That’s why it needs leaders to take note. Thanks for the discussion

Avatar Latrice says:

This is what we need – an insight to make evenoyre think

Avatar Yves Surmont says:

Hmm, seems pretty fluffy to me. Lots of action plans and big ideas. Even now with the agreement in COP21 on 1.5°C I have very strong doubts about real commitment. If you see that OECD states (september report) that government is still spending twice as much on fossil fuel support than on climate mitigation efforts…

Avatar Mike Gifford says:

Fits very nicely with the http://www.bcorporation.net mindset.

Avatar Roman Kuropas says:

This is a very thorough blueprint. If companies follow these suggestions, we will see great progress. Admittedly, several of these items will be hard to swallow, in particular #6 and #9. These items represent exactly the kind of altruistic sentiment it will take to halt climate change. We have to start thinking about the greater good and in some ways go backward so we are able to go forward. Thanks for this insightful piece!

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