2015: the year businesses recognize that climate change is real
With new climate policies, civil unrest and supply-chain disruptions in 2014, more businesses are becoming activists
- Top business sustainability trends of 2014
- 2015: the beginning of the end for climate skeptics
- More end-of-year reflections and new year’s predictions
It would be an understatement to say that a lot happened in 2014.
There was pervasive civic and social unrest across the US, bringing issues like racism and justice to the forefront yet again, as well as a historic agreement with China to mitigate carbon emissions. Meanwhile, India enacted a law requiring companies to spend 2% of their net profits on social development, the Philippines suffered yet another big typhoon, and the Ebola crisis killed more than 7,000 people in west Africa. Then there were the media shakeups, including buyouts at the New York Times, a mass exodus at the New Republic and a shift in Bloomberg’s top ranks.
But front and center in my universe as a close – and often vocal – observer and practitioner of corporate social responsibility and sustainability was climate: call it the “water-energy nexus,” the “resources dilemma,” or another variant. But in 2014, every sector of our industrial economy felt the weight of climate change.
But front and center in my universe as a close – and often vocal – observer and practitioner of corporate social responsibility and sustainability was climate: call it the “water-energy nexus,” the “resources dilemma,” or another variant. But in 2014, every sector of our industrial economy felt the weight of climate change.
More significantly, many more people began to interweave the repercussions of a changing climate with issues – like poverty, urbanization, lifestyles, economic standards and community development – that had previously appeared as separate prongs on any impact chart. (Remember the cute versions of the “triple bottom line” separating social from environmental and economic issues?)
And, as a result, we saw the needle move.
Corporations like Unilever set ever more aggressive and inclusive goals andcreated marketing plans to persuade others to join. CVS Caremark disrupted its sector by announcing that it would stop selling tobacco and would rebrand itself as CVS Health to better align its brand with its goals.
And for policymakers, the year saw clear action from US President Obama, bolder commitments from the European Union and new willingness to understand climate science – and shift its energy plan accordingly – from India.
So as we head into what promises to be the most tumultuous year yet for sustainable business, here are some of the themes I expect to dominate our decisions and strategy whiteboards.
1. More businesses recognize that climate change is real
Based on its annual data, CDP forecasts the impact of a warmer planet and climate change will be felt in as little as four to five years. Take a look at its Global Water Report for example, or the S&P 500 Climate Leaders report, which rates companies on climate readiness and market volatility for the first time.
Expect these forecasts to assume practical proportions and get embedded much more strategically into risk management and business development plans. And plan to become best friends with your investor relations department and the chief financial officer’s office. Some companies are already putting an internal price on carbon, for instance, to educate their investments (think Microsoft).
Others are starting to marry emissions with market performance, community health, urbanization and the sundry other elements that, ultimately, dictate growth. Keep an eye out for new standards from the Sustainability Accounting Standards Board – which just issued provisional standards for 10 service industries, for example – and for Bob Willard’s Future Fit Business Benchmark.
2. Companies align their strategies with ‘Sustainable Development Goals’
The next phase of the UN’s Millennium Development Goals, fittingly termed theSustainable Development Goals, shift priorities from insular goals like reducing poverty and increasing hygiene to more inclusive and integrated ones that push for systemic change like the rule of law, dignity and prosperity for all. The implications are significant.
And business is being called on to provide active support for the first time. This presents an unprecedented opportunity to tie businesses’ growth to their communities and the environment. For the first time, capitalists are welcome and actively needed at the table. This marks a key acknowledgement that determining our path forward as an interconnected economy will require the tensile strength of every single sector.
So how do you make sure your business is syncing its growth plan with the new UN goals? How do you get past the loftiness and map the real changes that are needed against the trajectory of your business plan?
You’ll want to start by investing in some scenario planning.
If a majority of your supply chain works in Bangladesh, for example, you’ll need to ask: are you equipped to handle disruptions from hurricanes and floods in the region and the consequential loss of life and infrastructure? If not, might investing in water conservation or employee and consumer empowerment initiatives make your business more resilient?
If your 10-year plan includes expanding in Africa, you should view the Sustainable Development Goals as a critical roadmap to help align your strategy with the continent’s social and environmental priorities and realities.
This type of scenario planning ensures not only that your business model is resilient, but also that your employees, customers and communities will play a critical role in your decisions.
3. Businesses switch from advocacy to activism
Apple CEO Tim Cook made the news in 2014 for many reasons beyond the launch of the iPhone 6. Among the highlights was his Climate Week speech advocating more aggressive action from his peers on climate change. On stage in New York, he noted he “wanted [Apple] to be one of the pebbles in the pond that creates the ripple” on climate change and the environment.
He wasn’t alone.
Unilever CEO Paul Polman has spoken often and loudly on the need for businesses to align their missions and growth models with action on climate and other key issues. “In the absence of politicians, we need to move faster,” he said. “Climate change is a great opportunity for business … the needle is starting to move in the US. The tornadoes and hurricanes are starting to drive the message home for people. … [T]he urgency cannot be watered down.”
As rhetoric and action begin to align across boardrooms, expect more business leaders to step out of their corner offices to spark more sustainable business practices, whether through regulation – Nike and Starbucks support Obama’s climate rule – or through well-funded lawsuits, investor-led demands, strategic partnerships or remapped business models.
As the crescendo for more action builds, you’ll want to ask the right questions to rebuild your narrative, remap your strategy and ensure your business is nimble enough – and able to collaborate sufficiently with its employees, consumers and other stakeholders – to remain an active participant in the next 25 years of economic development.
4. More big supply chain disruptions
While the Rana Plaza fire was not the first of its kind, the 2013 disaster continued to catalyze action across the apparel industry this year, with new partnerships and commitments in recent months. In 2014, the electronics industry had a similar moment when a report by nonprofit Verité found forced labor in Malaysian factories.
You can expect these disruptions to continue.
My advice to sidestep them? Forecast into the next two decades, not two years.
5. A growing focus on future-proofing
One term that has stuck in my mind in recent months – and one I plan to use ever more rigorously – is future-proofing. How will you use the next 12 months to ensure your long-term viability as an organization, as an economic contributor, as a consumer, as an employee, as a leader and as an informed decision maker?
For me, my mantra is clear. Tell the whole story, help our executives and leaders connect the dots, identify the context, and empower stakeholders through knowledge. When I started writing about these issues, I committed to connecting the dots. Always.
A decade later, that hasn’t changed.
And remember, joy is contagious. But so is skepticism. Stay clear. Steer carefully – and lead gracefully – onwards.
Aman Singh is a vice president in Edelman’s Business + Social Purpose team in New York and the founder of Singh Solutions,an advisory firm that offers CSR and sustainability reporting and communication strategies services. She previously served as CSRwire’s editorial director.
This piece is part of the values-led business hub, which is funded by SC Johnson. All content is editorially independent except for pieces labelled “brought to you by”. Find out more here.
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