While businesses are taking great strides towards climate action, there is still a lot of progress needed to obtain a sustainable climate solution. Some businesses still view sustainability as a PR issue but as one of the speakers at COP25 said, “CSR is dead. Now companies must truly integrate sustainability into their business to achieve a truly sustainable business model.”
There are many leading companies working to achieve this integration of sustainability throughout their business, such as those present at COP25 in Madrid. But what are some of the barriers to achieving this?
One major issue for a lot of corporate sustainability initiatives and action in local governments is a lack of fossil free electricity. Without this, the progress that can be made in the energy sector is limited. This is a major concern for transportation and mobility focused initiatives.
Another issue is the lack of differentiation of function from means. In the transportation sector especially, too much focus is placed on solving the issues of the car industry instead of solving mobility issues. This causes businesses and local governments to fall back into current patterns instead of considering innovative changes that could have a larger impact for climate.
There are three other major concerns for businesses: supply chain thinking, value creation and transparent data.
In order for any corporate sustainability effort to be successful, supply chain thinking must be expanded. Supply chain emissions can account for up to 80% of a company’s total emissions, and not addressing this is a major loss for the sustainability of a business.
Recently, Daimler (Mercedes-Benz) has set a goal of only sourcing from zero-emissions suppliers by 2039. As a result, companies are rushing R&D dollars into low carbon steel and other products in order to supply this demand, thus expanding the corporate sustainability movement. Microsoft is also looking towards its supply chain and is working closely with CDP to require suppliers to report to the program. Just as companies are willing to make changes if asked by their investors, suppliers will work to create sustainability initiatives if asked by their retailer.
Currently, economies of scale is the major driver of business action. Unfortunately, the source of value for sustainability initiatives will never be able to come from volume and thus their value must arise from a system other than economies of scale. As this system is yet to be created, there is a major question point for business leaders about where the value for sustainable initiatives will be sourced. Consumer actions and interests in sustainable products may offer a potential solution, but consumer interests are not yet of a scale to support ambitious change in the business sector.
One of the last major issues for companies working to implement sustainability initiatives is access to measurable and transparent data. In order to determine solutions and evaluate effectiveness of initiatives, companies must be able to access data on their company and others working towards similar programs. CDP is one program working to improve emissions data availability, but many companies still lack the ability to obtain accurate information within their own operations.
Overall, my time at COP25 taught me a lot about the innovative approaches being taken by business to tackle the climate crisis, as well as some of the shortfalls and areas of improvement that need to be addressed in the coming years.
As I prepare to enter the field of corporate sustainability, the lessons and skills I have learned from my time exploring the interactions of business in the climate conversation will be invaluable.