How much positive impact can a UK-based business have on climate change, without sacrificing productivity and profit? In the fourth and final podcast of Advanced’s Working It Out series, Louise Minchin talks with Professor Mark Maslin, Professor of Climate Change at University College London (UCL) about the legacy of COP26 and how businesses can increase profitability by harnessing a strong, positive environmental policy.
It would be easy to sit back and conclude that this year’s international climate summit, COP26, failed on many levels. If some of the world’s most polluting nations will not commit to making massive reductions in their carbon output, what good can individual businesses do? Is there really any point in individuals and organisations trying to make environmentally-friendly choices, dwarfed by the Goliath-sized impact of industrial countries like Russia and China?
Professor Maslin takes a pragmatic, and largely positive view of what was achieved in Glasgow, recognising that getting 197 countries to agree to anything was a massive feat. Within a very limited legal framework, there were significant steps forward including, extraordinarily, the inclusion of the words ‘coal’ and ‘fossil fuels’ in the updated agreement for the very first time. Another encouraging outcome is that the conference has focused businesses more keenly than ever before on the need to decarbonise.
Business leaders who are already pushing the envelope for climate change can help and inspire others. They are already experiencing benefits that include saving money, driving increased profit, finding their businesses more attractive to customers and suppliers, and helping them to secure the talented employees they need for long-term business success.
Governments, businesses and individuals all have a part to play in helping reduce carbon emissions and other pollutants because we all stand to gain from helping avert climate change. The longer-term benefits to the planet and its people of halting catastrophic changes may be apparent, but not all business leaders acknowledge that they can actually make a profit and ensure their own sustainable futures by going greener.
The role of government
Businesses want more regulation around measuring carbon impact and green credentials. The UK Government needs to create legal frameworks for organisations to follow and enforce meaningful penalties for those who don’t. It isn’t fair to those businesses who are taking climate change seriously, if they are undercut by others that don’t. There also needs to be time and support given for those rules to be embedded, so it’s important they are rigorous enough that they don’t need frequent updating. More regulation will help consumers too. They need clear signposting, with labels to show which products have a high or low carbon-footprint. Consumers are struggling to juggle busy lives so they need simple messaging about what is good for their health and also for the planet. The government can help guide the public towards a more plant-based diet, for example, with taxation of certain products, making it cheaper and easier to purchase healthier foods with lower carbon impact.
Business must play its part
In his book, How To Save Our Planet, Professor Maslin says that companies that actively manage and plan for climate change have a 67% higher return than those that refuse to disclose their carbon emission data. When businesses are on top of the environmental agenda, they are almost always more profitable. Not all leaders are motivated by being more ethical, but increasingly they recognise that going down the more sustainable and greener route will help them to attract the brightest talent. Younger employees in particular want good salaries and working conditions like everyone else, but they also want to be working for businesses that are ethically and morally best-placed to help deal with the climate crisis. They want to make a difference and be part of the solution. In the current skills shortage with so many unfilled job vacancies, leaders need to do all they can to attract the best talent. Having a green agenda tends to change the working environment and creates a more positive company culture, and that helps with retention too.
Consumers are also seeking more transparency about where products come from and how they are produced, with growth in demand for more environmentally-sound sourcing of products. Business leaders can’t afford to ignore that if they want to maintain a competitive edge. Professor Maslin points to the shift by all of the major car producers towards electric vehicles. He credits this not to government mandate, but to the runaway success of Tesla, a business that has showed its peers the formidable potential for profit, by producing ‘clean’ energy cars.
So, what are the first steps for a greener business?
- Talk about sustainability. Diverse people and points of view will come up with different questions about current practice and find better ways to do things. If just a few people with climate anxiety start to talk about the problem, what worries them and how they think things can be improved, it will draw others into the conversation. Like ‘green viruses’, the discussion will snowball and spread. It needs senior leaders to get involved too and want to address these issues, for everyone’s benefit.
- Measure the carbon footprint. It is important to have full insight and understanding of which areas are the biggest problem in order to be able to make significant improvements.
- Green Energy – all businesses can make a simple switch to green tariffs and this is one of the easiest ways to reduce carbon impact.
- Transport – businesses are starting to have face-to-face meetings again, with people traveling greater distances for work, but many interactions can still be done effectively using online meetings. Reducing corporate travel and reducing commuting by encouraging more remote working, saves money for organisations and employees alike.
- Products – manufacturers can undertake a lifecycle analysis, a cradle to grave assessment of the impact of their products. The insights can then be used to look at making changes in the manufacturing process, how to use less energy, make the products more recyclable, and at the end of its life, easier to dispose of.
- Supply chain. For most companies the supply chain impact is around seven and half times that of the company itself, so it is important to look at the bigger picture of where a business fits in. As a purchaser, there is potential to have a lot of influence. Sky has been carbon neutral since 2007. It now insists that all suppliers of its TV or films have to document their production and demonstrate that it is also carbon neutral. Most businesses can pick suppliers who fit their sustainability agenda.
- Carbon offsetting is not a cop-out. After making all other reductions, it is a way to get rid of remaining carbon impact. There are some very good, gold standard companies and projects that can be trusted to properly off-set carbon on a business’ behalf, for example by planting forests.
- Due diligence. Just like in any other area of business, it pays to shop around and choose trusted suppliers who demonstrate best practice. Whether choosing carbon neutral suppliers for components and raw materials or looking for a business for carbon off-setting, there are many poor ones as well as excellent ones. It’s a mistake to assume that people who are in the carbon off-setting business, and it is a business, share the same values when it comes to delivering a transparent and honest service.
Key ingredients for successful sustainable business
The first is leadership. Company culture permeates from the top down and being greener is part of the overall business strategy and vision for the future. The second critically important element is to trust and empower employees. They will have lots of ideas to make the company better, more sustainable, and will be enthused to try to make them work.
Ultimately, in relation to the global picture, all countries are on same path, we are just at different points. Right now we may blame China for its emissions, but China has an established internal carbon market, and is already trading carbon to ratchet down its overall impact. India is investing heavily in renewable energy over the next 10 years. By contrast the UK has a historic legacy of polluting the planet for the last 150 years. Sustainable industries will create new jobs and businesses as the world economy shifts to a new green economy. The number of jobs created in renewables is expected to outweigh those in fossil fuels by ten to one. The green agenda is not a fad and it is not going away. It is time for all businesses to get on board, in order to be part of the solution for our planet, while also creating a sustainable profit pipeline for its own future prosperity.