The time has come for the business to go beyond simply managing risk to address opportunity as the world reels from the growing climate crisis, global pandemic, threats to owners and growing income inequality. But how can companies responsibly participate in this opportunity to support both business value and transformational impact? Business leaders will need to develop a deep understanding of how these interrelated forces, particularly the climate crisis, are affecting the lives of workers, customers and society. Generally speaking. Only then can companies respond with innovation and create value without hype, which can change the future of the world.
Since its first publication in 2015, Fortune Change World List honored dozens of companies that are addressing threats to our planet through innovation, new business models, and unexpected partnerships. As we look at this year’s list, we are delighted by the continued contributions of companies around the globe to tackle climate change.
However, company leaders need to do more. More and more.
Go through the company’s sustainability reports and in “Climate Change” the best content is about the company’s science-based goals and what they’re doing to reduce Scope 1 emissions, 2 and 3. These are certainly important efforts, but they are highly technical and often do not include the populations and communities most affected by the impacts of climate change. At the same time, the purpose statements of these companies often focus on making people’s lives better.
This missed connection between technology and people can be dramatic; To create meaningful positive climate change, business leaders need to understand that intersection. That way, companies can open up opportunities to create value and improve people’s lives around the world. We offer a few thoughts for leaders on how to get started:
Redefine your business purpose
Companies need to scrutinize their purpose, raison d’être, to redefine their business model. For example, is a car company solving the problem of better cars or more personal mobility or mobility? Is a food company looking to nourish people, entertain people or improve people’s health? Asking such questions can allow companies to redefine their business purpose — including impacts on both profits and people (e.g. employees, partners, and local communities). and promote innovation. For example, in 2021 Nestlé announces its ambition to promote a regenerative food system, in line with its commitment to tackle two-thirds of greenhouse gas emissions generated by agriculture. Nestlé describes the transition to a regenerative food system as a “mission” for its business and others in the industry, paving the way for Nestlé to align its assets and business functions. for this purpose.
Connect with stakeholders
Understanding the human impact of climate change requires companies to in relation to the problem.Companies need to make the most of their assets by connecting with their employees, extended value chains, and the local communities in which they operate. Listen to staffAs the voice of partners and communities, companies can ask questions such as: What is people’s greatest concern for themselves and their families? How are staff and community members experiencing the impacts of the climate crisis? Will their lives and/or livelihoods change significantly due to climate change? Answering these questions is one of the key ways to understand how to innovate and build long-term business value to serve climate mitigation and the well-being of employees and local stakeholders.
When it comes to their own value chains, companies can encourage and enable their partners (including micro, small and medium enterprises) to adopt low carbon processes. An example is Walmart Supply Chain Finance Program, which uses science-based targets and favorable loan terms to incentivize its private brand suppliers to decarbonise. This program specifically aims to serve SMEs in the supply chain by providing tools, standards and capacity building to help businesses streamline operations and retrain workers. motion.
Pursuing the co-benefits of addressing social and environmental goals together
By recognizing the intersection of climate and equity-focused goals, today’s companies can realize co-benefits for both. For example, Women and girls are disproportionately experiencing the greatest impacts of climate changebut global data from 2018 shows that only 32% of renewable energy jobs are done by women. As wind, solar and other renewables grow in the coming decades, tens of millions of jobs and many companies will be created. Opportunities for businesses to support their practice of training, recruiting, and talent management to help address gender disparities, especially in STEM-related fields and the renewable energy industry. Investments generate returns for women’s livelihoods and for the business itselfbecause research has shown that gender-diverse groups perform better, and women demonstrate stronger leadership in both normal and crisis times.
Align networks and ecosystems
While individual businesses can drive innovation by leveraging insights into the impact of the climate crisis on everyone, business leaders can extend the positive impact. climate by using these same insights to drive change in partnership with other players in business, civil society and government. Transforming the status quo on a large scale requires companies to work together to change policies, regulations, and norms in the market system. An example is Better Cotton Initiative, a multi-stakeholder coalition working to improve cotton sustainability globally. The alliance’s members span the cotton supply chain, from large corporations to smallholder farmers, and the alliance’s governing board is representative of a wide range of stakeholders. By 2021, more than 2 million farmers affiliated with Better Cotton have produced 20% of the global cotton supply. As companies continue to drive large-scale progress on climate goals, including recent private sector commitments to end deforestation and dramatically reduce methane emissions, Effective networks and collaborations provide examples of how companies can make progress at the scale and speed needed.
In today’s volatile and seismically changing world, there are often winners and losers, with those most disenfranchised often bearing the brunt of the cost. A process that excludes the most disadvantaged will not lead to a fair outcome. As we face the climate crisis together, we call on business leaders around the world to act towards a forward onlyaddress both the human-centred and technical aspects of decarbonizing our economy and mitigating the climate crisis.
Rishi Agarwal is the managing director and head of Asia at FSG, based in Mumbai.
Chirlie Felix is an executive at FSG, based in New York City.
Laura Tilghman is a director at FSG, based in San Francisco.
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