Most commentary on climate change today focuses on the limited progress and monumental change required, the major risks associated with inaction and the cost of adapting our economy and society to a low carbon future. We need to look at it differently and consider the benefit for Ireland of becoming a leader on climate action.
While delivering a credible roadmap to net-zero clearly responds to the growing global demands on businesses, it is also an opportunity for our business community and our wider economic ecosystem. The debate on the merits of net-zero growth strategies is no longer a philosophical one about balancing economic growth with sustainable development. It is a business case centred on ensuring long-term viability.
The investor community is staying away from heavy emitting industries. If there was any doubt, the decision of a Dutch court last week ordering Royal Dutch Shell to cut carbon emissions takes business beyond the realm of aspiration. Exposure to climate change is now an “investment risk”. Even in the turmoil of 2020, investors oriented their money towards low carbon. This investment risk-aversion places greater focus on the environmental, social and governance credentials of business. It is no longer a niche market. It has become mainstream.
According to Deloitte’s Shifting Sands 2020 research, consumers are orienting their consumption decisions towards companies that link to their values and lifestyles. The research found that 68 per cent of consumers (in this survey) cut down on single use plastic, 43 per cent chose brands that have environmentally sustainable practices and values, and 38 per cent reduced the amount of new products and goods bought. A Nielsen report estimates the value of sustainable, fast-moving consumer goods market to reach $150 billion (€123 billion) in the US, making up to one-quarter of the entire market for these goods. While consumers may feel confused about environmental credentials and certifications, they want to do the right thing, and want to engage with brands that show purpose and align to their values.
Employees are demanding more from the companies where they want to work. In a Censuswide survey, 65 per cent of multi-generational UK workers said that they were more likely to work for a company with strong environmental policies. Employee engagement on environmental issues drives motivation and satisfaction, as well as creativity and innovation. This is not just a concern for millennials and Generation Z employees, but also for older colleagues who are worried about how their pension funds will perform if not invested sustainably. This is not snowflake territory, but real value risk to people.
Societal expectations on business continue to raise. Society wants businesses to provide solutions and advocate for change. Chief executives are expected to personally drive this systemic change, be it on gender equality, social exclusion or climate change. The call to action to all businesses is urgent and clear.
A key step in this journey is a credible evidence-based and scientific roadmap to net-zero emissions. It is encouraging to see more Irish companies align with international best practice. Science-based targets are fundamental as they are based on the latest scientific evidence, thus objective, practical, universal and aligned with the principles of the Paris Agreement.
Last month, 64 large Irish companies signed-up to the Business in the Community Ireland Low Carbon Pledge, committing to setting science-based carbon emissions reduction targets by 2024, which must include their entire carbon footprint and be in line with the Paris Agreement and the latest IPCC findings. Our ultimate goal is to achieve carbon neutrality and these targets are the first step towards a net zero world by 2050.
Accountability and transparency are critical success factors for any business aiming to harness the low carbon economy. And while most emissions in any business are indirect, meaning that they take place across the supply chain, it is critical for business commitments to net-zero to cover both direct and indirect emissions.
Shared vision
The engagement across the supply chain is enabling smaller companies to take concrete action to make their business models, in turn, more sustainable and resilient for the low carbon economy. The need to provide low emission solutions across the supply chain is driving innovation and entrepreneurship. Equally, large buyers and contractors, including governments, create markets for sustainable products by requiring green criteria in product specification and service requirements.
Ireland is uniquely placed to lead the low carbon economy, to position itself as a key ecosystem for collaboration, research and innovation. A strong approach by business to science-based target setting and transparency gives credibility to this ambition. Voluntarily reporting and setting targets ahead of much anticipated legislation will build a more resilient business community and will allow better access to finance and investment.
Ireland’s successful strategy of attracting foreign investment since the 1950s is a model for our low carbon vision. We can use our global connections, entrepreneurial spirit and combination of multinationals, indigenous industry and small and medium-sized companies to drive the sustainability revolution of Ireland.
The transition to a net-zero economy puts us at the forefront of the international commercial community. It is an opportunity to rebuild our economy from the pandemic but it is also a unique chance to bring about major systemic change and charter a path for economic growth, job creation and social cohesion that will be consistent with the planet and society.
Tomás Sercovich is chief executive of Business in the Community Ireland
