Although multiple actors propel the sustainability agenda, the adage “what gets measured gets done” very much applies: increased reporting requirements, driven by the European Union, are among the main catalysts.
“The key influence is coming from the EU via the [European] Green Deal and legislation like the Corporate Sustainability Reporting Directive (CSRD) and its knock-on influence and impact on individual states,” says Dr Thomas Macagno of UCD Innovation Academy.
There are penalties if EU member states fail to meet such requirements, which in part is what the Government’s Climate Action Plan aims to do, says Macagno. “Over time we are seeing Ireland developing specific legislation and specific targets,” he adds.
Dr Ciarán O’Caroll, of TUD, agrees that reporting is significant, though he would like to see stricter regulation and penalties.
“The thing that is influential with corporates is the rules and the regulations and compliance,” he says. “If organisations have to choose between profit and sustainability, they will choose profit every time, unless there’s a compliance issue. However, while there are great reporting requirements, we don’t have the same action requirements. Reporting is great because it produces transparency but what we need to see is that married to that is the action piece. We still don’t have the policies that mandate the actions that gets us to a sustainable society.”
Another key influence on sustainability is consumers. Research among European consumers by Forrester in 2022 showed that half of adults agreed that it was worth paying more for sustainable and environmentally friendly products and that recyclability of packaging and environmentally friendly shipping are among the options that consumers seek when making purchasing choices.
However, barriers to sustainable purchasing, such as price or convenience, often prevent customers from acting on their good intentions.
Macagno notes that among consumers there is a big drive to be more environmentally friendly, although consumers still want products that meet their needs. He cites the example of an eco-friendly washing detergent that doesn’t get your clothes clean.
Consumers believe that brands must drive sustainability but don’t trust them to do so, with 69 per cent surveyed by Forrester wishing companies were more transparent in their business practices and only 34 per cent trusting companies when they say they will commit to actions that have a positive impact on climate change.
Businesses get a bad rap in this area; the belief that they will only act when forced to do so by Government is widely held. Paul Polman, a former chief executive of Unilever, believes it doesn’t have to be this way. His decade-long leadership of the global consumer goods company demonstrated that sustainability can go hand in hand with increased profitability and that it isn’t a zero sum game.
Polman’s book Net Positive provides a manifesto to convince companies that taking a more radical approach to social and environmental issues won’t cost them in the long run but will, rather, enhance their financial performance. His belief is that reducing climate impacts to zero isn’t a sufficient end goal but merely a crossing point on a journey to making a better world. In this vision, a business doesn’t just do no harm, it also acts as a driving force for good, making communities and customers healthier.
Polman is now a leading figure in a network called Imagine, which brings together key stakeholders including leading chief executives, politicians and other power brokers to take collective steps on some of the world’s most difficult societal and environmental problems.
Recruitment is one of the more tangible areas where good environmental credentials can help companies. A survey of 1,000 graduates by the UK graduate employment specialist Prospects showed that more than nine out of 10 people felt it was important that their job enabled them to make a difference in people’s lives, with 86 per cent of them saying it was vital the company they worked for had a positive environmental impact. Around three quarters said they would be more likely to apply to a company with a strong commitment to this area.
“We see it with students who are looking to respect the environment as well as respecting individuals,” says Macagno. “Some are even questioning whether they want to go down the corporate career route and are looking at other options. There’s a challenge there for companies to show that they have genuine commitment to sustainability and to communicate that and demonstrate that they are not simply greenwashing. CSRD will make companies more transparent and show how accurate their stories are.”
For corporates, this is part of a wider agenda of being more responsible and having a more positive impact on society, he says.
“It’s not just about shareholders any more; it’s about broader society and wider values. We’re seeing a change in what is being expected of leadership, we’re seeing a change in what investors expect and we’re seeing a change in what Government expects – and all of those are converging to help drive change.”