Why organisational and societal change is needed to fight climate change

Ani­ta Lon­g­ley, Chair, Insti­tute of Cor­po­rate Respon­si­bil­i­ty and Sus­tain­abil­i­ty

The glob­al pan­dem­ic and cli­mate change have demon­strat­ed the inter­con­nect­ed and inter­de­pen­dent nature of our eco­nom­ic, social and envi­ron­men­tal sys­tems. The vul­ner­a­bil­i­ty of busi­ness­es, soci­ety and the econ­o­my to exter­nal shocks has hit home hard. 

ESG – envi­ron­men­tal, social and cor­po­rate gov­er­nance – issues have been cat­a­pult­ed to cen­tre stage with a new urgency. Now, it is wide­ly acknowl­edged that ESG is fun­da­men­tal to greater resilience as busi­ness­es have been forced to reap­praise cor­po­rate risk.

The good news is that, more than ever, main­stream investors, chief exec­u­tives and their boards are start­ing to take ESG seri­ous­ly, recog­nis­ing these con­cerns as vital to ensur­ing their busi­ness­es’ future suc­cess. 

Sus­tain­abil­i­ty rose to the top of the agen­da in 2019, with the launch of sus­tain­abil­i­ty and net-zero strate­gies and the rewrit­ing of entire val­ue propo­si­tions. 

This momen­tum accel­er­at­ed in 2020, despite and in part due to the coro­n­avirus pan­dem­ic. In 2021, it has become a part of many deci­sion process­es along­side tra­di­tion­al risk and strate­gic con­sid­er­a­tions. ESG has gone ful­ly main­stream.

How­ev­er, the ESG rush must not be sim­ply a knee-jerk, box-tick­ing exer­cise. As con­ver­sa­tions have shift­ed up sev­er­al gears in a very short space of time, it is impor­tant that ESG becomes ful­ly inte­grat­ed into busi­ness strat­e­gy and not just anoth­er lens. 

The spot­light on ESG has her­ald­ed an unprece­dent­ed demand for cor­po­rate respon­si­bil­i­ty and sus­tain­abil­i­ty (CRS) exper­tise. But was the aver­age CRS pro­fes­sion­al ready for this change? 

CRS pro­fes­sion­als now inter­act at the C‑suite lev­el, engag­ing on every­thing from a company’s core glob­al strat­e­gy to invest­ment deci­sions. And this encom­pass­es a broad spec­trum of social and envi­ron­men­tal pri­or­i­ties. The out­come of their advice has major reper­cus­sions and is right­ly scru­ti­nised to a much greater degree. 

As indi­vid­u­als, pro­fes­sion­als must man­age the pres­sures of this new respon­si­bil­i­ty as we push fur­ther into this crit­i­cal decade for the plan­et. 

More­over, the promi­nence of CRS can­not be a short-term fad. It must remain a main­stay of the ESG ecosys­tem, for the long term. CRS work is about help­ing com­pa­nies pos­i­tive­ly engage in the process of shap­ing our shared future.

Ulti­mate­ly, busi­ness­es can only make progress in their ESG strate­gies if they con­vince the finan­cial mar­kets that they are worth the invest­ment. 

In the past, impact investors led the ESG charge. But 2020’s mar­ket shocks made the entire invest­ment sec­tor sit up and the $715-bil­lion impact invest­ment mar­ket is set to grow. 

Investors are now aim­ing to dou­ble their sus­tain­able invest­ments over the next five years. And from ear­ly-2021, changes to MiFID II sus­tain­able finance mea­sures will oblige finan­cial advis­ers to incor­po­rate ESG into advice.

Com­pa­nies look­ing to take advan­tage of this mar­ket must show they have engaged with all rel­e­vant stake­hold­ers dur­ing a dif­fi­cult year, that they have a plan and are on the path to last­ing pos­i­tive impact.  

Cli­mate change and its asso­ci­at­ed risks are real. If busi­ness and soci­ety are to thrive, every­one has a part to play.

But a chief exec­u­tive decid­ing they want to lead a sus­tain­able busi­ness does not instant­ly make an organ­i­sa­tion or busi­ness sys­tem sus­tain­able. We need more than words, more than com­mu­ni­ca­tions; we need organ­i­sa­tion­al and soci­etal change.

Gov­er­nance struc­tures, poli­cies, pro­ce­dures and score­cards should all be over­hauled. Com­pa­nies must set real and trans­par­ent goals that are far reach­ing and sci­ence based. Achiev­ing those goals has to be non-nego­tiable. 

Only through this lev­el of change will we become respon­si­ble cor­po­rates, respon­si­ble investors and a respon­si­ble soci­ety. It will take a huge amount of effort, but that is the nec­es­sary next step. Until we take it, and make the invest­ments in time and resources, we will not see the sys­temic change we need.