Companies will be judged on what they do, not what they say about going green
3 December 2014
It’s disturbing how little trust society has in business leaders. According to the 2014 Edelman Trust Barometer, just one in five of us trust business leaders to solve social or societal issues, tell us the truth, or make ethical and moral decisions. We have even less trust in our elected political leaders.
There is no shortage of rhetoric about companies going green. Company websites are littered with “core values” that relate to environment and society, such as “contributing positively to our communities and our environment”, or “helping make the world a better place”.
Most of them agree on the general principle, that it is about doing the right thing. The test, however, is not what companies or their leaders say, but what they actually do; not what it says in the company’s vision statement or in its policies, but what lies at the heart of the business plan and strategy that is recognised and rewarded in practice.
Faced with climate change – and hence the need for sustainability – as the defining issues of our time, it is no longer a question of companies doing the right thing by doing no harm, or simply focusing on compliance and reputation management. It’s whether, as major engines of our economies, they can be relied upon to respond proportionately to the challenges we face.
Commenting on the latest Synthesis Report from the Intergovernmental Panel on Climate Change (IPCC), UN secretary general Ban Ki-moon said, “Science has spoken. There is no ambiguity in the message. Leaders must act; time is not on our side.” This is the wider context for transformational business leadership.
Whether it’s morally the right thing to do, or simply good for business, the fact is that global business has a crucial role to play in driving change for sustainability. The leadership burden must fall on those companies who have the greatest power and influence, mainly those at the top of the value chain.
At a time when global political leadership appears to be at an all-time low, it is the private sector that will innovate and invest most effectively in the new technologies and systems needed for a low-carbon economy. It is the private sector that is uniquely placed to foster positive change, not only through its products and services but also via its capital, talent, international perspective, and influence on policy and civil society. Companies like DSM, Kingfisher, Unilever and Nedbank have made a name for themselves in their attempts to achieve alignment between profitability and sustainability and, imperfect as these efforts may be, it is heartening to see genuine leadership emerging.
However it is clear that the scale of the task facing companies requires not only building internal capacity to drive change, but also working in new, collaborative ways that can unlock broader systemic change.
At the Cambridge Institute for Sustainability Leadership (CISL) we have seen first-hand the importance of top-level leadership and the power of collaboration in our Banking Environment Initiative, where some of the world’s largest banks – including Barclays, BNY Mellon, China Construction Bank, Deutsche Bank, Goldman Sachs, and Standard Chartered – have joined forces in directing capital towards environmentally and socially-sustainable economic development, developing trade finance products and services that help their clients to achieve zero net deforestation by 2020.
The power of chief executives to promote change has been demonstrated through the Prince of Wales’s Corporate Leaders Group, where CISL has worked with a group of businesses to support and influence the design of the policy responses and institutional architecture which will make a low-carbon transition possible.
The leaders in this group have publicly set out business arguments for robust national and international policies on climate change. In a series of communiqués they have called for ambitious, science-based targets and international agreements, securing support from chief executives and senior business leaders of over 1,200 companies in 61 countries, including many of the world’s biggest brands, to alert the international community to the need for urgent action on climate change.
2015 will be a critical year. The decisions made at the UN Climate Change Conference in Paris next December will have immense power, either to set the world on the path to a low-carbon economy or send us far off track. Now, and over the long term, business leaders must work with policy-makers and civil society to transform the global economy. Failure to do so risks seriously undermining future global prosperity and inflicting unnecessary social, economic and environmental costs on the world. Only by making this challenge a priority can business leaders build society’s confidence in them.
Article first published in Guardian Sustainable Business.