Companies that ignore their impact on the environment don't just alienate customers and turn off investors. Ultimately, says a new business brief from the United Nations Environment Programme (UNEP), they face "existential challenges".
The GEO for Business brief, Adapt to Survive: Business transformation in a time of uncertainty calls on businesses to dramatically reduce their environmental footprints. Failure to make the transformation, it warns, is a risk to their survival.
A how-to guide for businesses looking to transition to more sustainable practices and operations, the brief, which is the first of a series,builds on UNEP's flagship report, the Global Environment Outlook 6 (GEO-6), a 2019 scientific study that examined the health of the planet. According to the brief, unless the world slashes the environmental degradation caused by energy, food and waste systems, many of the earth's natural systems will collapse.
"Now is the time to put nature at the heart of all decision making and embark on transforming our world." emphasizes Joyce Msuya, UNEP Deputy Executive Director.
"The private sector has the resources and ingenuity to steer us towards a greener future. This is the smart choice. This is the only choice. Business leaders that think long-term must act collaboratively, across sectors to embed sustainability into our definitions of success" she adds.
The GEO for Business inaugural brief calls for businesses to embrace a "nature-positive" economic model - one that reduces their carbon footprint, conserves natural resources and safeguards biodiversity while creating value for nature and people.
The business case for sustainability
"This is the one planet we live on and the one planet we have to do business on," says Ben Tuxworth, an author of the brief and the director of consulting firm Anthesis Group. "The model where businesses essentially create value for shareholders without regard for social and environmental impact is coming to an end. Many firms will have to completely rethink their business models to make a transformation."
Alberto Garza Santos, a Mexican entrepreneur, who has founded companies that specialize in wind power and eco-friendly sanitation, finds that there is a compelling business case for going green. In recent years, Garza Santos - who also works with UNEP to promote environmental causes in Mexico - has seen consumers increasingly shun companies that forsake their responsibilities to the planet.
"Thanks to social media and cell phones, we are so informed right now," he says. "As the population gets younger, new generations will demand even more environmental responsibility from companies. They will decide who lives and who dies," he warns.
Businesses will also face pressure from investors, finds the GEO for Business brief. Take for instance, the investment firm BlackRock, which had more than US$6.8 trillion in assets under management last year. The company called climate change one of the most "significant" risks facing the corporate world and has begun to target its investment decisions using environmental sustainability criteria.
The UNEP brief notes that companies will also have to contend with tightening environmental regulations. Several countries, including Germany and South Korea, have set targets to reduce their carbon emissions to net zero by 2050 or earlier. Governments as diverse as China, France and Israel have announced future bans on petrol- and diesel-burning cars. Ethiopia has even unveiled an economic master plan intended to develop "a climate‐resilient green economy by 2025".
Building back better
The pandemic has challenged us all. However, as economies begin to rev up again, the brief urges smart business leaders to re-evaluate how they operate. Its authors recommend they examine how to "break away from a locked-in, linear, extractive and fossil-fuel-based economy" towards investments, practices and job creation that bring value for nature and people.
"Business success is inextricably linked to healthy people and ecosystems," says Denise Delaney, an author of the GEO for Business brief and a partner at Environmental Resources Management. "Yet, COVID-19 has exposed the fragility and vulnerability of our health and ecosystems. Now more than ever, we need global resilience and we hope that this brief offers business a pathway and the light at the end of the tunnel: a nature positive economy."
If businesses are still waffling on whether to make the investments necessary to go green, Garza Santos has a message for them: "Bet on it. The consumer will be on your side. And it will pay for itself," he says. "You will have the wind at your back."
The way forward is clear, reiterates the Geo for Business brief. Forward-thinking businesses are already on the pathway to a green transformation, but more need to follow, or will find themselves left behind.