Taking a value-led approach to sustainability

Everyone should care about climate change. At COP27, government representatives from all over the world meet to talk about how to slow climate change. The private sector also has a role to play. Almost all businesses have accepted this fact. In a survey of more than 500 companies that are leaders in sustainability, we found that 93% have made public commitments about climate change. Even so, progress is still too slow to bring about the cuts in emissions that the world needs.

But companies that act quickly on climate change don’t just make the world a better place. They also make more money for themselves, as shown by things like revenue growth and earnings.

This goes against the idea that you have to choose between financial and non-financial effects. On the contrary, for a subset of “pacesetter” companies that took the most risky steps, taking comprehensive action on climate change increased customer value (such as how customers felt about the brand and how they bought things) and employee value (such as how well they hired and kept staff), which in turn increased financial value. These companies are 2.4 times more likely than companies that don’t do much about climate change to say that their climate initiatives have given them a lot more money than they expected. They have also cut emissions more than they had before.

Putting climate action at the centre of business strategy brings value in a number of important ways. The sooner a business starts, the more it can learn and the more value it can get out of it. What helps the environment is also good for business.

There is an urgent need to do something about climate change. In the next few years, there is a small window when it is still possible to keep the temperature rise on Earth at 1.5 degrees Celsius.

Companies play a big role in this, but they need to change the way they think about this problem. They shouldn’t think that there is a trade-off between making money and helping the environment. Instead, they should see climate initiatives as a way to protect business, society, and the planet while creating more value for all three at the same time.

Sustainability projects bring financial value in a lot of different ways. From our survey, we know that 69% of companies are already getting better financial returns than they expected from their investments. They are getting just as much value for their customers, employees, and society as they are for themselves.

Our research also shows that taking action on climate change is a process. As businesses do things to fight climate change, they build their own skills, which makes it easier for them to do more.

One important thing to take away from these results is: Get started. Companies that have been setting goals, putting plans into action, building their capacity, and making themselves more resilient for longer are creating more value and having less trouble putting their plans into action than companies that are just starting out.

When we look at what those who are leading the way can teach us and where they and others still need to improve, we can see a number of things that companies should do to make their climate agendas more valuable for their stakeholders and for the planet.

Challenge your level of ambition. Even among the companies in this survey that have shown they want to change, we aren’t seeing goals that are ambitious enough to meet the goals of the Paris Agreement.

Recognize that the problem is complicated. Having a real effect on reducing emissions is a complicated process that needs measurements to track progress and measure return on investment (ROI) from the start.

Collaborate: Work together both within your own field and with people in other fields. This is a problem that affects everyone, and working with industry and groups from different fields will speed up the process of change.

Influence your supply chain. Many organisations will be able to have the most impact on reducing emissions by working with and supporting their suppliers in their supply chains.

Invest in people. Too many companies know there aren’t enough people with skills in sustainability to meet the challenge, but they don’t make this a priority. Upskilling in all of the organization’s important roles and bringing in experts can be sources of advantage.

In the coming years, the best companies will be those that use climate action to make strategic decisions, drive innovation, and get the most out of their money.