Celebrations for Earth Day this year may have been confined to the indoors, but we can at least be thankful for one thing: A recent study from the World Economic Forum indicates dramatic reductions in nitrogen dioxide emissions and coal consumption, signifying a silver lining for climate change. Oil prices have even gone negative for the first time in history, setting the stage for green energy growth.
Make no mistake: this is an anomaly. Halted manufacturing facilities, grounded aircraft and closed offices are all temporary. In fact, the short-term environmental benefits of lockdown may well be offset by disruption to collective action: UN climate talks set to take place in Glasgow in November have already been postponed to 2021, delaying a round of new global commitments. And despite our behavioural changes, carbon emissions reductions this year will still fall short of what scientists are saying is necessary.
So before we go patting ourselves on the backs for this year’s reductions, let’s remember that the economic fallout from global warming is set to soon rival that of COVID-19. Still, the way we bounce back from the current economic downturn offers a unique opportunity. Can businesses translate the positive short-term side-effects of lockdown into a greener economic recovery in the long run?
Build operational resilience and prioritise sustainability
The damage we have done to the climate is the ultimate example of humanity’s weakness for short-termism, but the tools at our disposal today allow for unprecedented insights to improve long-term sustainability. New possibilities in data capture, most commonly utilising machine learning to enable real-time, centralised access to disparate data sources, means businesses can track their output like never before.
Through cloud-based networks linking together millions of buyers and suppliers, businesses are gaining extraordinary visibility into supply chains and asserting accountability over previously far-removed sourcing decisions. According to McKinsey, over 80% of greenhouse-gas emissions in most consumer-good categories occur in supply chains. Supply chains can be vast and complicated, but when a company takes a holistic view of its procurement and supply networks, it gains the insights necessary to make conscientious, environmental decisions.
These insights need not be restricted to one’s own network: new open data initiatives are being encouraged to enable companies to contribute these insights to aid a greater cause. Microsoft has called on governments and companies around the world to share more of their data with other organisations, and hopefully more will follow suit.
Be transparent. Your stakeholders are watching
Communicating your climate position, while no substitute for action, sets an example in your sector, and eases consumer concerns. Everyone has a part to play – even small or non-energy-intensive businesses. Digital businesses are far from exempt: being paper-free does not automatically make an organisation environmentally progressive (remember, the average email actually equates to roughly four grams of carbon emissions).
Your stakeholders, including investors, are paying close attention. While COVID-19 has certainly turned the spotlight away from climate change, it has not been much of a decoy; as reported in the FT, big investment groups have urged companies to maintain their focus on reducing carbon emissions, even as businesses grapple with the economic fallout of coronavirus. With this in mind, business leaders would be wise to ensure their economic recovery is a green one. Bouncing back from a rough 2020 will be an urgent goal for businesses, but it mustn’t obscure long-term ambitions and ethical principles.
Employees and clients will be keeping tabs too. The workforce of the future, as well as the next generation of consumers and investors, will be far more environmentally conscious and ethically minded. 1.4 million young people around the world took part in school climate strikes last spring: when they’re of working age, they’ll be basing their employment decisions on business ethics far more than having pingpong tables or casual Fridays. Now is the time to spell out your brand values in a way that resonates with this generation.
Pledge a net zero commitment
While regulatory activity may be on pause for a few months, carbon taxes have been in the works for some time – the EU is looking at a ‘carbon border tax’, for example. It may be wise to get ahead of these potentially stringent taxes. Beyond the obvious virtue of reducing emissions, you have the opportunity to send a clear message to stakeholders. Do you want to be seen to be taking action of your own volition, or under duress from a tax introduction? For energy intensive businesses, there are proactive government incentives in place, such as Gov UK’s Climate Change Agreement (CCA) scheme.
Perhaps the biggest statement can be made with a net zero pledge. Companies including BP, Barclays, Nestlé, and IAG airlines have all set net zero targets, typically for 2050. For those with even bolder ambitions, follow Microsoft’s example: it launched an aggressive program to cut carbon emissions by more than half by 2030, both for direct emissions and for its entire supply and value chain.
Of course, these commitments must be realistic. This is not a vanity project, and a pledge must come with a data-driven, up-to-date plan.
Happy Earth Day. Remember – we only have one.