The Business Case For Action On Climate And Sustainability
Growing consumer demand for sustainable goods and services presents new revenue growth opportunities, writes Emily Styles
Climate change and sustainability have moved from being marginal Corporate Social Responsibility issues to being among the most important boardroom challenges facing businesses. That’s the view of Russell Smyth, Head of Sustainable Futures at KPMG, who adds that pressure from regulators and stakeholders in the coming years will change the commercial landscape for virtually all businesses. One of the key concerns facing many businesses considering the climate change and sustainability agenda is implementation costs. In the corporate arena, executives and directors typically feel pressured to demonstrate investment return within a two-year timeframe. Last year KPMG undertook a detailed analysis of companies across multiple sectors. “Our research shows that companies that focus on longterm value creation can deliver superior and more stable financial performance than their peers, both in the short and longer term,” says Smyth. “Business strategies that emphasize decisions taken for the long term are also more effective in an economic downturn.” In the KPMG report, Smyth stresses that there are positive opportunities decarbonisation and sustainability can bring for business. These span encouraging longer-term thinking, identifying market differentiation and revenue opportunities, through to attracting the right talent in an increasingly millennial-dominated workforce. Consumers are now much more aware of the environmental impact of the goods and services they are purchasing, and this will impact all businesses over the long term. “This presents significant new opportunities for businesses to grow new and existing revenue lines that have proven sustainability credentials,” says Smyth. “Sustainably sourced and produced products and services is one of the major shifts in consumer buying patterns at present. This global trend is evident in the Irish market, with sustainability and plastics recognised as one of the top trends influencing consumer shopping behaviour in 2019. However, Smyth cautions that companies and brands need to be mindful of the longer term impacts of ‘greenwashing’ within their sustainability strategies. Greenwashing is especially relevant in relation to employees, Smyth believes. “Employee engagement is increasingly dependent upon adopting best-in-class sustainability practices. The most pervasive impact for businesses will be the talented individuals who leave quietly or never join because an organisation does not live up to their values. “Employees are, by definition, on the inside and will not be diverted by greenwash or activities intended to appear sustainable and so present the greatest case for true integration of sustainability,” Smyth adds. AIB measures consumer attitudes to sustainability through a Sustainability Index based on regular surveys of c. 1,000 people. The bank’s June 2020 survey found that four in ten adults report that they are living sustainably, up from one in three in December 2019. This can be attributed to the impact of working from home, more people walking and cycling, and the reduced traffic levels. Half the respondents stated that sustainability has become more important to them personally since the Covid-19 pandemic locked down society. Given more time at home, people have been enthusiastically adopting more sustainable practices, according to the AIB survey. More than half of respondents reported that they now do more home cooking and DIY, while around the same amount are attempting to reduce food waste. In other encouraging signs, 45% of people are cycling and walking more, while onequarter are growing their own fruit, herbs or vegetables, and helping more in the community.