Corporate Action on Climate Change Needed More Than Ever
- Last year, according to UNEP, global emissions fell by 7% due to slow down effect of COVID-19 pandemic.
- Corporations must harness this fragile moment and build a path to a greener future.
- Here are four considerations for implementing environmental, social and corporate governance transformation.
For all the pain that 2020 wrought upon societies and economies around the world, it also brought some positives. Chief among them was the increased awareness for all of us—big corporates included—to prioritize climate change and the delicate balance of nature as we head into 2021 and beyond.
Addressing it will require a massive reduction in C02 emissions. Last year provided a glimmer of hope: according to UNEP, emissions fell by an estimated 7% as economic activity and travel around the globe ground to a near halt.
However, the fall in emissions only represented temporary relief and it was the result of conditions that none of us wants to repeat. To ensure the change is real, lasting, and of a magnitude great enough to stop global temperatures from rising even more, requires a fundamental and rapid change in the way we all live and work.
It also requires collective action, spanning the public and private sectors, policy makers, and ordinary citizens. Every one of us must change the way we think about our lives and how we produce and consume: in our homes, factories, transport and energy systems, and cities.
The good news is that the technologies that allow us to create a greener, smarter and fairer future exist, and are increasingly viable and economically competitive: think electric vehicles, and solar and wind power. Digital solutions allow us to be more efficient with our use of resources—lighting, heating or cooling—in warehouses, shopping malls, office high-rises and airport terminals.
As major economic players, corporations such as ours have an important role to play here – both as developers of new solutions and as users of them. Our capacity to innovate, R&D and investment decisions, global footprint, and our commitments to environmental, social and governance (ESG) issues, are big enough to matter not just to ourselves, but to our wider economic and social ecosystems.
So, how can a successful ESG transformation be implemented? How can we design a journey where the destination, the road and the people you are traveling with are all crucial?
1. Developing solutions
The starting point is our action, which needs to be centered on developing solutions for a sustainable growth in our daily business and activities. At Schneider Electric, for example, we design and deliver climate-positive solutions, that drive efficiency, leveraging the power of digital innovation and technologies.
2. Culture of commitment
Crucially, ESG transformation needs to come not just from the top, but extend to the underlying mindsets of the entire organization, spanning everything from what the business does, to how it behaves: such as diversity, inclusion, openness and ethics.
This needs to be part of an organization’s people and values, with public pledges and transparent execution, measurement and constant re-calibration as we progress and innovate. Sustainability commitments cannot just be a one-off.
At Schneider, we began our journey 15 years ago, and we have kept raising the bar for ourselves, and for our customers and partners, reinforcing our commitments every three years, in line with our purpose to empower all to make the most of our energy and resources, bridging progress and sustainability for all.
3. Shared vision
Partnerships and coalitions are an important part of the story. Corporate ESG strategies need to take a big-picture view and address impacts across entire value chains—customers, suppliers, and the ecosystem of partners—ensuring that sustainability commitments, policies and solutions extend across them.
All of this is in the collective interest – and it’s also what our customers, employees and investors increasingly value and demand. That’s why we have been actively supporting the UN Global Compact on the Sustainable Development Goals, He4She for inclusion, Act4Nature for biodiversity, and the Business Ambition for 1.5C on climate, among others.
4. Embedded approach
ESG is a systemic approach embedded at every level of a company: from business to partnerships, from culture to governance, to assess every progress and every difficulty. Doing so allows us to provide support and mobilize, to ensure an impactful action.
The past year has taught us that we can make choices and decisions, and take actions that we never made before. Rules and behaviours that we thought were set in stone can change – and more quickly than anyone believed possible just 12 months ago.
There are positive political signs too. The EU, China, Japan and others have made ambitious commitments to a green future. The US is rejoining the Paris Agreement on climate change. Over 370 companies—with a total market capitalization of more than US$3.6 trillion—have committed to reducing their emissions, in a bid to create a net-zero future by 2050.
If 2020 taught us anything, it’s that the future is ours to shape. The time is right for the Great Reset.
This article is part of the World Economic Forum’s Davos Agenda 2021. Find out more here.