Sustainability is no longer a buzzword. As the world works towards finding appropriate solutions to the climate crisis, consumers are becoming increasingly aware of the impact that their personal choices have. More people than ever before are seeking to become sustainable, and they are ready to pay more for products that can be certified as being environmentally friendly [1].
Greenwashing, or making a product seem more sustainable than it is, has been the status quo for businesses appealing to customers’ demand. However, as a study by Deloitte highlights, younger generations have caught on, and they value companies who promote a progressive agenda [2].
Sustainability is a financial opportunity
The cost of not adapting to climate change-driven market demands will lead to trillions in stranded assets [3]. Investments and projects are considered stranded if they have unexpectedly become liabilities due to an unplanned obsolescence or reduced demand. This is not limited to fossil fuel companies, but every other sector – climate change’s effects are global and will affect businesses regardless of their industry or position on the supply chain. As several reports from the CDP Worldwide point out, the cost of implementing a sustainable business model will pay off in the long-term, not just by reducing an entity’s carbon emissions and mitigating climate impacts, but also by streamlining services, reducing overheads, increasing returns and meeting customer demands [4, 5]. Adopting a sustainable business model is future-proofing [6].
Evolving with the times
“Adapt or die,” noted the United Kingdom’s Environmental Agency ahead of the United Nations climate change conference in November 2021 (COP26) [7]. Consumers value truly sustainable products and global governments are serious about decarbonizing their economies. Major actors within the private sector have recognized the risks of not adopting a sustainable business model and are transforming their industries. Yet, many institutions have not analyzed their own, or their portfolio’s impact on the climate [5]. With major sustainability goals set to be reached within this decade, there is a pressing need for businesses to evolve with the times or risk being left behind – what will you choose?
Key takeaways:
- 93% of people are generally concerned by the environment [1];
- Consumers trust brands making social and environmental progress [2]; and
- 49% of financial institutions indicate they do not conduct any analysis of how their portfolio impacts the climate at all [5].
References
[1] Southern Cross University, 2019, “Going Green”, Southern Cross University.
[2] Deloitte, 2021 “The Deloitte Global 2021 Millennial and Gen Z Survey”, Deloitte Touche Tohmatsu Limited.
[3] Ben Caldecott, Elizabeth Harnett, Theodor Cojoianu, Irem Kok, and Alexander Pfeiffer, 2016, “Stranded Assets: A Climate Risk Challenge”, Inter-American Development Bank.
[4] CDP, 2019, “Global Climate Change Analysis 2018”, CDP.
[5] CDP, 2021, “Financial Services Disclosure Report 2020”, CDP.
[6] C.P. Gurnani, 2020, “Sustainability and profitability can co-exist. Here’s How”, World Economic Forum.
[7] Environment Agency, 2021, “Press release: Adapt or die, says Environment Agency”, United Kingdom Government.