While the escalation of extreme climate events continues, companies are realizing that business strategies need to address climate resilience and responsibility proactively. Transparency on corporate social responsibility practices has become a key business practice as investors and public pressures have demanded insights into how companies operate.
Internalizing Those Environmental Externalities
The 1992 Rio Conference introduced the concept of sustainability to be “meeting the needs of the present without compromising the ability of future generations to meet their own needs,” which spurred the business world to encourage innovation and resilience while mitigating risk, minimizing waste, and addressing stranded assets.
Companies such as Dr. Bronner’s, Wal-Mart, and Costco have adopted CSR initiatives within their supply chain that address not only job security, but pledge to protect surrounding environmental and social communities from production practices, and ensure their products and services promote sustainable solutions. These practices, along with others such as board diversity, carbon offsetting, or waste management, require the creative collaboration of interdisciplinary teams within a company.
From the Production Line to the Executive Suite
The creation of sustainable value comprises a vision that is interdisciplinary, open to constant development, and one that is also embedded in the organizational structure and business strategy.
According to the MIT Sloan Management Review’s Corporate Sustainability at a Crossroads, 90% of executives consider sustainability a critical aspect of business development, but only 60% of companies have a sustainability strategy established. This is a testament to how important it is for everybody that is interested in sustainability to get involved and make it happen in their workplace.
As corporations worldwide reflect on their impact to identify improvement areas, we are seeing CSR and ESG become more commonly ingrained in markets.
Long-Termism Dedicated to Resilience
As unforeseen destruction of factories, farms, and production lines are becoming a more prominent risk for ROI, resilient infrastructure and adaptable business models have become the best way for companies to prepare for a successful future.
Resiliency is getting the critical attention it requires from numerous markets: it is now Goal 11 for UN’s Sustainable Development Goals and GRESB’s optional (soon to be mandatory) Resilience Module. Resilience planning requires companies to assess and develop strategies to avoid communal, production, environmental, and monetary loss for the next five, ten, and even twenty years ahead.
Since the world as we know it either flourishes or deteriorates from disruption, it is the awareness of potential losses and risks that will put companies ahead of the curve. Leading organizations must address future risks with setting specific, measurable, assignable, relevant, time-based (SMART) goals, being adaptable, and staying accountable as an entity.
This can be done by participating in international benchmarks (e.g. GRESB, CDP) and comparing best practices so that the market can offer accessible tools and best practices in ESG initiatives. As we continue to progress through the information age, data is the new oil, and investors are noticing.
Setting the Standards for Benchmarking
By collecting data on efficiency, social impacts, resiliency, consumption, and wildlife habitat rehabilitation, we were finally able to measure the profitability of sustainability and resiliency, both in the short and long term.
This data has opened the doors to setting global benchmarking standards. Current standards either focus on reporting (GRI, GRESB, B Corps) or measuring environmental impact (CDP, DJSI, SASB). With the sophistication of these standards, sustainability and resilience will continue to progress and develop. Companies with the best performance are those that internalize those externalities, utilize the diversity of their company and departments, address resilience with long-termism, and measure all initiatives with quality data not for scores but for best practices industry-wide.
Investors are focusing on those who are doing good and managing well, therefore shifting the focus of the market to measurable goals, quality data, and accountable reporting.