Three ways to step up corporate sustainability leadership
March 02, 2016
On the heels of the historic Paris climate agreement, corporate executives now have a greater opportunity – and obligation – to demonstrate 21st-century sustainability leadership and to pave the way for more ambitious climate action, writes Environmental Defense Fund’s Tom Murray.
At COP21, the governments of almost 200 nations spoke with one voice to fight climate change. Global corporations played a critical role in making this breakthrough moment possible. Now it’s more important than ever that US business leaders continue to lead, sending a powerful message to the world about our commitment to a thriving, clean energy future.
So what can forward-thinking companies do to show leadership on climate and position their firms to succeed in the low-carbon future? Here are three ways that corporate leaders can step up their sustainability efforts in 2016:
1. Set public, science-based emission reduction goals that extend beyond your operations and into your supply chains
Companies around the world are increasing their climate leadership and ambition. Announcing big numbers is no longer enough. Greenhouse gas (GHG) targets must be based on what science tells us is required to limit warming and stabilize the climate.
One major corporation that has actively engaged its supply chain is Walmart. Working closely with Environmental Defense Fund (EDF), the world’s largest retailer exceeded its 5-year goal and reduced 28 million metric tons of GHG from its global supply chain and product life cycles. EDF was on the ground, providing the science and uncovering the GHG hotspots in Walmart’s supply chain. By sending the right demand signals, Walmart was able to engage its vast network of suppliers to unlock innovation and drive emission reductions, proving that big goals drive big innovation.
In addition, Kellogg has announced it plans to cut GHG emissions by 65% across its own operations, and for the first time, work with suppliers to cut supply chain emissions by 50% by 2050.
Leading companies recognise that today’s environmental challenges are too big to tackle on their own. Taking a systems-approach means looking beyond the four walls of your company, collaborating with key supply chain partners, and sending a clear demand signal for sustainable products and practices across your supply chain.
2. Incorporate a price on carbon into business planning
According to CDP, the international non-for-profit organisation, corporate use of an internal price on carbon nearly tripled between 2014 and 2015, to 435 companies, and more than 500 additional companies plan to implement a price in the next two years. BP chief executive Bob Dudley recently took a public stance, calling on governments to adopt carbon pricing as the most effective way to transition to a low-carbon economy, saying, “It incentivises greater energy efficiency and energy saving. It incentivises lower carbon choices – like replacing coal with natural gas in power generation, as well as replacing fossil fuels with renewables or nuclear energy. And it incentivizes investment in R&D to improve energy efficiency and discover the next generation of low carbon technologies.”
Leading consumer brands such as Colgate-Palmolive, Campbell’s and global industrials like General Motors have assigned an internal price to their carbon emissions because it’s a smart way to plan for the clean energy economy and help achieve GHG reduction targets.
3. Align your company’s public policy advocacy with its sustainability goals and operations
Voluntary efforts to address sustainability within company operations have made a difference and will continue to be a critical pathway for innovation. But this alone is no longer sufficient to meet the size and scale of the challenges we face. Businesses must take the next leadership step – helping to shape and support the smart regulatory and policy changes required to preserve the natural systems that people, communities and companies need to thrive.
Today’s corporate leaders have an opportunity to weigh in on regional and national policies that actively address future business risks and supply chain disruptions from climate change. Those brands that are already stepping up and publicly supporting smart climate policy are sending a clear signal to investors, suppliers, customers and employees that growing the business sustainably is a priority.
There can no longer be a disconnect between a company’s sustainability practices and its policy support. By aligning internal sustainability strategy with external engagement in public policy, corporate leaders have an opportunity to rewrite the playbook on how businesses can thrive while protecting the planet. Now is the time for new innovation, new thinking and new leadership.
Environmental Defense Fund (EDF) has been working with the private sector for 25 years, shaping the future of corporate sustainability leadership by partnering with powerful brands in private equity, retail, shipping and fast food.
Tom Murray, vice president of corporate partnerships for Environmental Defense Fund, has been on the front lines of corporate sustainability for more than a decade. He is an advisor to the American University Center for Environmental Policy, Greenhouse Gas Management Institute and Newsweek Green Rankings.
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