Discussions at COP26 this week are shining a light on the impact of business on the environment and highlighting that many organizations are still putting profits over the planet. As recently as 2018, the commercial sector was responsible for 18% of CO2 emissions alone, just behind homes. In the same year, US industry accounted for more than a fifth of domestic greenhouse-gas emissions, according to a Senate Democrats’ report. And in its 2019 progress report, the UK committee on climate change said: “It will be businesses that primarily deliver the net-zero target and provide the vast majority of the required investment.”
What’s clear, is business has a big role in reaching the ambitious targets set by COP26.
Governments must continue to focus on climate change policy, and business – while taking profits into account – must become more accountable. Which is why the ‘triple bottom line’ is crucial.
The triple bottom line
Today progressive companies are using the accounting and sustainability framework of the triple bottom line – which combines profit, people, and the planet – rather than solely focusing on generating profit, the standard ‘bottom line’. And many are doing so, while increasing profits.
Take Ikea as an example. In 2016, a year when the company sold over $37 billion in goods, it saved $1 million by recycling waste into its products. It has created a goal of sending zero waste to landfills globally, and 98% of its home furniture materials are already made of renewables. This makes sense not just from a sustainability standpoint, but from a cost reduction one. What’s more, it makes the company appealing to consumers who are focused on sustainability and climate change.
More companies are getting on board and it’s being driven by consumer expectations on business practice. More than 4 in 5 consumers consider climate change, diversity and inclusion (D&I), and the ethical business practices when choosing a business to purchase from, according to our recent research report.
It’s therefore no surprise that more businesses are responding to this demand. Amazon has launched a $2 billion fund to advance technologies that cut greenhouse gases, tech provider Cognizant has announced a $250 million commitment to global CSR initiatives. In addition, Facebook has implemented a number of initiatives that use its supplier diversity program to invest in the community. This is not exclusive to big tech, with businesses across the globe have started, and continue to, measure the triple bottom line. Clearly, much more can still done, but more companies are taking action.
The crucial ingredient for ensuring the triple bottom line is an effective measure of success, is accurate data. Without organizations having a complete, up-to-date picture of what’s happening across their many departments, the concept of the triple bottom line will fail. Such interconnectivity will be tough to achieve. But a high level of analytics maturity will allow businesses to not only measure their performance better, but actually perform better too.
ESG and CSR Initiatives – reputation matters
As businesses embrace Environment Social and Governance (ESG) initiatives and focus on Corporate Social Responsibility (CSR), it is also having a marked impact on their reputation and ability to connect with customers. With over half (53%) of CSR decision makers feeling that their ability to show progress on CSR and ESG initiatives would help them maintain and gain customer loyalty. They’re not wrong. Around half of consumers agree with this statement.
But businesses can’t just talk about CSR or ESG, they need to demonstrate that they are making real changes that will move the needle when it comes to climate change, diversity and ethical practices. Consumers, governments and COP26 want proof!
The question is how and where do companies start? According to our data, the top source of data that consumers would trust in regard to a company’s position on climate change would be a government-driven benchmark which shows how the company measures against competitors. Other elements such as industry benchmarks and videos from well-known climate change activists mentioning the company would also work as proof.
Again, data will be critical to managing such benchmarks. And COP26 has a major role to play in kickstarting the development of this kind of framework, that businesses can follow and individuals can trust.
Data, CSR and planet over profits
We are at a critical juncture. Companies, consumers and governments must work together and hold each other accountable for climate change. And we are already seeing the hallmarks of change.
It begins with the access to data and platforms that can help businesses to truly understand their impact on the planet and inform the decisions that they make around the triple bottom line. By embracing this approach and driving a data revolution, we will see more companies to prove that they are not all talk. And that their initiatives are making a real difference.
After all, we only have one planet. It’s time to put it first.