Climate change and environmental pressures are going to increasingly disrupt business as usual. However, as many businesses battle with the fallout from Covid-19 and Brexit, some may assume that corporate action on climate change may drop down the priority list.
The Carbon Trust has found that, in many cases, the opposite is true. Research undertaken last year found that Covid-19 had actually resulted in sustainability gaining greater recognition in large companies around the world.
Over 70 per cent of companies interviewed for our ‘Corporate attitudes towards sustainability 2020’ research, said environmental management and/or sustainability priorities are likely to become ‘somewhat more important’ or ‘significantly more important’ for them as a result of Covid-19.
Companies in the wholesale and retail, construction, engineering and mining, manufacturing and healthcare sectors were the most optimistic about the growing importance of sustainability as a corporate priority – over 80 per cent of those interviewed in each of these sectors said it would be ‘somewhat’ or ‘significantly more important’.
Even those companies that have been significantly impacted by the pandemic still believe sustainability – which includes the use of natural resources and the reduction of environmental impact across the organisation – is going to become more important. Of those experiencing significant disruption, 69 per cent expect environmental management and/or sustainability to become ‘somewhat’ or ‘significantly more important’.
We commissioned B2B International to undertake the research which included interviews with 453 large companies in six countries (Germany, France, Mexico, Singapore, Spain, and the UK), in a wide range of sectors including business and financial services, IT and telecoms (20 per cent), manufacturing (22 per cent), wholesale and retail (seven per cent); and transport, storage and communication (seven per cent).
Three quarters of those interviewed said that their business had been negatively impacted by Covid-19. The worst disruption was experienced in Spain, but the impact was reasonably consistent across all geographies.
The research was undertaken in July 2020 so does not reflect business confidence following further waves, however the findings are consistent with the Carbon Trust’s experience of increased demand for our corporate sustainability services.
It appears that the pandemic has strengthened the importance of properly assessing and mitigating risk and this has inevitably elevated sustainability issues in company boardrooms across the world. The climate crisis presents risks that no business can afford to ignore.
We also know that the pandemic has demonstrated all too well that denial and delay are deadly and provided many valuable lessons that apply equally to the management of climate risk (for more on this read Learning from coronavirus: why 2020 matters for climate, at: bit.ly/3oBhCTC).
Many companies are also responding to a shift in customer demand. The majority of companies (74 per cent) believe that sustainability will become more important to their customers as a result of Covid-19 – with almost a third saying it will become ‘significantly more important for their customers’.
Another positive is that budgets are also increasing – 63 per cent of those interviewed said their sustainability budgets will get ‘significantly’ or ‘somewhat bigger’ and only 16 per cent said they would be ‘somewhat smaller’.
The research findings come at a vital time given the urgency of focusing on, and delivering, a green recovery – achieving net zero targets at the same time as fostering economic activity. They also indicate that businesses are on the right course ahead of COP26, to be hosted by the UK, in partnership with Italy, in Glasgow from 1-12 November this year.
The UK government is encouraging businesses of all sizes to take climate action in the run up to COP26. For large businesses this should mean committing to, and setting, science-based targets (sciencebasedtargets.org), and joining the Race to Zero (bit.ly/3hD70lX). While for small and medium sized businesses, it is suggested they also join the Race to Zero via the SME Climate Hub, businessclimatehub.org/uk
Sustainability is rightly growing as a business priority and our research shows that, despite extremely challenging market conditions, this is an area that businesses are prioritising.
With COP26 just months away we expect to see momentum continue to build and the business community play its part in responding to climate risk.
Read the research report at: bit.ly/3bHjDZf
Hugh Jones is managing director, Advisory, at The Carbon Trust
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