A CONSIDERABLE number of newsworthy climate stories came out in the last two months. This year's Earth Hour and Earth Day celebrations are still fresh in mind, especially as the latter urged society to "invest in our planet" and act now. April notably saw a worldwide scientist-led protest following the release of the latest Intergovernmental Panel on Climate Change report. More recently, the BBC reported on "phantom forests" resulting from organizations that overpromised and failed to implement reforestation programs.
Two sentiments serve as a common connecting thread across these events. First, being that they are the largest contributors to greenhouse gas emissions worldwide, corporations are under intense scrutiny to adopt more environmentally sustainable operations and be at the forefront of climate action. Second, if we have any hope of cutting greenhouse gas emissions by 2025 and avoiding the darkest timeline for the planet, companies must work to reduce their carbon footprints with utmost urgency. Currently, it seems their efforts have been inadequate.
Sustainability reporting is primarily used to track a company's progress towards environmental, social, and governance (ESG) goals. However, there have been concerns as to the accuracy of these reports because studies have shown that many of the world's biggest companies tend to overstate or exaggerate their ESG progress. With a Google Cloud survey showing that even C-suite members and executives find their companies guilty of "green hypocrisy" or using sustainability as a buzzword, genuine climate leadership is more than ever needed among organizations. In the Philippines, the Securities and Exchange Commission (SEC) is set to make sustainability reporting mandatory for publicly listed companies (the PLCs) by 2023. It would be interesting to see whether many of the local PLCs will rise above the challenge and bring about genuine climate leadership.
On our part, we have expounded on the benefits and importance of tackling real sustainability in order to maximize the value of a business. But the question on the table is, how can companies enact actual change for the good of the environment?
Pioneer relevant sustainable practices
As illustrated in a report from the Natural Resources Defense Council, Inc. (NRDC), even if corporations commit themselves to a generous greenhouse gas reduction goal, this will only apply to the emissions from the corporation's own facilities and direct energy suppliers. There remains a significant number of downstream emissions, or greenhouse gas emissions released when consumers use and dispose of products, that are unaccounted for.
As such, companies must first display a full understanding of their environmental impact before they can begin to adopt sustainability strategies tailored to their business and industry. Put another way, they must have a grasp of the damage they inflict so they can find the most efficient solution. For example, supermarkets and companies in the fast-moving consumer goods (FMCG) industry, with products in single-use plastics contributing to the Philippines' "sachet economy", could reasonably start a plastic collection program to reduce their overall waste.
Well-planned strategies backed by an understanding of its effects and connection to climate issues show a company's dedication to the cause, especially if the green initiative is adopted holistically and embodied by the company culture. Corporate leadership advocating for the environment can inspire employees, stakeholders, and consumers to participate in these initiatives and adopt more sustainable practices in their day-to-day too.
Consider sustainable architecture and energy
According to the World Economic Forum, buildings make up 39% of the world's greenhouse gas emissions, and this value accounts for their daily activities and the materials used in their construction. In addition, concrete is also a significant source of carbon emissions. By revolutionizing infrastructure and operations, companies can stand to make a substantial impact on their ESG promises.
There are more eco-friendly alternatives to concrete, and in 2019 local engineering students found that an alternative mixture of concrete with locally sourced and recycled materials could greatly improve its environmental impact. However, unless companies have a need to relocate or rebuild their offices, a better way to compensate for carbon emissions would be to focus attention on energy efficiency.
Cooling is one of the most demanding uses of electricity for any building. Companies could consult with experts on how to utilize architecture to naturally cool rooms within the building. Smart and automated controls throughout buildings, such as sensors to detect when a room is empty, are also expected to save 10-15 percent of energy. Alternatively, companies could invest in the biofuels industry, the maturity of which could create a circular economy that could benefit related sectors.
Utilize new funding opportunities
In a recent webinar which I had the honor of moderating, a participant asked if the resulting economic returns were equal to or greater than a company's initial investment in sustainability. The answer is yes, according to one of the speakers, especially as the world places more emphasis on resolving climate change. Most companies adopt sustainability initiatives to increase business resilience, improve relations with stakeholders and employees, strengthen talent acquisition and retention, improve efficiency and reduce costs, etc. But these are considered as long-term returns. At this point in time, companies investing in sustainability initiatives will mostly be faced with costs.
In light of this, business leaders might consider applying for green bonds and sustainability-linked loans to increase their investment capital. These are loans used exclusively for environmental projects. Borrowers are given key performance indicators (KPIs) to ensure their compliance with the bond, and they are incentivized with a lower interest rate if they meet their KPIs. As the Philippines steadily increases its offerings of sustainability bonds, more companies should consider using this opportunity to kickstart plans to be more climate resilient in the long run.
Whichever methods companies choose to apply, it is vital that they face sustainability issues with compassion, commitment, and action. The writing on the wall has never been clearer: we need to address climate change now. There may be plenty of benefits for organizations to adopt a full-fledged sustainability model, but by far, the greatest advantage of our actions is ensuring the world our children inherit is one they can thrive in. Embarking on a sustainability journey should not just be for economic wins or for compliance. It should go beyond. It should be purposeful.
As published in The Manila Times, dated 18 May 2022