Thursday, March 16, 2017

Sustainability Leadership: 500 Companies, 50 Drivers, 5 Reasons and 5 CEOs

Sustainability is a mainstream phenomenon that has become an imperative. Driven by a powerful logic it has taken root in the US and around the world. Many CEOs and businesses in the United States are already fully engaged. The business case for sustainability has never been stronger. Businesses are moving forward despite the fact that the Trump administration is a serious impediment to the growth of sustainability.  However, contrary to the assertions of this administration the evidence shows that sustainability is a boon and not a liability.

As recounted in a We Mean Business post, "Corporate-level commitments to take action against climate change are gaining unprecedented momentum as the business case becomes ever more compelling." This article points to the more than 500 companies worth over $8.1 trillion in annual revenues, that have now made over a thousand ambitious commitments as part of the We Mean Business coalition’s (WMB) take action campaign.

This diverse array of companies includes more than 200 of the world’s biggest corporations that are have joined the Science-Based Targets initiative. This includes companies like Walmart, General Mills, Diageo and recently joined United Technologies Corporation. A total of 87 companies have already committed to source 100 percent renewable electricity as part of the RE100 commitment, this includes Google, Apple, General Motors, Danske Bank and Gatwick Airport.

While there are numerous drivers of sustainability (click here for a list of 50) here are 5 reasons cited by "We Mean Business" that have helped drive 500 companies to commit to take action on climate change:

1. Cost savings from efficiency and emissions reductions benefit the bottom line. Walmart has saved nearly $1 billion in the past fiscal year and avoided emitting almost 650,000 metric tons of CO2, by doubling the efficiency of its US fleet between 2005 to 2015.

2. The global impact of adopting emission reduction targets have a global impact. To illustrate the point RE100 Member companies (87 and growing) are now creating demand for approximately 107 TWh of renewable power annually. According to a recent CDP report, leading suppliers disclosed reductions equivalent to 434 million tonnes of carbon dioxide from reduction projects. This amounts to $12.4 billion in savings, more than double the figure from 2015.

3. Evidence for the decoupling of growth and emissions. According to a CDP emission reductions and growth can be compatible. The CDP analysis shows how 62 companies have reduced greenhouse gases (GHG) while improving revenue growth. These decoupled companies have grown by an average of 29 percent while their emissions fell by an average of 26 percent. Conversely companies that have not decoupled growth and emissions saw revenue decline by 6 percent on average, while their GHG emissions grew by 6 percent. A WMB report in partnership with CDP shows that companies taking climate action are outperforming their peers, and achieving an average Internal Rate of Return (IRR) of 27 percent, with some US companies generating as much as 81 percent IRR on particular initiatives.

4. Sustainability drives innovation and opens new markets. The IKEA Group's investments in solar and wind has turned energy from being a cost center into a profit center. Philips innovative sustainability offerings saw increased sales of 15 percent in 2016 over 2015. Green products (especially low-carbon innovation) now represent a total of 52 percent of the company’s overall revenue.

5. The economic scale of sustainability is massive and businesses simply cannot afford to ignore the opportunity. The multi-trillion dollar opportunity associated with the transition to a low-carbon future is an economic boon. Implementing the Paris Agreement alone will unlock at least $13.5 trillion of economic activity globally. Renewable energy is at the forefront of this opportunity representing $7.8 trillion off the $11.4 trillion set to be invested in power generation globally by 2040.

As reviewed in a Triple Pundit article, here are comments from five successful CEOs that support the argument for engaging sustainability.

1. CEO Paul Polman is a sustainability champion that has been at the helm of Unilever for almost a decade. In a recent Fortune magazine feature titled "Unilever CEO Paul Polman’s Plan to Save the World," the Fortune 500 CEO said: "The real purpose of business has always been to come up with solutions that are relevant to society, to make society better."

2. Elon Musk is a prime example of a very successful business mind that sees real value in sustainability. Musk's leadership includes EVs (Tesla Motors), solar (Solar City), battery storage (Powerwall), the hyperloop and space travel, Musk is an innovator who is successfully leveraging technology for societal betterment. "We must at some point achieve a sustainable energy economy," Musk said last year, "or we will run out of fossil fuels to burn and civilization will collapse."

3. Another truly ground-breaking pioneer is Patagonia CEO Yvon Chouinard. He walks the talk as few others do. Sustainability is ingrained into the DNA of his company. "When we make a decision because it’s the right thing to do for the planet, it ends up also being good for the business," Yvon Chouinard wrote in his new book “Let My People Go Surfing".

4. Chobani founder and CEO Hamdi Ulukaya is a sustainability focused Greek yogurt king. He has recruited immigrants and refugees to work with him and he compensates them well recently giving 10 percent of his company’s stock to his employees in an ESOP. He has worked with other companies to file a legal brief opposing Donald Trump’s Muslim travel ban.

5. Sustainability-focused fashion mogul Eileen Fisher has been around for more than three decades. The company is moving forward with its 100 percent sustainability 2020 goals. This includes organic and sustainable fabrics, fair trade supply chains, and human rights. "These days I’m focused on the concept of good growth,” Fisher told Inc. magazine in 2014. “I constantly ask myself and my employees, How do we grow in ways that are sustainable, and ways we can be proud of?"

10 Reasons Why Patagonia is the World's Most Responsible Company  

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