Do businesses across Australia — and the world — know what to do about climate change?
It’s fair to say most of the world has clued in on the fact that climate change is a problem.
In a conference run by Moir Group last week — attended by more than 50 chief executives, chief financial officers and company directors — Australasian Centre for Corporate Responsibility (ACCR) director of climate and environment Daniel Gocher and Greenpeace Australia REenergise campaign director Lindsay Soutar agreed the debate has certainly “moved on” from whether businesses need to worry about climate change to how they should take action to tackle it.
But do companies actually know how to address climate change, or how to set and achieve sustainability targets that will keep consumers and investors on board?
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In Moir Group’s conference, titled I get that climate change is a problem. What do I do as a CFO in my business?, more than half of the C-suite participants said they were either “in the middle” of trying to address climate change within their business, or weren’t addressing it at all.
What does your climate change pathway look like?
When it comes to mapping out a pathway to take action, Gocher said “the first thing businesses need to tackle is climate governance”.
That’s who is responsible for managing climate within the business and who they will report to, whether it’s an individual responsible; a team made up of representatives from different divisions; someone on the board that has a responsibility for managing climate risk; or an entire sustainability committee.
“That’s the first question you should be asking,” Gocher said. “Who is going to be taking responsibility for the problem?”
Gocher said mapping out this process is essential, from this starting question to how to reduce emissions and waste in your own business, to figuring out how to weave sustainability practices into KPIs for the team, and then evaluating your entire supply chain.
“Focus on your knitting”
So once you’re acting on your environmental, social and governance (ESG) goals, how do you evaluate your progress? A question asked by many CFOs on the call was whether the multitude of score cards, rankings and grades are a worthy indicator of progress.
Gocher answered that he doesn’t think they actually capture how well companies are committed to climate action and that they have become checkbox exercises as “companies have essentially figured out how to game those systems”.
Rather, Gocher said the answer is to “focus on your knitting and get on with it”.
“If you can explain what you’re doing and you’re comfortable with that, then I think that’s more important than trying to satisfy a sustainable ratings agency.”
So while rating scores isn’t where you should be focusing your energy (no pun intended), Gocher does believe it’s the role of small businesses to spend a lot of time lobbying industry associations about the impact those associations and groups are having on climate change.
“And there is a role for small companies and mid-sized companies to play in influencing the role of those groups,” he adds.
“There’s not going to be a lot small or medium-sized companies can do about it unless we all get our act together.”
The shift in values towards building more sustainable companies didn’t occur overnight, and isn’t solely due to an understanding of the physical effects of climate change. A lot of it has to do with the fact that “the money’s moving”, Gocher said.
The market signal is changing; shareholders are telling companies they have to make changes; investors and banks are “forcing their hand”; and generations are electing to not work in industries if they aren’t aligned with their values.
But while there’s no denying the many negative effects of climate change, businesses — and the people within — should feel hopeful about the bright silver lining: opportunities.
“There’s opportunities in the transition to pivot your businesses into making products that will be in greater demand,” Gocher says.
“The best way to look at climate change is that it’s not a cost anymore: it’s an opportunity.”
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