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Enter: The third transformational wave

October 15, 2019


Enter: The third transformational wave

By Mathias Lelievre, CEO at ENGIE Impact

Globalisation came first, then focus shifted to digital transformation and now, businesses want to drive sustainability.  

After the Paris Agreement was adopted in December 2015 and later signed by 175 Parties globally, there emerged a new urgency for businesses, cities and governments to respond to the threat of climate change for the future of the planet.

The drivers are significant: decreasing costs of more efficient and renewable energy solutions, the opportunity to implement new business and operational models that reconcile growth and sustainability, and of course, significant stakeholder pressure for customers, citizens, employees and investors. The conversations have shifted dramatically fast from “What it will cost me?”, to “Where should I invest? On which technologies? What is my return on investment?”

Three and a half years later, many businesses and cities are responding to market and stakeholder demands and embedding sustainability as a key pillar in their organisational strategy and purpose.

Since 2015, the number of businesses making commitments through initiatives such as RE100 and Science-Based Targets has grown exponentially, and the number of cities making significant commitments to reduce greenhouse gas emissions grew from 40 in 2010 to 228 today. The Under2 Coalition, of which The Climate Group is the Secretariat, now has over 200 members. Their commitments will allow them to not only thrive economically but deliver environmental benefits their stakeholders and citizens are increasingly demanding.

Although the aforementioned business members are making good progress, according to analysis by Carbon Delta, of the world’s largest 500 companies by market cap that have set public sustainability targets, only 15 percent are on pace to meet the goals of the Paris Agreement. The economic risk of failure is enormous. In a recently-released CDP report, a group of the world’s largest companies have valued the climate risks to their business at almost $1 trillion, with many of these risks likely to hit within five years.

It’s becoming more apparent that there’s a divide between committing to goals and implementing a successful sustainability strategy. The longer this sustainability transformation takes, the greater the risk organisations will fall behind, greatly impacting both their stability and our planet’s future.

Decreasing our demand for fossil fuels is at the crux of sustainability and a zero-carbon future. Less reliance on fossil fuels means fewer carbon emissions. But there are other precious resources (like water) and sustainability considerations (such as waste management) which are all merging into a complex and crucial nexus. However, an effective sustainability strategy is about more than resource consumption and facility management. It’s a holistic strategy that transcends the organisation, that needs to influence product design, logistic schemes, digital strategy, brand reputation, employee engagement, customer engagement and satisfaction and risk.

The challenge, however, is that many of these efforts have been siloed and executed on a local level. True sustainability transformation can only be achieved if acted upon holistically and programmatically. This is no different than the transformational disruptors before it, such as globalisation and digitisation, that changed the very core of how organisations operate.

Sustainability transformation, of which we are in the early stages, will require a similar level of change and investment. Sustainability is at the core of the strategy, and no longer at the periphery of organisations. Sustainability transformation must become top of mind for leaders, in the same way digital transformation is at the core of the strategy of so many organisations. The good news is that we have the means to make sustainability real and put it into action now, reconciling the economic paradigm and the environmental challenge. We are already seeing many real examples of this manifesting with leading brands today, like PatagoniaIKEA, and Adidas, who have integrated sustainability at their core, from product design to their brand mission and beyond.

There is no question that the scale of the sustainability transformation is immense. It involves new business models, operational processes, logistic and supply chains, product designs, and consumption habits. But in order to keep the sustainability promises businesses make to their stakeholders, we must take on the most complex sustainability challenges.

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