The Sustainability Debate is now a Business Debate too!

COP 26 focussed on fast tracking momentum for climate change action

The period 2021-2030 is being called the “watershed decade.” At the 26th meeting of the Conference of Parties (COP-26) in Glasgow, Scotland, in November 2021, this sentiment was most pronounced, with a range of stakeholders including governments, businesses, and environmentalists making strong commitments to avert an environmental catastrophe in the future.

While governments declared their climate goals at the summit, business organizations now need to play their part in the quest for a sustainable future. Climate Action 100+, an Environmental thinktank, claims 167 companies account for more than 80 percent of emissions. And public perception of corporates is not great either – 44% of consumers say they do not trust sustainability claims made by organizations, according to one industry report.

A story of some omissions …

Indeed, part of the blame appears to be valid. For instance, across the G20 countries, though more than 4,000 companies have disclosed their climate emission targets, just one in five have aligned them with keeping temperatures to within 1.5-degree centigrade of pre-industrial levels by 2050.

In addition, the unregulated system of purchasing carbon offsets or credits by large organizations has also cast doubt on their true commitment to a clean future. Carbon credits allows many companies to claim carbon neutrality on paper even while they continue to emit carbon.

… And ongoing accomplishments

However, this doesn’t mean that progress has not been made. A 2021 Science Based Targets report said 338 large companies globally reduced emissions by 25 percent between 2015 and 2019, which is equivalent to 302 million tonnes of carbon-di-oxide or the annual emissions of 78 coal-fired power plants.

[box type=”success” align=”” class=”” width=””]Companies such as Google have stated that they will not build custom AI tools that can be used for extracting fossil fuels. In the insurance sector, AXA announced in 2019 that it would no longer sell insurance to companies that generate carbon in excess of 30% of their turnover or electrical production from coal or produce over 20 million metric tons of coal per year[/box]

Through positive screening and impact investing, companies such as BBVA have committed to securing €100 billion in sustainable financing between 2018 and 2025. The world’s top retailers, including H&M Group, IKEA, and Walmart have resolved to collectively drive climate action as part of the UN’s Race to Zero initiative. There are several such examples across industries globally!

The case for taking action is clear

For long, the belief was that emissions were a necessary by-product to achieve higher economic growth and improve living standards. But it’s proven that we can decouple growth and emissions. A World Economic Forum report found that nature-positive models can add $10.1 trillion in annual business value, and around 395 million new jobs by 2030.

Recent research also showcases that most organizations are seeing monetary and non-monetary benefits from sustainability initiatives – ranging from enhanced brand reputation, reduced cost of capital, efficiency gains, and to increased revenue and improved customer and employee trust.

Technology is playing a key role in sustainability

Innovation, driven by data and digital technologies such as Artificial Intelligence and machine learning, digital twins, analytics, etc., can help organizations address both sustainability and profitability simultaneously.

Mitsubishi Heavy Industries (MHI), together with Kansai Electric Power company, developed its own CO2-capture technology. This technology, which helps in significant energy savings, has been adopted in 13 of MHI’s plants as of February 2019.

COP-26 strikes a chord among Indian corporates

In India, the debate around COP-26 and carbon emissions seems to have resonated with business. By November 2021, a total of 64 Indian companies have signed up for Science Based Targets, which provides companies a clear path to reduce emissions in line with the Paris Agreement.

[box type=”info” align=”” class=”” width=””]The Carbon Disclosure Project’s Annual Report 2020 reported that in India, 220 companies (17 percent more than in 2019) agreed for sustainability disclosures to investors and customers.[/box]

Post-COP-26, businesses globally are at the centre of the sustainability debate. While the race for carbon control is long and costly, the gains from mitigating it are worth the investments we make today. This requires participation of all stakeholders – governments, corporates, civil society, consumers – to address emission control.

Until then, carbon emissions will remain a clear and present danger!

[author title=”” image=”http://”]The article is written by Sandeep Bhatia, Executive Vice President, Country Head – Capgemini Invent India[/author]

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of the Economic Times – ET Edge Insights, its management, or its members

Disclaimer: The views expressed in this article are those of the author and do not necessarily reflect the views of ET Edge Insights, its management, or its members

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