How the energy transition stands to benefit business

Business Impact: How the energy transition stands to benefit business

How the energy transition stands to benefit business

Business Impact: How the energy transition stands to benefit business
Business Impact: How the energy transition stands to benefit business

When we consider the scale of the climate emergency and energy transition, it’s easy to feel overwhelmed, but getting caught up in existential panic will do very little to solve the problem. Instead, we need to focus on transcending these challenges.

Focusing on the positives is a very simple starting point, because for all the legitimate concerns, there are also reasons to be hopeful about the progress being made.

Business is a key part of this. The energy transition will impact many business sectors (and, indeed, all aspects of human life) and where businesses are disrupted, there will be incentive to find the solutions.

Here, therefore, are four reasons why we can be positive about business and the energy transition.

Business is enabling the transition to “pick up speed”

The International Energy Agency (IEA) works across everything to do with the energy transition and its chief energy economist, Tim Gould, recently said that business is enabling it to “pick up speed”.

Gould cited the electric vehicle industry as an example of this on GlobalData’s Thematic Intelligence podcast last month. He highlighted how the number of electric car sales has risen from one in 25 of all sales in 2020 to one in five today. By 2030, half of all car sales are expected to be electric.

“There are a number of examples of quite significant shifts in mature, clean technologies,” he said. “But I think the other important thing that we’re seeing now is that some of the elements that were moving slowly are now starting to pick up speed. We are seeing more dynamism.”

COP fossil fuel pledge will oblige business to act

Yes, the 2023 United Nations Climate Change Conference (COP28) was messy. It was held in the UAE – a nation which intends to ramp up oil production – and the talks were led by Sultan Al Jaber, the CEO of its state oil company. Unsurprisingly, a number of rows erupted during the summit, from the BBC investigation which suggested the UAE was intending to use COP to negotiate oil and gas deals to the controversy over a draft resolution to merely “reduce” fossil fuel production and consumption.

Yet, the final agreement for 197 countries to “contribute to… transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner” was historic in its ambition. It was the first explicit call to leave fossil fuels behind. While not legally binding, it is still a major outcome to build on.

From a business perspective, what it has done is create a clear expectation of organisations – not just governments – around the world to fulfil their duty for the climate. It will reflect poorly on those which fail to “transition away” from fossil fuels and the markets will punish them.

Cold business logic behind supporting the transition

Supporting the energy transition is not just the right thing to do from an environmental and ethical perspective, there is also cold business logic behind it. As per Bloomberg estimates, a record $495 billion was invested in renewables globally in 2022. Meanwhile, it recently emerged via a Carbon Brief analysis that UK electricity generated by fossil fuels fell 22 per cent last year to the lowest annual level since 1957.

Put simply, the shift to renewable energy is the way the wind is blowing and it follows that businesses will respond to these shifts. One example is the launch of Volvo’s energy solutions business in November last year, focusing on clean energy storage and charging-related tech. As a company aiming for its cars to be fully electric by 2030, the move offers an indication of how firms can support the energy transition while future-proofing their business models.

Empowered workforces, labour and mobility

In the US alone in 2021 and 2022, nearly 100 million people quit their jobs. It was part of the well-documented ‘great resignation’ in which workers, many of whom were prompted by the COVID pandemic, sought more meaningful work with employers that aligned with their own values.

This has given rise to a new phenomenon: climate quitting (also known as conscious quitting) in which – as per KPMG – employees seek out a more environmentally friendly job. Its research found that 64 per cent of 5,700 workers surveyed refused to work in certain industries for ethical reasons. A separate study from the former CEO of Unilever, Paul Polman, who led the company’s successful sustainability shift in the 2010s, also found 35 per cent of 2,000 employees surveyed had resigned because they did not agree with the company’s values.

What this shift has done is empower employees to speak out against bosses who are deemed to not be moving quickly enough. For example, Reuters reported in September last year how two Shell employees directly called out CEO Wael Sawan’s energy transition strategy in an open letter on the company’s internal system. It attracted 80,000 views and 1,000 ‘likes’, with Sawan feeling compelled to directly respond to the employees in order to defend himself. Would he have been questioned in this way 10 years ago? It’s unlikely.

As Polman said: “The question for business leaders is actually simple: employees – the people who make or break the company – care about its values and impact more than most people realise… How are we going to show them that we care too?”

The world’s largest system change?

These shifts go alongside other benefits. From the labour standpoint, for example, the transition to clean energy favours job opportunities and stimulates economic growth in renewable energy sectors. In addition, investments in renewable energy infrastructure, energy efficiency and sustainable technologies can all drive job creation, stimulate local economies and foster innovation and entrepreneurship.

The energy transition is going to be one of the largest system changes the world has ever seen. Amid the climate emergency, it’s easy to get bogged down with concerns that this transition is moving too slowly. However, there plenty of positives, especially from a business perspective and we must focus and build on these.

Headline image credit: Markus Spiske on Unsplash

Ruggero Gramatica is an honorary research associate at the University of Oxford’s Institute for New Economic Thinking and CEO of Macrocosm, an energy transition modelling and advisory firm

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Companies may be ‘gaming’ their reported emissions, study suggests

Business Impact: Companies may be ‘gaming’ their reported emissions

Companies may be ‘gaming’ their reported emissions, study suggests

Business Impact: Companies may be ‘gaming’ their reported emissions
Business Impact: Companies may be ‘gaming’ their reported emissions

The level of carbon dioxide equivalent (CO2e) emissions reported by organisations can vary by as much as 5.4 per cent, on average, depending on which of three approved datasets they are using, according to new research from King’s Business School (KBS). These variations have the potential to impact share prices by 1.9 per cent.

Approved under the United Nations Framework Convention on Climate Change, the three datasets analysed in the study are those provided by the UK Department for Environment, Food and Rural Affairs (Defra), the US Environmental Protection Agency (US EPA) and Exiobase. Reporting using the database from Defra instead of the US EPA led to an average increase in emissions of 5.4 per cent. The suggestion implicit here is that organisations can effectively ‘game’ their CO2e results by using the dataset that gives them the most suitable results.

“This matters because if business can’t, or won’t, calculate CO2e emissions accurately, we can’t plot a proper path to keeping the global temperature at or below the 1.5°C above pre-industrial levels that scientists see as a tipping point,” said KBS executive education sustainability lead Marc Lepere.

To address this issue, the study’s authors say new regulations are needed that require companies to disclose their CO2e emission calculation methodologies and datasets. They also recommend mandatory external audits.

“Increasingly large sums of capital are being deployed either in line with environmental, social and governance criteria or with the explicit aim of mitigating climate change,” added professor of finance at KBS David Aikman. “Investment managers need assurance that the data they are basing their decisions on is as robust and transparent as it can be. At the moment, it clearly isn’t.”

The study is the first KBS Research Impact Paper, a new report series aimed at widening the reach of the school’s research. It was put together by a team of six at the school, including Lepere and Aikman.

This article is adapted from one that originally appeared in Business Impact magazine (Issue 4 2023, volume 18)

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Why upskilling on sustainability must begin with faculty

Business Impact: Why upskilling on sustainability must begin with teaching faculty

Why upskilling on sustainability must begin with faculty

Business Impact: Why upskilling on sustainability must begin with teaching faculty
Business Impact: Why upskilling on sustainability must begin with teaching faculty

How are you working to incorporate corporate social responsibility (CSR) and sustainable development into Iéseg’s programmes and how are you measuring the success of initiatives to implement them?

“This is our number one priority for the next year. We’ve had mandatory CSR courses since 2016 and our students now have access to several such courses, but we are aiming to have full integration of sustainability into all our different programmes and management disciplines by 2026.

“We can only achieve that if we train all our professors and staff to ensure that everybody speaks the same language and understands how and why we’re doing it. In February, we launched a compulsory training programme for all our staff and professors on the basics of climate change and planetary boundaries.

“The programme ends with workshops where each academic department or administrative service develops roadmaps with KPIs or ambitions for the next five years. The objective is that by the end of the first modules, professors will be rethinking their courses. We then expect this to be reflected in curricula by September 2024. Of course, tracking this without making it too bureaucratic is a key challenge and we are still thinking about the best way of doing this.

“This year, we are also asking professors and staff how they integrate sustainability into their day-to-day jobs as part of their annual performance evaluation. Salaries and promotions depend on these evaluations, so I think it sends a very strong signal in terms of the importance the school places on sustainability.”

How has reaction to the programme been from staff and faculty? Are they concerned about the perceived implications for their workload?

“We’ve had a few challenges and there has been some resistance. However, this has been from a minority and ultimately, we’ve been surprised by the positive reaction. We’ve also found that people have already started integrating some of these topics and conversations into their courses. Of course, we still need to help some of these faculty members do it in a more coherent, transversal way.

“The question of the added workload was definitely raised, but we’ve tried to have more one-on-one conversations with those who were more sceptical initially. At the same time, a lot of faculty members are happy to learn more about the climate and planetary boundaries because it’s something they’re starting to see more and more in their own field and research.”

Earlier this year, you took part in a panel on upskilling for a sustainable future as part of Economist Impact’s Sustainability Week. Could tell us what you spoke about?

“I was speaking about the growing need to upskill and retrain managers, leaders and students. Specifically, how companies and higher education institutions can work in a collaborative fashion to drive this upskilling process. Companies have set very ambitious goals related to net zero. But without the right educational process, we won’t be able to achieve those goals.”

Who do we need to get in the classroom?

“We need to get everyone in the classroom. It needs to start with the governance and leadership because these changes cannot take place without them being on board. However, to drive change and achieve these goals, every single person in a company needs to go through this process. We also need to touch on every kind of job and industry and that’s a huge challenge.”

How do you envisage collaborative processes working between schools and companies?

“Sometimes companies forget that business schools are also there to help them drive transformation and that we have expertise in developing knowledge, skills, competencies and, I would even say, passion on these topics. So, we have to establish these relationships.

“We also need to bring companies closer to our students. We need to get them in the classrooms and collaborating on projects; that way, they can listen to students’ expectations and share what they need in terms of graduate skills.”

How might the classroom approach need to change in relation to company talks and industry exposure?

“We have mostly had a top-down approach to how companies interact with students where they simply give a talk about what they do and answer questions. This kind of discourse doesn’t work anymore because students want more – they’re questioning what companies are doing and they want to be part of the change. They don’t just want a company to tell them: ‘This is our strategy’ or ‘this is why we’re great’. They want to know what’s really happening and how they can play their part when they graduate. Imagining different pedagogical approaches where they see behind the scenes of corporate storytelling is crucial.”

Does the biggest shortfall on sustainability relate more to issues of awareness or technical knowledge right now?

“I think it’s both. An issue of awareness remains – there are still people who are not convinced this is a major problem. There’s big work to be done, but with that comes a big challenge that relates more to the hard sciences of what climate change is.

“We can talk about upskilling all we want, but we need to explain the science behind it, so people understand what that means and the implications it has for their business – both the risks and the opportunities. Just talking about achieving net zero and telling them this is their new objective and how they’re going to be measured doesn’t work.”

You coordinate Iéseg’s People-Planet-Profit project – can you tell us more about it?

“This is a mandatory consulting project at bachelor’s level, meaning about 1,250 students do it at the same time, so it’s massive. For a full term, we split students into groups and match them with a company for a sustainability project. About 18 months ago, this became an interdisciplinary project. During the same term, students now have six different courses, such as digital innovation, sustainability and financial analysis, and they need to integrate what they learn in all those disciplines into the project. The aim is to show students sustainability is not a standalone discipline.”

How many companies have you worked with in delivering this project and what kind of sizes and sectors are involved?

“The project has been running since 2016 and we’ve worked with more than 35 companies, from huge multinationals to smaller family businesses and start-ups. We’ve also started to work with Certified B Corporations because we signed a partnership with the non-profit B Lab network.

“A source of differentiation in this project is that we also work with cities. Some students get assigned to small cities in the areas of Paris and Lille. These students work on urban issues of sustainability, rather than corporate issues. We are a management school and that also involves public management.”

You also help run the Grand Challenges MBA module. How does this differ from the undergraduate project?

“The Grand Challenges module is broader and is where we can really go through the big issues in sustainability today, such as understanding climate change and the implications for companies and society. We do this through small blocks of courses on key topics and then go on a learning expedition to discover how sustainability is being implemented in a specific region. The students then undertake an ‘integrative project’ and work on a transformation plan.

“The aim here is to bring together the sustainability skills they’ve learned through the different modules in relation to their professional life, which is particularly useful for executive MBA students. We also talk about stakeholders, as well as new legislation around the world. It’s about understanding how all this is going to change the way they do their jobs.”

The focus is on a different geographic region each year – why is that?

“We thought it would be interesting to do a deep dive into a specific area. This year, it was Bologna, Italy, known for its automotive industry. We stay in Europe because we try to be as sustainable as possible, but there are still so many things to be discovered. Every country has different ways of approaching these topics and individual industries have distinct challenges.

“It’s also great to get students on the ground and show them what’s happening in companies because this is not always aligned with the discourse we hear at a more macro level. Seeing how communities are affected and how local governments are managing sustainability, how they’re collaborating with companies on initiatives – all this is very much tied to a particular region and the industries based there.”

Can you tell us more about the recently launched, student-led Climate Lab?

“The idea of this course is to experiment with a student-led course, where the professor is just there as a guide. Some of our students are very passionate about climate change and they want to learn more, so we thought we’d give them the space to do it.

“The students must come up with what they need to learn and how they need to learn it. They talk to some alumni and companies and develop a learning process. It’s designed to be an elective each term and we had about 12 students in the first cohort that launched earlier this year in the grande école programme for master’s students.

“We are still experimenting and evaluating, but we’re definitely continuing it and could have similar formats for different disciplines and not just climate change. We would need to keep it to smaller groups, which would make it a challenge if we ever wanted to make it mandatory, but I think we could scale it up into our MBA programme or specialised master’s programmes.”

You initiated the Responsible Leaders project about five years ago; what are its main aims and outcomes?

“Again, we saw that a lot of students want to engage more with the school on sustainability topics. The idea for the Responsible Leaders initiative was, therefore, to give students a space to engage with us. In it, volunteers work on sustainability projects. This has been ongoing since 2018 and this year, we have about 20 students who are Responsible Leaders.

“What’s been nice is many of the projects proposed and driven by the students have come to life. For example, during Covid-19, the Responsible Leaders proposed a sustainability certificate. This is where students get points for taking electives, attending conferences and events or doing internships and thesis projects on topics relating to sustainability. It’s an engagement certificate rather than anything academic, but we want to reward that student engagement. If students achieve a minimum number of points, they receive an additional diploma when they graduate.

“Students worked on this project from start to finish and were the ones who presented it to our dean and academic commission. In addition, one of them remains a student Responsible Leader and now oversees the sustainability certificate, as well as working as an intern in our team. I think that it is extremely rewarding for students to see their proposals are implemented.”

Maria Castillo IESEG

Maria Castillo is social and environmental director at Iéseg School of Management, where she is also a senior professor in corporate social responsibility, business ethics and strategy

How to rethink your business’ approach to sustainability

Business Impact: How to rethink your business’ approach to sustainability

How to rethink your business’ approach to sustainability

Business Impact: How to rethink your business’ approach to sustainability
Business Impact: How to rethink your business’ approach to sustainability

Increasing sales and customer loyalty, reducing cost, creating attractive and productive workplaces, and yes – also improving the brand value. These are some of the typical types of business value that we see companies harvest when they seriously engage in sustainability. So, clearly, sustainability should not be seen as a burden to bear but as a potent tool.

While numerous leaders recognise the importance of sustainable practices, they struggle with the ‘how’. In particular, they don’t know how to make efforts in this regard profitable. Many anticipate that the younger workforce will guide and instigate this transformative change. A great way to prepare yourself for that is to adopt a new mindset, as this works across disciplines.

Your mindset influences your perceptions, reactions and the opportunities you recognise. However, there are common misjudgements that prevent firms from adopting the right mindset to excel in sustainability in a way that is good for business and the world. Here are the ‘Fatal Five’ misjudgements, along with an alternative ‘Five to Thrive’ approaches that are covered in more detail below.

Start and end with business

Sustainability isn’t just an environmental or technical specialty. Envisioning it solely as such misses its broader implications. Effective sustainability can, as I said, reduce costs, spike sales, boost loyalty and lure talent – all key areas of managerial attention.

The trick here is to tie the effort directly to an organisation’s top problems and among key clients. Therefore, I recommend starting by identifying the three-to-five-biggest challenges in your company and for your core customers. Let that be the starting point and then use sustainability to find new ways to solve these problems. This way, sustainability efforts immediately gain a solid strategic transformation, greater focus and higher value. It’s about creating business with built-in environmental impact.

Create a positive impact

Traditionally, sustainability focuses on minimising negative impacts and, often, the ultimate goal is achieving net zero. Zero CO2 emissions; zero waste; zero everything. However, businesses thrive on ‘more’ – more profit, growth, products and so on. Hence, sustainability seen as a constraint can feel counterintuitive. Instead, focus on leveraging sustainability to innovate and elevate what you offer.

When sustainability becomes a matter of doing less, avoiding or settling, it resembles the discussions we have during economic downturns, unconsciously triggering our fear of losing things. Furthermore, it is difficult to recruit people to an agenda that involves giving up something and, in general, being ‘a little less bad’.

If you turn it around, it becomes much more interesting. Frame it, think about it and aim to create positive impact. When you use sustainability to strive for a new and better version of what you sell, it opens up creativity and taps into the human drive we have always had to make tomorrow better than yesterday.

Green products are cheaper

How many times have you encountered a ‘green’ product that is more expensive? You probably experience it daily. Just go to the supermarket and compare organic products to conventional ones. It is so widespread that it is considered an unspoken truth.

Whether you believe that a sustainable initiative, in the end, will be more expensive or cheaper, you are most likely right. Yet, there are myriad examples of ‘greener’ products that require fewer materials, less energy and/or provide higher value or value over a longer period. These are just some of the results of smarter resource utilisation. So, there is no basis for the starting point that an environmentally better product must be more expensive.

Does that mean I’m saying that a new and environmentally better solution will always be cheaper? No, it doesn’t. Some things will be more expensive either because they require something more or simply because we pay the price for the materials and their impact, without shifting part of the bill on to our children. Adopt a mindset where sustainable solutions are cost-competitive or even cost-saving from a total cost perspective.

A new way of doing business

Another widespread misconception is that it is too risky to tamper with the core business. However, the reality today is that the reverse is true – it’s too risky if you don’t.

Continuing business as usual and just making minor ‘green’ tweaks is a high-stake gamble. The same goes even if what you’re doing is good and can serve as a flagship project. People will see through it. They will see that you are still part of the problem, even if you have made changes such as altering your packaging, acquiring electric cars for management, or installing solar panels. You expose yourself to a significant risk of being accused of greenwashing.

You need to start developing a new and better version of your core business, regardless of what you deliver to the market. A version that, in some way, contributes to making the world a better place. Sustainability is not a project. It is a different way of thinking, developing and conducting business.

Be open, transparent and collaborative

Many companies shield their sustainability endeavours either out of fear that some will scrutinise them and criticise them for doing too little and pointing out the flaws, or because they fear replication if they are working on something exciting. This is an outdated approach that no longer works. In today’s age, transparency, openness and collaboration are indispensable.

When you are open and transparent, it creates credibility when you communicate. But it also allows those who may have a solution that can accelerate your development to recognise that you have a need and come to you.

Furthermore, by being open and transparent, you can inspire more people and we can all avoid reinventing the wheel all the time. We don’t have time for anything else with all the changes we need to achieve individually in this decade. The complexity and magnitude of the climate crisis, for example, mean that no one can create the right solutions alone. The transition to sustainability is a team sport that requires collaboration.

These five components constitute a progressive mindset that will make it significantly easier for you to spot new opportunities and address the sustainability effort in a company in a way that fosters business value as well as environmental impact. Bringing this mindset with you will increase your value and speed up your access to the top management and strategically important discussions. This is where the fun is, where you learn the most and where you can have the biggest impact.

Business Impact: Jasper Steinhausen Headshot

Jasper Steinhausen is the founder and CEO of Business with Impact and author of Making Sustainability Profitable. An established circular economy business consultant in the Nordic countries, Steinhausen has been an advisor to the Danish government on how to accelerate the green transition through its Green Transition Fund

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The needs of nature warrant greater investment

Business Impact: The needs of nature warrant greater investment

The needs of nature warrant greater investment

Business Impact: The needs of nature warrant greater investment
Business Impact: The needs of nature warrant greater investment

New means of enticing private sector investment are needed to fund nature restoration projects in Southeast Asia that could cost up to $200 billion. That’s according to a new study from researchers at Imperial College Business School’s Centre for Climate Finance & Investment (CCFI). It argues that investing in nature projects of this kind offers a logical and powerful response to the climate emergency in Southeast Asia, where a number of economies are underpinned by nature.

“Climate change is already impacting Southeast Asian economies and, together with the risk of ecosystem collapse, provides a strong motivation for investing in nature. Investors stand to benefit greatly from nature investments – whether for resilience, portfolio diversification or cost reduction efforts,” said report author and CCFI research fellow Pernille Holtedahl.

Sustainability-linked bonds (SLBs) offer one route to further investment, according to the report. SLBs to the tune of $73 billion were issued globally in 2022 and are designed to tie organisations to specific sustainability commitments, with penalties incurred for missed targets. Drawing on cases studies from Malaysia, the report recommends that SLBs are administered with credible and verifiable key performance indicators.

The report, Nature Investment as a Response to the Climate Crisis: Opportunities in Southeast Asia, also cautions against basing investment cases for nature around carbon credits, arguing that the goal should be the long-term incorporation of nature benefits into broader corporate investment decisions. 

Headline image credit: Eutah Mizushima on Unsplash

This article originally appeared in the print edition (Issue 3 2023) of Business Impact, magazine of the Business Graduates Association (BGA)

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Empowering the journey to net zero with data

Business Impact: Empowering the journey to net zero with data

Empowering the journey to net zero with data

Business Impact: Empowering the journey to net zero with data
Business Impact: Empowering the journey to net zero with data

Amid the ominous challenge and existential threat of climate change, the urgency to achieve net zero has become paramount. Moreover, the race to net zero demands the swiftness of a hare, not the slow pace of a tortoise. Time is of the essence.

Both public and private sector organisations worldwide are under pressure to reduce their carbon footprints and actively contribute to the goal of net zero by 2050. However, many are asking how to achieve this ambitious target. The answer lies in the power of data.

Data-driven solutions are becoming a critical tool in paving the way forward. Using resource management data, businesses can gain a deeper understanding of their emissions and identify areas for improvement. With organisations struggling to manage workspaces effectively, data has become the key to taking targeted steps in reducing their carbon footprint and implementing more sustainable practices. The countdown has begun and the race to net zero is one where businesses cannot afford to fall behind. It’s time to get a head start with the help of data.

Charting the course

Without accurate data, businesses across all sectors may not have a clear picture of their environmental impact, making it impossible for them to identify areas for improvement.

Those dealing with an organisation’s resources are pushed to their limits to simply maintain efficiency, let alone achieve net zero. Since the pandemic, underused space and turbulent energy prices have been driving real estate executives to reset their strategies and place greater focus on space optimisation and reducing energy expenditure.

Yet, the biggest challenge to acquiring accurate data is funding. Implementing energy-efficient technology or data collection software, or even investing in renewable energy sources can require significant upfront costs. This may be a barrier for many, particularly in the public sector where budgets are restricted. However, you can’t manage what you don’t measure. Data provides a clearer insight into combatting these challenges and can lead to a long-term return on investment (ROI). More importantly, it supports an organisation on its journey to net zero.

Set the heading for net zero

As one of the most powerful tools in the fight against climate change, the right data can allow businesses to gain valuable insights into their energy usage patterns, identify areas for improvement and track progress over time. One element for organisations across every sector to consider is how employees now work.

The shift in how we work has led to wasted resources and unnecessary carbon emissions in other areas, specifically office spaces. Therefore, implementing the right management data can allow firms to better understand their physical resources. For example, data might reveal certain areas of an office that are consistently overused or underused, indicating an opportunity to adjust the layout or occupancy to save energy and improve efficiency from a business perspective.

Furthermore, saving money on reduced office space and equipment can free up investment for net zero initiatives, such as green leasing. Green leases serve as a means for decarbonising real estate and opens a more collaborative effort between landlords and tenants, all in support of achieving net zero.

While reducing the size of office spaces can help organisations cut their carbon footprint, there is a catch. As more people work from home, the burden of emissions is shifted to their households instead. Individual staff behaviours are harder to measure and control, let alone enforce. Therefore, it’s crucial to instil a company culture of sustainability by setting policies and providing support to help workers reduce their environmental impact while working from home.

Unchartered territory

The term ‘net zero’ should inspire change towards a more efficient and cost-effective business model. Rather than considering net zero as a burden, business leaders should think of it as an opportunity to improve how they operate, decrease long-term costs and increase efficiency.

Now more than ever, data can be used to inform and drive business decisions to capitalise on climate action. However, achieving this will require a full-scale review of an organisation’s internal strategy that targets precisely where it can reduce emissions and eliminate waste.

With the application of data management systems, companies can take advantage of insights that not only align with their business objectives but also their net zero objectives, enabling them to better understand their environmental impact and forecast reduction scenarios accurately.

With governments around the world observing matters closely and the general public exerting mounting pressure, the sprint towards net zero is in full swing. Business leaders must now focus their efforts on this crucial goal before it slips out of reach.

Business Impact: Karl Breeze, CEO, Matrix Booking

Karl Breeze is CEO at workplace management firm, Matrix Booking

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How to escape ESG compliance’s ‘Groundhog Day’

How to escape ESG compliance’s ‘Groundhog Day’

How to escape ESG compliance’s ‘Groundhog Day’

How to escape ESG compliance’s ‘Groundhog Day’
How to escape ESG compliance’s ‘Groundhog Day’

As the sustainability industry grapples with interpreting and standardising ESG definitions, indicators, reporting frameworks and methodologies, the risk is that it perpetuates a time loop, or ‘Groundhog Day’, of collective self-delusion.

We face a crisis that demands a response. This crisis is framed by the breakdown of economic, institutional and societal structures that were thought to be impenetrable. Previous structures for doing business have been pounded by ever more powerful externalities. The clue to the significance of this is in the word ‘externalities’. They are outside our current thinking and financial models. They are outside the constructs that we have built for safety and security. They are the essential ingredients of any system and they have been neglected.

Fixing systems

The engineering design of the post­war model is flawed. We have assumed that we can deploy infinite models for growth and prosperity in a linear model while on a foundation of finite resources. This has been known about in scientific communities and at the most senior levels of industry and government for several decades. However, the warnings have been ignored or the consequences have been so unimaginable that it has garnered a culture of denial. Worse still, many leaders have drawn their followers into a fantasy realm of ‘Groundhog Day’ ESG initiatives. This is all to buy time. Time required to maximise the collection of wealth in the storehouses of the few.

We need to set ESG ‘Groundhog Day’ against the potential towards a living world that supports human flourishing. For us to do this, we need to coalesce our supply chain around our global net-zero targets. We need less transactional and more longer-term relationships with our clients. We need to get our product back at the end of its life, retrieve it and recycle/reuse its materials. A shift like this will disrupt supply chains as we start to source our raw material from customers. Transparency across the system will mean that brands become much more vulnerable in parts of the value chain where they currently have little visibility.

Businesses will also need to be highly adaptable to keep up with customers who typically adapt their buying choices faster than corporations can respond.

Escaping ESG paralysis

Business leaders can overcome ESG paralysis to bring in a new era of sustainable performance by reforming the company’s assets and behaviours.

  • Suppliers: your suppliers are almost certainly global, as well as being culturally and ethnically diverse. With increased transparency, you may uncover abusive or unfair labour practice and human rights violations. There may be ethical dilemmas that require the north star guidance system and wisdom.
  • Customers: Your customers are operating outside your control zone. Technology has given your customers access to competitors and platforms on which they can declare their opinion on your service, product or brand with little or no control from yourselves. Democratisation of consumerism has arrived.
  • Loyalty over leverage: Navigating successfully in this zone will require a different relationship where you need to build trust, respect and loyalty with your stakeholders, rather than seeking to exploit your enhanced leverage to maximise profit with little regard for social or environmental impact.
  • Connecting with stakeholders: Your communications department needs to know what authenticity looks and feels like, as well as how ESG claims will stand up to scrutiny.
  • Manufacturing: Your product development team needs to design products with recovery and reuse in mind. The assembly team will need to source much of their raw material from the components of existing products that need to be retrieved from customers.
  • Finance: Capital will be deployed by demonstrating that you are making the required progress in your transition and the meeting of milestone ESG targets. Investments will have to be made in reverse logistics. Sales teams will have to be incentivised differently and enterprise management systems and inventories will have to be reconstructed for new business models.
  • Technology: To move from a linear, forward-focused business model to creating a Total Value System using AI and digital tools that will help us operate effectively in complexity.

Stepping out of the ‘Groundhog Day’ of ESG initiatives demands a response from leadership and within that response, we all have choices. We can hunker down, tick a few boxes, buy some time and shore up our pension pot. Or, we can become leaders for our time: courageous, humble, heroic and adventurous.

Stuart McLachlan CEO Antithesis Group

Stuart McLachlan (left) is a founder and CEO of Sustainability Consultancy, Anthesis Group.

Dean Sanders is chief enterprise officer at Anthesis Group and an honorary fellow at Durham University Business School.
Stuart McLachlan and Dean Sanders are co-authors of The Adventure of Sustainable Performance: Beyond ESG Compliance to Leadership in the New Era (Wiley)

Dean Sanders_Adventure of Sustainable Performance

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How to use your business to make the world a better place

Business Impact: How to use your business to make the world a better place

How to use your business to make the world a better place

Business Impact: How to use your business to make the world a better place
Business Impact: How to use your business to make the world a better place

As children, we were taught to do the right thing through consequences. Misbehave and you get a time-out, tidy your room and you may watch TV. Back then, we did the right thing because we knew we’d get rewarded for it and vice versa. But, at some point, we outgrew that reward system and started doing the right thing simply because it’s the right thing to do.

So, why do many business leaders still operate with a reward/punishment mentality? Shouldn’t we, as adults, be doing the right thing without the threat of fines, penalties, or bad PR? This brings us to the first point…

Don’t just do good, be good

With the demand for responsible capitalism growing every day, customers are looking for real change – not just lip service. The same brand awareness that pillared companies in the past, might now be their undoing. If you don’t care for the environment, your customers will find someone who does. Their thinking has changed and they expect you to change with them. However, this shouldn’t be your main motivator.

Acting responsibly just because you fear losing customers is like a teenager behaving well just to avoid being grounded. Instead, as a leader, you should be proactively looking for ways to minimise your environmental impact because, ultimately, it’s something that affects you, your brand and everyone you know.

Give back from the start

At CodeCrew, we founded our email marketing enterprise on the principle of giving back – using business to make the world a better place, if you will. So, from the get-go, we made a list of ways CodeCrew could be an asset in the world and these are now part of our very fibre. We now do regular pro bono work for various NGOs. From helping to revive the world’s bee population to raising awareness about ocean plastics, if we can help a worthy cause get the exposure it deserves, we’re all in.

In addition, from the first month we made a profit, we joined Patagonia and countless other brands in donating one per cent of our revenue to sustainable causes by signing up to 1% For The Planet. We’re also part of One Tree Planted and have planted around 5,000 trees globally… and counting.

The key driver here is not virtue signalling, rebates or trying to win over clients – it’s who we are. We’re passionate about trees, bees and people; that’s our journey. Your journey will be different, but the important thing is finding your calling and using what you have to make it happen. By sticking to your goals and following your proverbial true north, the right customers and clients will come.

Get with the times

The age of plunder-for-profit is over and customers have adopted a zero-tolerance attitude towards companies that are adding to society’s growing challenges. The world needs givers, not takers and those in the latter category are under increased pressure to roll up their sleeves and toe the line.

Of course, no one’s making you do it. Many business leaders will continue to exploit every possible resource with no consequences. The point is, why do it, though? If you could make even the slightest difference in the world with little to no cost to yourself, why not jump at the opportunity?

If we’re to evolve beyond the punishment/reward system and start seeing the bigger picture, we must see a business as part of a larger macrocosm that’s connected by something more than economics. Don’t get us wrong, profit is good… it’s very good. We’d never advocate for anyone to run their company at a loss to plant trees. But, with success comes the opportunity to improve the world around us. Anyone who finds that idea abhorrent, should (probably) not be responsible for the livelihood of others.

Our company is not run by children – we don’t need incentives, threats or guidelines to do the right thing. If you’re reading this, it means you feel the same way. You understand that it’s not about following a rule – it’s knowing why the rule exists in the first place. We urge you to find something you care about and use your business to make it better. And do it like no one’s watching.

Alexander Melone Headshot 1

Alexander Melone is a co-founder and chief production officer at CodeCrew, an email marketing agency based in Oakland, California.

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Can children’s literature create responsible citizens? 

Business Impact: Can children’s literature create responsible citizens?

Can children’s literature create responsible citizens? 

Business Impact: Can children’s literature create responsible citizens?
Business Impact: Can children’s literature create responsible citizens?

Classic children’s stories such as the Aesop fable The tortoise and the hare are often laced with lessons or hidden morals. Could they encourage kids to be kind to the environment?

Berit Huntebrinker, a researcher at the University of Agder recently completed a thesis on how four picture books for children and three comics portray humans’ relationship with nature. All the books and comics were created by Norwegian authors and illustrators and were published between 1974 and 2019. Huntebrinker noted that while some of the texts were directly educational, others left room for a conclusion to be sought by the reader.

One key theme to emerge from the majority of the books and comics examined was that the main character had to take responsibility for nature but had free will to choose how they wanted to solve any issues. The onus was on individual responsibility rather than collective responsibility.

This focus on individual responsibility did not surprise Huntebrinker. “Children’s books and popular literature are often simplified presentations and the individual is often the focus in popular literature,” she explained.

However, Det blå folket og karamell-fabrikken (1974), written by Tor Åge Bringsværd and illustrated by Thore Hansen, was found to have a greater emphasis on collective responsibility. The reason identified for this is that the book’s creators were critical of the political and social conditions in Norway at the time and were therefore interested in promoting a collective conscious.

“A nuanced reading is fruitful and necessary to fully appreciate the complexity of children’s literature, also when it comes to the presentation of different views about our responsibility for nature,” argued Huntebrinker. 

The researcher’s conclusion is that while children’s authors agree that the way we behave towards nature needs to change, they do not agree on what those behaviours should be – a conundrum that has great applicability in the world of business and management.

This article originally appeared in the print edition (Issue 2 2023) of Business Impact, magazine of the Business Graduates Association (BGA).

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The principles of business ethics | How to adapt a responsible approach to management

The principles of business ethics | How to adapt a responsible approach to management

teamwork-3213924_960_720
teamwork-3213924_960_720

As an impactful business school, adopting a responsible approach to business management is essential, for both the institution and its students alike.

In this article, we discuss the key principles of business ethics, and how these impact an institution’s approach to responsible management, from integrating social responsibility into your curriculum to partnering with responsible businesses.

At the Business Graduates Association, responsible management is one of the main core pillars of BGA’s vision. Our goal is to be the leading global movement for responsible management, positive impact and lifelong learning.To learn more about BGA, please visit here.

What does business ethics mean?

Business ethics refers to the principles and values that guide the behaviour of business organisations and the individuals within them on a global scale. It encompasses a range of considerations including honesty, respect for human rights, social responsibility and sustainability.

Why are ethics important in business?

Not only do ethics help business schools develop future leaders and build trust with students, alumni and employers, but they can also help prepare students for the real world.

Additional reasons why ethics are important in the world of business education include:

Address social and environmental challenges

Business schools have a responsibility to address the social and environmental challenges facing society.

By ensuring the MBA curriculum features business ethics, institutions can promote sustainable business practices, assisting students in understanding the impact of business on society and the environment.

Foster innovation

By encouraging students to think creatively and make ethical decisions, business schools can help students create innovative solutions to complex challenges in the business realm.

Ensure compliance

Efficient business schools will acknowledge their responsibility for ensuring graduates comply with ethical standards in the workplace. By teaching students about the importance of good business ethics, institutions can help build trust by demonstrating their commitment to business ethics and sustainability.

Prepare students for the future

Ethical challenges in the workplace are incredibly common. Teaching business ethics can assist students in forming an understanding of the ethical dilemmas they may face throughout their careers and provide them with the tools required to manage these situations effectively.

Encourage lifelong learning

Business schools can encourage lifelong learning by teaching their students to think critically in a range of situations. By incorporating business ethics and sustainability into the curriculum, institutions can help students develop a lifelong commitment to learning and self-improvement.

Contribute to a better society
Accredited business schools have a responsibility to contribute to a better society. By promoting good business ethics, schools can assist in creating a business culture that values society as a whole, rather than an individual asset.

The evolution of business ethics

Since emerging as a concept in the early 20th century, business ethics have evolved greatly thanks to various social, economic and political changes. Initially coming into view as a means to approach worker exploitation and poor working conditions, business ethics became a more formalised field of study in the mid-20th century.

The 21st century has witnessed a growing emphasis on the importance of ethical leadership in business, driven by high-profile corporate scandals and financial crises. Nowadays, the field of business ethics continues to evolve, with a growing focus on diversity and inclusion.

Key principles of business ethics

Integrity – refers to being honest in all business dealings, even in the face of making difficult decisions.
Fairness – treating all stakeholders fairly – including the avoidance of discrimination, exploitation and unfair practices.
Responsibility – taking responsibility for the impact of business activities on society and the environment.
Respect for human rights – including the right to dignity, privacy and non-discrimination.
Transparency – being accountable in all business dealings – this involves being open about business practices and decisions and addressing unethical behaviour.
Compliance with laws – this involves following the law and regulations in all business activities, as well as upholding ethical standards that go beyond requirements.

Business school membership | Promoting good business ethics within institutions around the globe

BGA believes that business schools should strive to innovate beyond conventional means.

As a member institution of the BGA network, your business school will have the opportunity to pursue BGA validation, an offsite assessment of a business schools’ ability to meet the BGA Charter, built upon the nine pillars that would demonstrate continuous improvement, quality and responsible management practices of an institution. BGA validation serves as a great way to prepare schools that are new to business school accreditation. Learn more about BGA validation here.

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