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Fighting climate change at the corporate level

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Sustainability is more than just a trend. It’s a global imperative given the devastating effects of climate change to the planet. The evidence points to carbon dioxide (CO2) as the primary cause of climate change, followed by other greenhouse gases and other air pollutants.1

A recent United Nations (U.N.) Intergovernmental Panel on Climate Change (IPCC) report noted that the next few years will be critical to reduce greenhouse gas emissions. Ways to reduce emissions include making more efficient use of materials, reusing and recycling products, and minimizing waste. Importantly, the remedy to stop climate change requires a shift toward renewable resources. There has to be a substantial reduction in fossil fuel use, the adoption of more alternative fuels such as hydrogen, and widespread electrification.2

Analysis by the IPCC found that to limit warming to around 1.5°Celsius (2.7°F), global greenhouse gas emissions will peak before 2025 at the latest, and emissions will need to be reduced by 43% by 2030.  At best, this is an optimistic outlook. The assessment showed to limit warming to around 2°C (3.6°F) still requires global greenhouse gas emissions to peak before 2025, to achieve about a 25% reduction by 2030.3

Today, corporations are quick to claim sustainability programs as part of their ESG (environmental, economic, and social governance) profiles. This is not just to avoid alienating customers and elevate their social responsibility reputations, but to stay compliant with increasingly stringent environmental regulations. 

However, while environmental observers caution that compliance with existing regulations is the key to address climate change, a review of environmental policies worldwide by the U.N. found that while most countries have environmental regulations in place, compliance is very low.4

What corporations are doing to go green

The good news? Corporations are taking action to create sustainability policies and implement more widespread eco-friendly programs into their operations.  

According to Euromonitor International’s most recent Voice of the Industry Sustainability Survey that surveyed professionals worldwide in different industries, five key trends are currently affecting global sustainability programs. Climate action, the circular economy, commodity price volatility, resource security, and environmental pollution are driving sustainability programs today.5

The circular economy is playing out in many ways, from post-consumer recycling programs to refurbishing goods for resale, reverse logistics, and resale marketplaces. Euromonitor International reported corporate recycling initiatives were cited as a top planned investment over the forecast period from 2021 through 2026, noted by over 74% of professionals. For instance, in the U.K., waste recycling of textiles, plastics, and glass are the fastest-growing forms of recycling. 

In the 2021 Sustainability Survey, more than 51% of professionals said their company is taking measures to reduce environmental pollution, with investments that seek to decarbonize their supply chains and logistics operations. Many examples are found in moves to lower-carbon fuels, boosting vehicle efficiency, and supporting the efforts of suppliers that work to decrease their emissions. 

The shift to renewable energies is expected to continue, and this is seen in the many long-term initiatives by companies to reduce carbon emissions such as the electrification of delivery vehicles and trucks. Investments are being made through 2026 in the switch to renewable energies, cited by over 40% of respondents in the Sustainability Survey.6 While consumption of renewable energy has been rising, the pandemic temporarily depressed oil prices, making renewable energies less competitive and delaying progress for corporations on renewable alternatives such as solar and wind. 

Similarly, many of eco-friendly programs such as decarbonizing supply chains and recycling were suggested in the 2021 Shopify eCommerce Market Credibility Study. In the survey conducted by Forrester Consulting on behalf of Shopify, 53% of companies said they were making sustainability one of their top priorities in 2022, and many organizations are taking a more holistic approach to their green initiatives.7

According to the Shopify eCommerce study, top sustainability initiatives that brands are investing in include allowing customers to easily recycle products, improving manufacturing efficiency, distancing from partners that won’t meet shared sustainability goals, measuring and tracking emissions, and offsetting emissions.  

Sustainability promises made  

Governments, shareholders and customers are increasingly holding corporations accountable for their environmental practices. But are corporations doing enough? 

The broad answer is no. Most corporations are still in the early stages of integrating sustainable practices into their businesses. One of the biggest barriers to mitigate climate change is the significant investment required. 

Consulting firm PwC analyzed more than 1,000 published reports of companies across 31 countries about their national sustainable development goals (SDGs)—as previously agreed to by all U.N.-member nations—and concluded a lot of work remains to be done for companies to contribute meaningfully to national efforts.8

In the U.S., the advisory firm Institutional Shareholder Services looked at company data and its own analyses to assess what corporations are doing to reduce emissions. The firm found that just over one-third of the companies in the S&P 500 stock index, which includes 500 large companies across many industries, have pledged ambitious targets, while 215 companies had no sustainability goals.9

PwC is among the organizations that say more measurement and reporting of sustainability-related goals is called for in the fight against climate change. Others say sustainability programs aren’t integrated into business strategies and cite a lack of C-suite involvement. Critics also warn against over-reliance by corporations on carbon offsetting to balance out their carbon footprints in the form of purchasing carbon credits to take CO2 out of the atmosphere, such as forestry and hydropower projects.10

Everyone in the supply chain, from commodity producers to manufacturers and brands, can take steps to combat climate change and reduce waste. Overall, awareness of sustainability is high, though corporations worldwide are only in the early stages of taking on climate change to make a significant impact on the environment.

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