Going climate neutral can be good for business and society, writes London Business School alumnus and ClimateCare CEO, Vaughan Lindsay
From Extinction Rebellion to extreme weather, you cannot turn on the television or pick up a newspaper without seeing headlines about how crucial it is that we act now to address climate change. In Deloitte’s 2019 survey of millennials, for example, climate change topped the list as the most significant societal concern among employees aged between 25 and 36 in the developed world. And there are growing calls for individuals, governments and businesses to take full and joint responsibility for their climate impact as we move towards a net zero world.
A significant number of companies have become interested in taking responsibility for their climate impact and reducing their carbon footprint. Yet, these interests often go beyond CSR, with increasing recognition that developing carbon-neutral products and services makes good business sense.
‘Firms that align their business models to the transition to a carbon-neutral world will be rewarded handsomely; those that fail to adapt will cease to exist,’ Mark Carney, the Governor of the Bank of England, recently stated.
To be ‘purpose-led’, an organisation will need to stand for something in which it believes. It will need to go beyond a singular focus on profit, and strive towards impacting positively on society. However, being purpose-led, as opposed to being purely profit-minded, has been a hard sell in the business world; and to an extent, it still is. Many in business have a trade-off mentality – the idea that if we demonstrate more purpose, we should expect lower returns, but this mentality is increasingly being challenged. Firms can balance both profit and purpose and, in doing so, can achieve important business synergies, such as improved customer attraction and retention, higher staff engagement, lower costs, and the chance to identify fresh opportunities that others may overlook. In fact, it’s the firms focusing on both profit and purpose that will have the best opportunity to thrive in the future.
A growing body of evidence shows that businesses that combine profit and purpose, deliver better returns. A 2018 report in the Harvard Business Review (HBR) put a monetary value against ‘purpose’, stating: ‘Based on established job satisfaction-to-productivity ratios, we estimate that highly meaningful work will generate an additional $9,078 USD per worker, per year.’ Benefits didn’t stop at productivity either. The HBR story, authored by researchers at behavioural science platform, BetterUp, added: ‘Translating that into bottom-line results, we estimate that enterprise companies save an average of $6.43m USD in annual turnover-related costs for every 10,000 workers, when all employees feel their work is highly meaningful.’
Companies that get this right do so by ensuring alignment between their values and those held by their employees and customers. A 2018 Danone-funded YouGov study found that a third of employees would consider leaving their job if a ‘greater purpose’ was unclear, while slightly more than half would leave if their company’s values and purpose didn’t align with their own. This is what makes the Deloitte survey findings so important.
Who’s getting the balance right?
Plenty of businesses have achieved a combination of profit and environmental purpose. Bulb is a good example of a firm that is getting the balance right. The UK energy market has seen many new entrants and, while several energy suppliers have failed in the last year, Bulb has thrived and is now reaching more than a million customers.
The firm’s commitment to providing ‘simpler, cheaper, greener’ energy has resonated with employees and customers alike. Its recent commitment to provide 100% carbon-neutral gas as standard made Bulb the largest green energy supplier in the UK, a significant accomplishment for a business that didn’t exist five years ago. Employees and customers alike can be proud of their connection to ‘the Bulb community’ because it champions the very issues which matter to them the most.
Likewise, COOK, a UK retail food supplier, is taking a leading role in transforming the environmental footprint of the frozen food industry. The company states: ‘We know COOK is part of a food system that’s contributing to climate breakdown and we’re committed to helping change it for the better.’ COOK halved its carbon footprint by switching to 100% renewable energy and has made significant headway in switching to recycled cardboard and plastic packaging.
Meanwhile, Co-op Insurance is making a stand in the insurance market with its carbon offseting programme, which has seen it offset a proportion of its motor and home insurance customers’ carbon emissions, as standard.Other global corporations, including Innocent, Unilever, Patagonia, and Adidas are also making significant statements, impressing the benefits of having a strong social purpose on customers and employees.
The increased focus on ‘good businesses’ has led to the emergence of ‘B Corporations’, set up to help independently assess which organisation are true profit-with-purpose firms. Certified B Corporations (or ‘B Corps’ for short) are businesses that meet the highest standards of verified social and environmental performance, public transparency and legal accountability
to balance profit and purpose.
B Corps are accelerating a global cultural shift to redefine success in business and build a more inclusive and sustainable economy, and ClimateCare is proud to rank among the overall honorees in its 2019 Best For The World list.
The clock is ticking
I feel optimistic about the role business can have in addressing climate change, but I am also aware that there is a long way to go – and that the clock is ticking. Society’s most challenging problems cannot be solved by government or philanthropy alone.
Rather, we have to harness the power of business as a means to help drive change. Businesses that put purpose on a par with profit demonstrate that change can be delivered in a way that is sustainable and at scale; it is this combination that will attract the trillions of dollars in the capital markets that will be needed to tackle this global issue.
However, profit-with-purpose businesses cannot do this alone and will need support from governments, policymakers, regulators, investors and consumers, to accelerate this change. It is my belief that we are now entering a new form of business: ‘good business’, which focuses on being a good global corporation and a good corporate citizen simultaneously.
Companies that act now, and start to consider their social purpose alongside their profit targets, will see tangible business benefits beyond simply knowing they are doing the right thing for future generations. They can feel reassured that decisions about profit no longer require trading off against purpose. It’s time to form a community of leaders to drive forward a global movement of people who use business as a force for good.
Vaughan Lindsay is CEO of ClimateCare, supporting the team in the delivery of programmes designed to allow organisations to meet their climate responsibilities. He holds an MBA from London Business School.