Businesses have been reminded of the imminent threat to the world posed by climate change and warned by climate experts they need to “anticipate, not react” to the impact it will have on supply chains, policy and regulation.
Speakers from the World Wildlife Fund (WWF), Organisation for Economic Co-operation and Development (OECD) and International Trade Centre (ITC), among others, were speaking on a free webinar hosted by the Institute of Export & International Trade (IOE&IT) last week.
The event came shortly after the World Meteorological Association warned that global temperatures could get to more than 1.7 degrees Celsius warmer than pre-industrial levels as soon as 2027.
Responsible business
Dr Jason Clay, a senior vice-president at the WWF, said that climate change is expected to reduce net primary global productivity by between 10% and 15%, but that global population growth is going to continue to rapidly grow.
This will mean governments and businesses need to “swim faster to tread water” at the same time as cutting greenhouse emissions (GHGs) by 80%, while also needing to use less water and land.
When defining what a “responsible company” looks like, he said:
“You still have to provide high-quality products for your customers, you still have to keep your shareholders happy and you still have to recruit and retain your employees. All those things are business as usual.
“One thing that will become different is that the emphasis can’t just be on shareholders. Increasingly, in a finite world, we need to be focusing on where products come from, where your suppliers are and whether they are producing in a way that is more sustainable over time.”
He added that many supply chains will need to be reconfigured, saying “buying low and selling high is not going to be the future”. However, he warned that the increasing diversification of supply chains, particularly following the pandemic, could make it more difficult for businesses to understand where their products and commodities are being sourced from.
‘Pre-competitive issue’
Dr Clay also said that what constitutes sustainable trade today will likely be different to what we view as sustainable in the future, saying:
“Companies need to anticipate issues rather than react to them. Reacting is a very slow process in a very fast-changing world. The companies that are reactive are not just going to be irresponsible, but probably no longer in business.”
He said businesses should view sustainability as a “pre-competitive issue”.
Integrated solution
Adrian Greet, a head tutor at the Cambridge Institute for Sustainability Leadership, advised businesses they need to see sustainability as “built in” and integrated into their broader missions and strategies, rather than as a “bolt on”.
“If you’re going to be a responsible business, you need to look at new market models, you need to reconsider what value is and how to apportion value in your supply chain and decisions.
“When I talk to businesses about sustainability, I say that you have to start with the clear premise that sustainability is an anagram of ‘say it as built in’. Until this is part of what you do every day – how you measure, reward, remunerate and prioritise – it’s always going to be bolt on.
“It can’t be like this because, if it’s a bolt on, when there’s a challenge on returns or growth it will get bulked off very quickly. That cannot be the future, that’s not sustainable for you as a business, it won’t work.”
He said businesses need to be “authentic” and to be honest about what they can and can’t do, acknowledging that becoming more sustainable will, for many businesses, be an “iterative” process.
‘Regenerate, not just maintain’
Dr Gabriela Alvarez, founder and co-founder of several ventures in cocoa farming and reforestation, questioned the use of the word sustainability, saying that businesses should be looking at “regenerating, not just maintaining” nature.
She said that many MSMEs had an opportunity to benefit from the move to more sustainable business practices because they can be more agile and therefore more “innovative”.
She added that businesses could consider creative ways of funding investment in more sustainable ways of doing business. As this investment could result in HR or marketing benefits for a business, among others, the funding for it could come from these departments, she argued.
Standards
The webinar also featured a discussion of the role of voluntary standards in driving more sustainable business practices.
Shemina Amarsy, a sustainability adviser at ITC, said a “plethora of standards” had been developed globally and that businesses needed guidance on how to use them, citing the Standards Map tool developed by the ITC.
Dr Matteo Fiorini, a trade policy analyst for the OECD, said that bilateral and regional trade agreements were a “natural landscape” to test how voluntary standards could interact with mandatory regulatory requirements, saying:
“The potential avenue to fix the issues and maximise the benefits of such initiatives is through the interaction of some kind of regulatory frameworks and public policy. Trade policy is the natural landscape to test this type of interaction.”
Education
During a poll held during the webinar, 82% of the delegates said they would like to receive ‘further educational support around the topic of sustainable trade and responsible business’.
Responding to this poll, Professor Sangeeta Khorana, the chair of the IOE&IT Academic Board, said:
“The IOE&IT has a learning academy, which partners with governments and organisations like the ITC, to deliver training programmes that professionalise trade at a national and international level.
“Given that businesses are increasingly recognising the importance of sustainability within business operations and supply chains, we will be very keen to roll out qualifications on this significantly important topic.”
