The latest UN climate change report made for stark reading, warning that failure to lower emissions dramatically in the next decade will lead to “irreversible” changes. The challenge is how global businesses will react.
It is unlikely — and unfeasible — to expect every country to legislate on all the sustainability-related matters. However, nearly all economies now accept that long term economic success can only come with sustainable business practices. In the Middle East, the UAE has a reputation for being ahead of the curve on sustainability. Not only does the country have the highest share of green buildings in the Middle East and North Africa, it also has a track record of investing in clean energy and waste management. The Abu Dhabi Sustainability Week is established as a leading global forum, and sustainability is a key theme for Dubai’s Expo 2020.
The UAE is in a great position to show leadership on sustainability in the region. But what will this look like?
No more time for tinkering
The lesson of the last 10 years has been that for both business and society, the time for small incremental changes is over. Businesses need to incorporate sustainability as a core part of their business operations, rather than a piece of brand positioning or a marketing add-on.
But it is no longer enough for sustainability to be “something that only big companies do”; in order to see real long term prosperity, it needs to be embedded at the heart of all businesses and at every level.
A core part of business strategy
Sustainability is about business survival. This means there needs to be a shift in how businesses see sustainability. Instead of simply asking if there are ways in which some usages and emissions can be reduced, companies need to ask themselves some important questions. Questions to include: Can they survive if natural resources become constrained? Do they rely on unsustainable commodities or resources? Does the company act responsibly?
These are vital strategic questions. We are talking about nothing less than whether a business can operate at all in the future. It is likely, after all, that resources will become scarcer, that regulations will become more stringent, and that public opinion will increasingly deplore wastefulness.
And this means, that sustainability is not something to consider at the end of, or halfway through, developing a business strategy. It is no longer enough to hope that nothing will change, or that businesses will be able to react as challenges arise. Only companies that plan ahead can hope to survive in the longer term.
Looking at the bottom-line
We are now hearing more than ever people talking about the “triple bottom line”, or accounting for social and environmental as well as financial outcomes. While there are still discussions to be had over how this can best be achieved, it recognises the fact that there is already a framework for how business can examine and evaluate the most effective uses of resources and how to manage them — in the finance function.
One of the mainstays of finance professionals’ jobs is measuring and monitoring performance, and then compiling the results in a way that can be used to inform strategic planning. This means sustainability is an area where they are best placed to take the lead, demonstrating how to best measure and manage risks and resources.
There is another benefit to having much of this led from the finance function. Some businesses can still be wary of sustainability, especially if previous experiences have been of it as a vague marketing tool, or something that they feel doesn’t contribute positively to core business strategy.
It is crucial that everyone is convinced of the need to embed sustainability at every level of a business’s operations. By leading this through the finance function, it can be shown how this is a concrete basis for long-term business strategy, with real and tangible outcomes for success and risks for failure.
No company is an island
Ensuring sustainability is at the heart of everything they do should enable every business, whatever its size or sector, to respond to new challenges and manage risk. This is the only way that businesses can survive in the long term — by playing their part in delivering long term benefits for society and the natural environment, as well as staying operational.
Companies are often experts at considering their business environment — it is perhaps time to remember that it only exists as part of a wider world in which they operate.
The writer is Head of Sustainability at ICAEW, the finance and accountancy grouping.
