IPCC report as “code red for humanity”
“It is unequivocal that human influence has warmed the atmosphere, oceans and land”. In this strong and confident voice, the new Intergovernmental Panel on Climate Change (IPCC) report alarmed the world that human activity is changing the climate in unprecedented and irreversible ways. The report predicts that the 1.5 celsius threshold will be reached by 2040 in all scenarios. The 1.5 degrees Celsius threshold is a crucial global target because it unlocks a tipping point that may bring an irreversible change in the climate system, which will exacerbate global heating.
The report should be a wake up call for global leaders to act fast to stabilize rising temperatures through deep cuts in emissions of greenhouse gases. It also shows the rising importance of environmental, social, and governance (ESG) leadership among corporations around the world. As all businesses are intertwined with ESG concerns, it is their social, economics and environmental imperative to address these issues.
We need action and we need it now
The IPCC report claims that we need a “strong and sustained” reduction of carbon emissions and other greenhouse gasses to limit the process of climate change, yet it would still take 20 to 30 years to actually stabilize the actual process. The claims indicate that we should no longer put all our hope in the development of new technology to help us reduce our emissions or find new sources of energy. It is now the responsibility of the whole world to take action to protect the environment. It is therefore every business’s responsibility to redefine “growth” from purely financial success to a more sustainable and holistic approach .
Greenwashing VS ESG leadership
As of now, many companies make public announcements that they are on the journey to achieve sustainability. They set up sustainability departments and make policy changes that encourage reduction in emission. However, given the severity of the situation faced by humanity as a whole, these actions are far from enough to really make a difference. Therefore, the number one imperative of global companies is to steer away from greenwashing to achieve true ESG leadership.
ESG leadership
There are several ways to distinguish ESG leadership from greenwashing. First of all, ESG leadership is to make sustainability a priority from the top down. It requires business leaders to adopt a data-driven approach to complete a comprehensive overview and assessment of risks and opportunities. Companies committed to ESG leadership would access all aspects of their value chain and identify goals to improve their business activities. In short, ESG leadership should not be something that the “sustainability” head does alone, it’s really a shared responsibility within the company, almost a change of culture.
ESG as a value creation process
Numerous studies have shown that ESG is no longer a fad or a feel good exercise. The overwhelming weight of accumulated research finds that companies that pay attention to environmental, social, and governance concerns do not experience a drag on value creation—in fact, quite the opposite. A strong ESG proposition correlates with higher equity returns, from both a tilt and momentum perspective. Better performance in ESG also corresponds with a reduction in downside risk, as evidenced, among other ways, by lower loan and credit default swap spreads and higher credit ratings.
Get Action
It is therefore important for companies to adopt leadership now and fast. One of many effective ways to achieve this is to organize a learning expedition that allows company leaders to gain real life exposure on the imperativeness of ESG leadership, and how ESG could improve the financial and operational performance of business organizations. Leaders can learn the success stories achieved by other organizations and individuals through field trips and talks given by experts of different fields. Learning expeditions will provide company leaders with an immersive learning experience that will enable them to learn and adopt ESG leadership fast and effectively. Therefore, they can in turn, bring ESG into their own company.