Exclusive: We need a business mindset shift and new tools to get us there, says City insider
ESG commitments for 2030 are high on the boardroom agenda, but are we asking the right questions?
The big money question is, even if we meet our sustainability targets, does that secure the social conditions and environmental resources that we will need for businesses to operate in the future?
Across the City, a viewpoint on how corporate sustainability strategies and commitments need to deliver more for businesses is growing, and many firms are looking into a new approach for how businesses need to deliver more focused rather than broader action to unlock transformation, progress and returns.
The transition towards more meaningful change is largely driven by using sustainability performance data, coupled with proactive leadership and communications actions.
To discuss these challenges, City PM sat down with Kathleen Enright, managing director of City consultancy firm Salterbaxter, to gain her view on corporate sustainability commitments as we consider progress in the business world in the fast diminishing ‘decade of action’ to 2030.
“We need to alter our perception of a company’s performance and value when it comes to assessing their sustainability commitments”, said Enright.
“This means a shift from evaluating business reputation based on perception to measuring actual sustainability performance against the benchmark of a sustainable future.”
“Some CEOs are starting to make that mindset change,” Enright continued.
“Traditionally, the CEO’s view of sustainable performance was ‘better than before’ or ‘better than my peers’. We are now seeing a shift towards ‘are we doing enough in the time we have left? It’s a reassuring movement but something we need to try to accelerate.”
A broader meaning
With the focus on net zero, many have fallen into the trap of carbon tunnel vision.
“Some companies have made genuine shifts towards sustainable business practices, but many remain stuck in a myriad of generic claims and commitments,” said Enright.
“Businesses need to move out of a ‘running with the pack’ mentality as their messages become diluted and fail to create the understanding and behaviour change they need.”
Kathleen Enright
Companies need to take a total systems view.
Indeed, while traditionally companies have been specifically focused on emissions when talking about net zero, they need to think about net zero in its broadest sense – in terms of its total negative impact: on communities, nature, waste streams, and so on. A changing comprehension of net zero will be symbolic of this changing mindset.
“Net zero is something we need to be striving for, but we need to look at it in a connected way,” said Enright. “Net zero must remain the aim for businesses, but now it’s time for us to look at it in a deeper, more holistic way across the entire business. This is a complex, but essential, shift.”
Data
Enright explained that data will play an increasingly critical role in this shift – not just in creating transformation but measuring that transformation too.
However, the majority of data tools on the market are focused on ESG, for the investment or insurance audience – the user case being primarily one of mitigating risk.
These tools are failing to advise boardrooms where they need to focus and what action they need to lean into to accelerate progress and deliver on their sustainability claims, promises and impact.
“A true net zero mindset requires us to track and monitor not just ESG performance but fundamentally contributions to the sustainable development goals,” stressed Enright.
“We need to highlight the gaps between the commitments companies set vs the remaining gap to delivering a sustainable future.”
Kathleen Enright
“And then we need to be able to pinpoint which actions to focus on to deliver transformation and unlock progress. That’s not something that can happen with a broad approach.”
Enright concluded by pointing out that for businesses to make the kind of meaningful changes that go with an evolved mindset, all of their insights need to be focused on benchmarking against the UN SDGs and a net zero impact future rather than just keeping ahead of peers and legislation.