Climate change is one of the most pressing challenges of our time, and businesses have a crucial role to play in addressing it. Investing in climate action and reporting can help businesses reduce their environmental impact, enhance their reputation, attract investors, and seize new opportunities. Here are some of the reasons why climate action and reporting are priorities for sustainable business.
Climate action can reduce costs and risks
By taking action to reduce greenhouse gas emissions, businesses can lower their energy bills, improve their operational efficiency, and avoid potential carbon taxes or penalties. Climate action can also help businesses mitigate the physical and transitional risks of climate change, such as extreme weather events, supply chain disruptions, regulatory changes, and shifting consumer preferences. For example, Unilever has set a goal of reducing its greenhouse gas emissions to zero by 2030, and those across its value chain to net zero by 2039. The company says that this will help it avoid the costs and risks of climate change, as well as create new business opportunities.
Climate reporting can enhance transparency and trust
By reporting on their climate performance and impact, businesses can demonstrate their commitment to sustainability and accountability. Climate reporting can help businesses communicate their progress, challenges, and goals to their stakeholders, including investors, customers, employees, regulators, and the public. Climate reporting can also help businesses identify gaps and areas for improvement, and benchmark themselves against their peers and industry standards. For example, the Task Force on Climate-related Financial Disclosures (TCFD) provides a framework for businesses to disclose their climate-related risks and opportunities, and how they are managing them.
Climate action and reporting can attract capital and customers
By investing in climate action and reporting, businesses can gain a competitive edge and access new sources of capital and customers. Investors are increasingly looking for businesses that align with their environmental, social, and governance (ESG) criteria, and that can deliver long-term value and resilience. According to McKinsey, climate-related investment increased significantly in 2022, despite the geopolitical and macroeconomic headwinds that roiled most global capital markets. Customers are also becoming more aware and demanding of the environmental impact of the products and services they buy, and are willing to pay a premium for sustainable options. By taking climate action and reporting, businesses can differentiate themselves and meet the expectations of their investors and customers.
Climate action and reporting can unlock new opportunities and innovation
By investing in climate action and reporting, businesses can also explore new markets, products, and services that can help them grow and create positive impact. Climate action and reporting can stimulate innovation and creativity, and enable businesses to tap into the potential of emerging technologies and trends. For example, the Biden administration’s sustainability agenda, which includes the Inflation Reduction Act (IRA) and the Clean Energy for America Act (CEAA), aims to create millions of jobs and spur economic growth by investing in clean energy, infrastructure, and innovation. Businesses that align with this agenda can benefit from the government support and incentives, and contribute to the transition to a low-carbon economy.
Climate action and reporting are not only good for the planet, but also good for business. By investing in climate action and reporting, businesses can reduce their costs and risks, enhance their transparency and trust, attract capital and customers, and unlock new opportunities and innovation. Climate action and reporting are essential for building a sustainable and prosperous future.
