Tokyo (SCCIJ) – About 40 members and guests of the SCCIJ March Luncheon learned about potential opportunities and practical steps for businesses and corporations to achieve net-zero carbon emissions in their field. The speakers Ms. Trista Bridges and Mr. Donald Eubank, co-founders and principals of Read the Air, recently published a book about launching and accelerating the corporate journey to sustainability.
Sustainability as an issue
At the start, Mr. Eubank pointed to changing attitudes of employees and consumers. About two-thirds of millennials would not take up a job at an employer without strong corporate responsibility practices. At the same time, two-thirds of Americans would switch from a product they typically buy to a new product if it comes from a purpose-driven company. New products labeled as sustainable already account for 16% of the total consumer goods market.
The World Economic Forum estimates the business value of aiming for sustainability at 10.1 trillion dollars. “But how can a business create a strategy to respond to the growing net-zero ambitions?” asked the speaker and mentioned two methods as the answer – reducing your emission and developing or sourcing offsets.
Steps for corporate journey
Before a company can start to implement a strategy for reductions or offsets, Mr. Eubank and Ms. Bridges find that it is necessary for the business to look internally and put itself in a firm stance that has sustainability at the core of its strategies. Only then will positive environmental and social impacts naturally flow from the company’s business decision-making.
“In researching our book, we discovered that every business goes through five steps to make your sustainability strategy also your business strategy,” Mr. Eubank explained. First, a base-level understanding; second, an engagement and initial choices made at the C-level of management. Step 3 would be actions and first wins, step 4 cross-organizational priority-setting and buy-ins. Finally reaching step 5 would mean alignment and process integration.
“Most companies are at step 2 or 3,” the speaker reported. However, the Dutch vitamin maker DSM with 10 billion euro in sales would be an example for a big company having reached already level 5. As a result of its transformation, its stock outperformed in five years the exchange-traded funds of the three different economic sectors DSM operates in.
Efforts start at the top
Mr. Eubank named some important steps of DSM to increase sustainability. “All group heads understood the policy of the CEO and set targets for their divisions and groups,” he said. “If they could not reach the target, the business was spun off or sold.” The carbon generated in production was reduced. Then, products with a smaller carbon imprint were created.
To achieve their strategic goal of sustainability, companies would need partners such as researchers and non-governmental organizations. “These kinds of non-corporate organizations can provide the expertise that businesses lack in certain subjects or on the ground in circent markets,” Mr. Eubank said.
A boom in sustainable finance
The other luncheon speaker Ms. Trista Bridges started with a focus on environmental, social, and sustainable bonds as a key part of the toolkit to achieve sustainability. “They offer a value proposition for the finance sector,” she explained. “If the company does not meet its commitment, it has to pay additional money to the bondholders.”
Another trend in sustainability is the “coming revolution” of impact-weighted financial accounts, Ms. Bridges explained. That means: Company financial statements may soon integrate the negative impact of carbon. For example, the value of Tesla would be higher, in most instances, than General Motors because adjusting for Tesla’s lower carbon footprint would result in a lower negative impact on Tesla’s financial performance.
Carbon in the balance sheet
Next, Ms. Bridges explained the “coming revolution” of impact-weighted financial accounts. That means: Company accounts will integrate the negative environmental and socials impacts of carbon into their financial reporting. For example, if you are driving a Tesla electric car in a country with little renewable energy this has a different influence on accounting than Toyota’s hybrid engine which saves fuel everywhere.
“We are bringing carbon and other negative externalities to the balance sheet,” she picked up the idea originated by Sir Ronald Cohen. “ESG is becoming the norm, but impact accounting is next.” ESG stands environmental and social governance, while impact investments are supposed to generate positive, measurable social and environmental impact alongside a financial return. For example, the French insurer AXA already launched three such investment funds in 2019.
“What are our key takeaways from today?”, Ms. Bridges asked. “Start with bold leadership. You have to make clear strategic choices and communicate your directives and the reasons. Be systematic about building sustainability capability and build an ‘A Team’.” Support to build capability in carbon mitigation strategies would come from some powerful off-the-shelf or customized learning programs or simulation tools, she assured the audience.
Biographies of the speakers
Ms. Trista Bridges is a strategy and marketing expert with extensive experience across various geographies and sectors including consumer products, financial services, technology, and healthcare. As co-founder of “Read the Air”, she advises organizations on sustainability, providing them with the insights and solutions needed to transition to sustainable business models.
Mr. Donald Eubank is an experienced manager who has worked across the IT, finance, and media industries in Asia for the past 25 years. As a co-founder of “Read the Air”, he serves as an important advisor to businesses that are integrating sustainability into their core strategy, guiding their teams to lead sustainably and apply critical tools for managing their impact.
Text and photos: Martin Fritz for SCCIJ