How the climate crisis is transforming the meaning of “sustainability”

In his letter to CEOs for 2021, Larry Fink, CEO and Chairman of BlackRock, the world’s largest investment manager, wrote: “No problem ranks higher than climate change on our client’s priority lists. . “

A notable example is Heinz. The ketchup maker has announced a cap for its 100% recyclable ketchup bottle. This is the result of an investment of $ 1.2 million and 185,000 hours of work over eight years, according to the company.

Climate change requires a new approach

While companies seem to grasp the scale of the climate crisis, they are trying to deal with it primarily in a sustainable way, as usual, one ketchup bottle cap at a time.

Consider emission reductions. Companies have been slow to commit to reducing their emissions to zero by mid-century at the latest, a target the Intergovernmental Panel on Climate Change considers necessary to limit global warming to 1.5 degree Celsius (approximately 2.7 degrees Fahrenheit) and avoid the worst effects of climate change. Only about a fifth of large companies have targets for 2030 that are in line with the goals of net zero by 2050 at the latest.

Companies that set net zero goals often do so in a way that lacks the necessary robustness, allowing them to continue to emit greenhouse gases, as recent reports point out. One concern, for example, is their reliance on carbon offsets, which allows them to pay for potential carbon reductions elsewhere without making real changes in their own value chain.

How to transform business sustainability

Companies have tried to rename their efforts in a way that seems more sophisticated, shifting from terms such as “corporate social responsibility (CSR)” to “environment, social and governance (ESG)”, “specified companies” and “products”. carbon neutral. “

But when companies don’t put their words into action, they increasingly face resistance from activists, investors, and government and regulatory agencies. One example is the growing scrutiny of companies that present themselves as climate leaders, but at the same time, give money to politicians opposed to climate policies. Public relations and advertising workers called their own industry in a report outlining 90 agencies working with fossil fuel companies.

Business is at a strategic inflection point, which Andy Grove, the former CEO of computer chip maker Intel, described as “a time in the life of a company when its fundamentals are about to change.” .

This transformation could evolve in different ways, but as I suggest in my book, effectively tackling climate change requires a new mindset that shifts the relationship between profit maximization and sustainability to prioritize sustainability over profit.

The first signs of evolution

There are early signs of change, both within companies and the forces shaping the environment in which companies operate.

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