By Amy Augustine
As we confront a new political climate that is inspiring both uncertainty and rising citizen action, I am more convinced than ever that business must play a critical role in achieving a sustainable, equitable and clean-energy future. Bold leadership, as well as individual and collective action from influential companies and investors, is critical to ensure continued progress in achieving the ambitions of the historic Paris Climate Agreement and the U.N. Sustainable Development Goals.
Fortunately, companies we engage with here at Ceres continue to demonstrate that sustainability is not just good for the bottom line; it is the bottom line. Despite backward steps in Washington, there is unprecedented clarity in the business community – especially from the Fortune 100s – that building a healthy, low-carbon economy is irresistible and irreversible. Examples of this are popping up everywhere, although still not at the pace and scale we need.
These seven key corporate trends are ready for primetime and will be critically important in advancing our sustainability goals, no matter the political winds in Washington.
1. Corporate support for clean-energy policy is accelerating
Corporate energy buyers want renewable energy – and not just to help them meet their own greenhouse gas reduction goals. Renewable energy prices are increasingly cost-competitive in many parts of the country, and they remove the long-term risks associated with fossil fuel energy price volatility.
More than 900 companies and investors are calling on President Trump and Congress to keep the U.S. in the Paris Climate Agreement and to support low-carbon policies in the U.S. And nearly 100 global companies have signed on to to the RE100 initiative, a commitment to source all of their energy from renewables.
Lacking a national carbon mitigation strategy, states and cities will continue to be the platforms on which we’ll see meaningful clean-energy progress. In Michigan, Ohio and Virginia, among other states, companies are helping to shape policies that strengthen and increase access to renewable energy, leading to more clean-energy investment and jobs in those states.
Stay tuned for our upcoming Power Forward report this spring documenting these trends among Fortune 500 companies.
2. More investors expect companies to disclose climate-related risks and opportunities
The Task Force on Climate-Related Disclosures (TCFD) – whose leadership includes Ceres member companies such as Bloomberg LP and JPMorgan Chase – recently published a specific guidance on how companies should evaluate and disclose climate risks in financial filings.
Investors and global stock exchanges are taking notice, especially in regard to how carbon-intensive companies are analyzing business impacts under scenarios where carbon pollution is reduced at levels that would limit global warming to 2-degrees Celsius or less – the goal of the Paris Climate Agreement.
More than ever, investors are aiming these questions at energy-intensive companies like ExxonMobil and Chevron, which are already struggling financially as global oil demand is waning.
3. Companies are advancing human rights reporting and performance
Companies are facing unprecedented scrutiny on their human rights performance and reporting. In 2015, the nonprofit group Shift that helps organizations to implement the U.N. Guiding Principles on Business and Human Rights (UNGPs), developed the UNGP reporting framework, which companies such as Ericsson, Nestle, and Unilever are already utilizing to strengthen human rights reporting and performance.
Ceres is now collaborating with Shift to advance corporate adoption and implementation of the framework to drive improved human rights performance across direct operations and global supply chains.
4. Water risks are rising on the investor agenda
Water crises such as prolonged droughts and extreme precipitation events – been in California, lately? – were again among the top five global impact risks in an annual report from the World Economic Forum.
Increasingly, companies operating in water-stressed regions are proactively taking action to conserve and protect water sources. General Mills, Gap and PepsiCo, are among a growing cadre of companies engaging with California policymakers on the urgency for stronger water management policies in this water-starved state.
5. Competence on sustainability is becoming a measure of board effectiveness
Corporate boards have a key authority and responsibility to boost corporate attention on long-term sustainability risks like climate change. Large investors are increasingly focused on the role board members can play on sustainability. U.S. pension funds CalPERS and CalSTRS, for example, both recently updated their governance principles to explicitly request that company boards have stronger experience and expertise on climate risk management.
In the coming months, investors and other stakeholders will be looking to engage with key governance experts within companies on this topic, including corporate secretaries and general counsel.
6. SDGs will be a bigger driver of strategy and action
In 2015, more than 190 world leaders committed to 17 Sustainable Development Goals (SDGs) aimed at ending extreme poverty, eliminating longstanding inequalities and fighting climate change.
Worldwide momentum behind these internationally supported goals continues to gain strength, and at the upcoming Ceres Conference we will hear from Novozymes, BASF and Intel about how they are aligning their commitments and business strategies with this global vision.
7. Sustainable sourcing is becoming the new norm
Access to reliable, affordable supplies of key inputs is threatened by climate change, water scarcity risks, and the use of unethical practices like deforestation and forced labor. Agricultural supply chains are feeling some of the biggest pressures, leading to stronger action by investors and companies themselves to push for strategies to assess and manage these risks.
This spring, Ceres will release an interactive tool called Engage the Chain to help investors and companies better understand wide-ranging agricultural commodity risks.
No doubt, company actions on all of these fronts will continue to evolve – and, hopefully, accelerate. Such leadership is more essential than ever.
Image credit: Pexels
Amy Augustine is the senior director of the corporate program at Ceres, a nonprofit sustainability organization mobilizing the world’s largest investors and companies to take stronger action on climate change, water scarcity and other global sustainability challenges.