Disable your ad blocker to enjoy the full interactive features of this document.
Sustainability and The Just Transition
Companies committed to working towards a Just Transition seek to align environmental objectives with social justice, ensuring that as they adopt sustainable practices, they also consider the well-being of their workforce, local communities, and stakeholders. By incorporating these principles into their sustainability strategies, businesses contribute to a more holistic and responsible approach to combating climate change while ensuring the well-being of all involved parties. This not only aligns with ethical considerations but also enhances long-term business resilience and reputation.
The perceived levels of ambition for delivering sustainability and climate action being shown by companies across the board is fairly high, with 23% of overall respondents ranking their firm as either a 9 or 10 on a sliding scale (with 10 being ‘extremely ambitious’ and 1 being ‘not at all ambitious’). Within large companies (of 5,000 staff or more), the ambition picture is similar to the overall average, while the perceived ambition among smaller firms (with fewer than 250 staff) is much greater, with 35% of respondents claiming it to be either a 9 or 10 ranking.
Q. How would you rank your organisation's current level of ambition when it comes to delivering sustainability and climate action - with 1 being not at all ambitious and 10 being extremely ambitious?
However, not all material issues – either environmental or social – are being given equal resources, efforts, investment and focus overall.
Addressing biodiversity is not yet considered to be a priority.
Late last year, COP15’s global biodiversity agreement – in which countries came together in a Paris Agreement-style deal to protect and restore nature – was hailed as something of landmark moment in efforts to reverse widespread biodiversity loss. For businesses, this would mean setting clear goals and understanding risks when it comes to nature-related impacts.
However, despite biodiversity issues being increasingly acknowledged at a global level, the issue doesn’t seem to have filtered down to concrete corporate action just yet. When asked how much of a priority is their organisation currently placing on a range of sustainability and CSR issues, fewer respondents placed a high priority on biodiversity and nature restoration than all other subjects. Just a third (33%) of respondents said biodiversity was either ‘business critical’ or ‘high priority’, compared with those that said the same about workplace diversity and inclusion (64%), developing a climate transition plan (54%), dealing with waste management and resource efficiency (48%) or getting to grips with climate-related financial disclosure (41%).
Respondents from construction companies place a higher priority on biodiversity (66% stating it as being either ‘business critical’ or ‘high priority’) than any other sector. This is likely to be a result of incoming regulations requiring new developments to deliver a biodiversity net gain (BNG) of 10%, which comes into play in January 2024 (or April 2024 for smaller sites).
Q. How much of a priority is your organisation currently placing on the following areas of sustainability and CSR?
And the situation is not likely to change any time soon. When asked to name the one sustainability opportunity they are most hopeful of their business focusing on or achieving in the next 12 months, among the comments received from 89% of respondents, just four respondents mentioned addressing biodiversity, taking biodiversity measurements or adopting nature-positive strategies.
There is a big green skills gap that must be closed.
The global demand for green skills is now 40% higher than it was in 2015, and just 13% of the global workforce possess the required green skills. This is marginally better than the 9% that were suitably equipped in 2015, but clearly there is a skills gap that must be closed. The UK is off track in delivering on its commitment to create two million green jobs by 2030, partly due to a lack of plans for upskilling and reskilling workers.
While the survey respondents are clearly focused is on finding investment for their carbon reduction and net zero projects, and building plans to transition to a low-carbon economy, more businesses recognise they will need to invest in their people to help them achieve their goals. A lack of internal skills and knowledge and the growing skills gaps were both noted as fairly significant challenges holding corporate sustainability back right now. A total of 11% of respondents noted the macro level skills gap as the biggest challenge facing corporate sustainability. And a similar number (12%) of respondents said that a lack of internal capability is the biggest challenge facing their organisation's sustainability strategy. A number of respondents also mentioned a lack of internal knowledge and skills when asked to explain, in a few words, what they see as the biggest challenge when it comes to the implementation and/or delivery of their company’s decarbonisation strategy. “Upskilling the organisation on ESG requirements”, “Upskilling of staff”, “Lack of knowledge about how carbon and wider sustainability issues join up with operations” were among the comments received.
The level of focus and resources going into enhancing diversity and inclusion (D&I) suggests more companies see D&I as a strategy for making progress on sustainability. Workplace diversity and inclusion is the area being given the most priority among all respondent organisations, with 16% seeing it as ‘business critical’ and 46% as ‘high priority’ for their business.
It appears that many companies are tightening the purse strings and focusing on quick wins with short payback periods while they weather the storm associated with higher inflation and rising prices. This might explain why measures including energy efficiency and staff behaviour change programmes are being prioritised (with 60% and 55% of respondents seeing them as ‘business critical’ or ‘high priority’ respectively) over measures that demand more investment, such as onsite renewables (deemed by just 39% to be either ‘business critical’ or ‘high priority’) or smart grid/flexibility technologies (acknowledged by just 17% to be either ‘business critical’ or ‘high priority’).
However, in hospitality, manufacturing and education sectors, investing in onsite renewable energy does appear to be a priority, with 75%, 56% and 50% of respondents respectively claiming it to be either ‘business critical’ or ‘high priority’ for their organisation.
Finance teams are still not fully on board with sustainability.
Almost 34% of finance departments are not engaged with sustainability or climate action within their organisation.[1] The situation is more acute within the media, banking and manufacturing industries, where 55%, 50% and 50% of respondents claim to have a disengaged finance department.[2]
The survey results indicate there is room for improvement when it comes to engaging finance teams and the board, and there is a big opportunity for sustainability teams to double-down on their efforts to convince those that hold the purse strings of the importance of investing in ESG issues. They will need to find specific ways to engage, using language and examples that encourage finance professionals to sit up and take notice. Among the comments received, a notable number of respondents pointed to the fact that implementing net-zero transition plans – and translating net-zero goals into financial returns – is one way to positively engage the board on sustainability.
[1] ‘Not engaged’ or ‘disengaged’ refers to the percentage of respondents that said their department was either ‘Not at all engaged’, ‘Somewhat disengaged’ or ‘Neither engaged nor disengaged’ with sustainability.
[2] ‘Not engaged’ or ‘disengaged’ refers to the percentage of respondents that said their department was either ‘Not at all engaged’, ‘Somewhat disengaged’ or ‘Neither engaged nor disengaged’ with sustainability.
In a few words, what one sustainability opportunity are you most hopeful that your business will focus on or achieve over the next 12 months?
“Training and empowerment of our team to lead action inside and outside the office, including working with suppliers and clients to lead change.”
“Critical thinking skills development in staff.”
© 2023 edie