View from the Street: People, profit, planet

@HattieMoll

View from the Street: People, profit, planet

I was lucky enough to sit down with Linzie Forrester, Group Head of HSE at Wood plc. recently.  Linzie has more than 25 years of experience leading and advising on global sustainability programmes. She describes the impact of sustainability on business with three words, “people, profit, planet”.  It’s the most succinct and understandable descriptor for why sustainability matters that I’ve ever heard.
 
Sustainability is often that part of the business that investors avoid looking at in direct sunlight.  It requires peering into the future, sometimes the distant future, planning beyond your own tenure and taking financial decisions that won’t see quick financial returns.  Not so long ago, sustainability could be written off as a “nice to have” but today it is arguably the biggest key to unlocking future business growth opportunities. 
 
The business case for sustainable development is strong: as well as opening up opportunities, it drives innovation and it enhances reputations. Companies with a reputation for sustainability attract and retain employees, consumers and investors and secure their licence to operate. So far more than 9,000 companies have already signed up to the ten principles of the Global Compact(the guide to sustainable business behaviour).
 
When building sustainability goals for any business, a good place to start is by aligning ambitions with the Global Goals for Sustainable Development. By placing your sustainability framework within the existing framework of the Global Goals you are immediately part of a family of businesses working towards a shared profitable future.  Research conducted by the Business and Sustainable Development Commission reveals that adhering to the Global Goals offers a compelling growth strategy for individual businesses. The report argues that the time is right for business leaders to seize the market opportunities opened up by the Goals and incorporate them into core growth strategies, value chain operations and policy positions.  Interestingly, it is car companies that are leading the way.
 
The window for businesses to address challenging internal sustainability scenarios is closing fast.  The tipping point of environmental, human and accompanying regulatory challenges may already have been reached to finish off some dinosaurs.
 
One of the challenges to any sustainability manager is how to make their strategy integrate with the business. If your company doesn’t embrace the development goals as part of the core business, how can you marry complicated regulatory requirements around emissions or taxation with a programme that inspires transformational community investment and engages your workforce?  It’s made harder when the government’s regulatory stance has often stopped businesses from engaging with their own sustainability issues at a practical level.  
 
An example of this would be the UK mandatory CRC (carbon reduction commitment).  All businesses that use more than 6,000 MWh per half hour per year of electricity are obliged to submit details of their usage and buy and submit CO2 allowances to cover it.  Clearly, businesses are incentivised to reduce emissions so as to pay less.  They are not incentivised to engage with the impact of their emissions on the environment or their communities.
 
Schemes such as UK Woodland Carbon Units represent a more forward thinking opportunity for businesses.  Woodland Carbon Units are one of three types of ‘credit’ that can be used to offset a company’s gross emissions under UK government guidance.  By buying units from a recognised voluntary carbon sequestration project Woodland Carbon Units can be used in claims of carbon neutrality of an organisation’s activities, products, services, buildings, projects or events. 
 
Crucially, the business can become a partner in the creation and development of a woodland, an eco-system and a local public amenity.  The opportunity for building a local active partnership offers a wide range of opportunities for team building, corporate days of planting, picnicking, butterfly preservation work, marketing and community group engagement and for the overall health and well-being of the workforce.
 
Unfortunately, while carbon sequestration resulting from projects certified to the Code does, in common with other woodland creation, contribute directly to the UK’s national targets for reducing emissions of greenhouse gases (under the Kyoto Protocol and the UK Climate Change Act 2008);  Woodland Carbon Units cannot currently be used in regulatory carbon reduction mechanisms (e.g. the CRC Energy Efficiency Scheme or EU Emissions Trading Scheme) or traded internationally. 

Along with those businesses leading the way by voluntarily investing in Woodland Carbon Units, I hope that the UK government will look to integrate schemes like this into the next iteration of the CRC in 2019 by which point I have every faith that sustainability will be even higher up the business agenda than it is today.