With COP27 only a little over 6 months away, fulfilling ESG commitments have been on the minds of business leaders and legislators alike since pledges were made in Glasgow late last year. While achieving carbon efficiency is a key step forward, at MVGX, we believe that organizations can do better. New technologies hold the key in going beyond the bare minimum, making it easier for businesses to set tangible goals and hold themselves to them as they actively offset carbon emissions and achieve neutrality once and for all.
However, climate action isn’t just good for the environment, it’s also good for business. Here are our top 5 reasons why organizations should become carbon neutral:
1. Customers prefer carbon neutral brands and businesses
Sustainability is no longer a luxury or a ‘nice-to-have’ but should be core to all essential business practices. Over the last five years, 85% of people have shifted their purchasing behavior towards making more sustainable choices. It is through the rise in consumer concern for climate change that big corporations such as Nissan, Starbucks and Chevron are making critical changes across all aspects of their operations — be it terms of a pivot to eco-friendly packaging or a renewed focus on EVs. In recognition of the fact that these changes come at a cost, more than 30% of global consumers are even willing to pay a premium for sustainable products and services.
This trend has accelerated over the course of the pandemic, which prompted recognition of the delicate interplay between human, economic, and environmental health. In fact, the pandemic was identified as one of the biggest drivers that pushed consumers to rethink their habits: 94% of surveyed respondents are making at least some effort to live more sustainability of which 46% say they are “doing all they can” to reduce their footprint on the planet.
While the impetus for change is here, businesses also need to be aware of the risks. To avoid being accused of greenwashing, businesses should adopt robust, verifiable systems and hold themselves to the strong environmental mandates they’ve set or risk losing their customers to progressive competitors who can better meet growing consumer demands for sustainability-oriented products and services.
2. Employees prefer employers that are sustainable
A 2021 Deloitte study highlights the significance of climate change to young people. But why does this matter? 44% of millennials and 49% of Gen-Zs expressed that they lean on their personal ethics to inform employment decisions, preferring those who share the same values. With Gen-Zs regarded as the “Sustainability Generation”, business leaders would do well to place a renewed focus on sustainability as they appeal to the next generation entering the workforce.
A separate study done by Censuswide also found that employees want to see more than just the bare minimum when it comes to climate action, with 65% of respondents “more likely to work for a company with a strong environmental policy”.
If anything, these two studies have shown that the demands that employees have for an organization’s environmental mandate are not constrained within the millennial and Gen-Z demographic but is instead an intergenerational concern. As companies compete for talent amid the “Great Resignation”, it’s important that employers adapt to growing demands for climate action within their talent pool to make themselves more attractive to prospective applicants.
3. Climate regulations will soon impact your business
The outcomes of COP26 made it extremely clear that businesses play a critical role in solving the climate crisis. To achieve the agreements agreed upon at COP26, businesses and governments have to collaborate with each other. While governments propose to enact policies and regulations to push for compulsory climate-related impact reports and trade regulations, businesses have to accelerate their climate action efforts by being accountable and building clear sustainability strategies and targets. Inability to comply with regulations will result in penalties and huge losses for businesses.
In France, for example, companies are being held accountable for misleading marketing and advertising around sustainability activities. The government also introduced the Climate and Resilience Law which penalizes companies for misrepresenting the scope of their sustainability commitments, “in particular with respect to the environment, the nature, the process or the reason for the sale or the provision of services” and is punishable by imprisonment of up to two years and a fine of €300,000.
Closer to home, the Singaporean government has rolled out mandatory climate reporting rules for issuers in specific industries starting in 2023. Together with this new rule, companies in the specified sectors have to subject their sustainability reporting processes to internal reviewing by their auditors and all directors are required to attend a training on sustainability. As countries scramble to enact climate regulations globally, businesses have to be ready to adapt to the incoming wave of climate regulations in order to stay both relevant and compliant. While this may come at a cost, technological solutions and services, such as MVGX’s Carbon Management System, can help to streamline and simplify climate-related reporting processes.
4. ESG objectives reduce overall costs to your bottom line
A misconception among businesses starting their sustainability journeys is that it needs to be a costly one, what with the growing demands for reporting, re-evaluating aspects of your supply chain, or even going as far back as the provenance of natural resources associated with your products. However, in recognition of its growing importance, businesses can actually receive additional financial incentives by going green.
For example, through sustainability-linked loans, companies are able to enjoy lower interest rates if they meet certain climate related targets. The Monetary Authority of Singapore has also introduced its own Green and Sustainability-Linked Loans Grant Scheme which supports corporates in accessing financing as they invest in green projects and stand to benefit from a reduction in their loan interest rate if they meet their sustainability targets. Additionally, by integrating sustainability targets into their business’ decisions, companies can also enjoy cost savings on expenses such as the cost of carbon, water, energy, and other manufacturing inputs.
Implementing ESG objectives can also create tangible value for businesses beyond cost reductions. McKinsey also highlighted that strong ESG mandates can also enable businesses to better tap into new markets as they gain trust from governing authorities and ability to win new customers; reduce risk exposure from legal and regulatory bodies; increase productivity by instilling a sense of purpose in employees; and invest capital in opportunities that are more promising and sustainable.
5. All of us need to play our part in this urgent need
The outcomes of COP26 are a sobering reminder of how we can no longer drag our feet when it comes to solving the climate crisis. The most recent report published by the UN IPCC has emphasized that insufficient progress has been made to date but immediate and deep emission reductions across all industries and sectors can help to avoid the worst climate change scenarios. If we were to go beyond the 1.5 degree Celsius threshold, this would result in irreversible damage to the environment.
Within a globalized environment where international trade is the norm, the need to comply with a fragmented sustainability regulatory regime will be critical to staying ahead. At MVGX, we’re excited to work with businesses looking to strengthen their sustainability commitments with our Carbon Management System and our Carbon Neutrality Token (CNT™) to enable them to access tokenized carbon credits that are verifiably linked to green projects across the region. Backed by rigorous international standards and certified by British Standards Institutions (BSI), we can help corporations looking to strengthen their ESG mandates with cutting-edge technologies to increase the transparency, efficiency, and verifiability of their efforts.
Seeing as consumers are already taking action to shift towards living more sustainable lifestyles, it is now time for the global business community to rise up, admit responsibility, and take action. Given the urgency of the climate crisis, corporations should be at the forefront of this movement to bridge the gap between rhetoric and action — so what are you waiting for? We’re here to help you get started.
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