2021 – the year ‘sustainability’ comes of age?

By Lily Martin, Account Manager

For Governments and businesses across the globe, 2020 was supposed to be the year to address climate change. But much of this, I suspect, has been side-lined by Covid-19. As thoughts tentatively turn to recovery, and with COP26 on the horizon, now seems like the perfect time to make a genuine start. However, in the rush to be seen as green, companies must not fall into the trap of overstating their own eco-credentials. Being green requires devotion, and a genuine reassessment of your priorities.

Frustratingly, most businesses seem to be approaching the run-up to COP26 in November as the single news hook to promote their sustainability drives. While the event certainly promises to be a watershed moment, companies need to get out of the mindset that climate change is an event that they should be working towards when communicating their ESG strategy. Firstly, it smacks of insincerity, and secondly, it would be misguided to lock in an entire company’s efforts for one month’s worth of news at a time when the news agenda is already oversaturated.

This is not to say that your ESG strategy (if you have one already) is not worth promoting. It is vital that you do. But to convince investors and regulators that you are serious, your efforts must move beyond a single event into ‘business as usual’ communications. This means pulling the strategy out of the boardroom and into the field independently of COP26. Before you hail COP26 as a landmark event on your social media channels, make sure you have your house in order.

Understandably, there is the concern amongst businesses about promoting something publicly that is a work in progress. However, tackling climate change is a transition, so demonstrating your business’s progress will not only provide a narrative which over time details your company’s headway, it will encourage others to follow suit.

This is particularly relevant for firms that previously invested in businesses that have caused harm to the environment. It’s important to not ignore that you made these investments (nearly everyone did) but demonstrate how and why you are committed to transforming your investment strategies. This is no easy task, nor something that can happen overnight. But only those businesses who demonstrate significant leadership and innovation in the face of climate change will continue to grow. Firms, particularly investment managers, that fail to demonstrate how they are managing and mitigating climate change risk could experience a significant loss of value, and an inability to secure new capital.

The next favoured approach that firms seem to be taking is drafting a report. While it is certainly important to underscore any results and bolster your sustainability credentials with data, a report is often a one-hit-wonder. It is far better to generate a frequent drumbeat of news surrounding your sustainable practices than distribute a single report and watch it soon fade from relevance to the everchanging news agenda. We are seeing an increased appetite amongst journalists for more regular updates from companies regarding their sustainability progress. Challenges too, do not have to be framed in the lens of ‘failure,’ but as the active response to long term objectives.

It is also important to look outwards and use collaboration to your advantage. If you are a small business, have you considered partnering with a larger one to affect change? Can you use incoming regulation to your advantage? While no business can ‘win’ the sustainability race, there is much to be said for working towards a common goal.

Sustainability is not a single event, report, or news clipping. The market is changing fundamentally – creating a sustainable business is not simply another challenge, it is the main challenge.

This piece first appeared in Cicero/AMO’s February news and insights update – click here to access our full update.

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Lily Martin

Account Manager