Scanning the signals
The concept of sustainability — using natural resources that are renewable, or in a way that will not lead to their depletion; reducing the ecological footprint of the business; and avoiding contributing to outcomes such as global warming — is gathering unprecedented mindshare in political, economic and market circles. Making sustainable choices is something an increasing number of consumers do as a matter of course, and that businesses are incorporating directly into commercial strategies.
Technology is a major contributor to climate change and a large number of tech companies are attempting to address this, whether by building energy-efficient data centers, adopting renewable energy sources, or developing applications that consume less in both their creation and ongoing operation. Technology can also help make our everyday lives more sustainable, by for example supporting smart cities that optimize traffic to reduce pollution.
The move to a sustainable world is accelerating, and the trend has wide business implications. Signals here include:
- The emergence of sustainability in government policies, for example the Green New Deal or the European Green Deal
- The increasing prominence of ESG standards within organizations, and the movement of funds into ‘ethical’ investments and away from companies that pollute or have a negative sustainability posture
- Technology providers touting their ‘greenness’ or other sustainability characteristics
- Organizations adopting carbon neutral or similar environmental impact reduction pledges. For example, upon winning the naming rights to Seattle’s rebuilt sporting arena, Amazon dubbed the facility “Climate Pledge Arena,” aiming to make it the first net-zero carbon building of its kind in the world. Microsoft has set the goals of being both water positive and carbon negative by 2030
Consumers want to feel good about their impact on the world and will increasingly factor sustainability into their decision making when choosing a brand or supplier. That will require businesses to examine the environmental costs of their products and operations, and adopt more sustainable strategies and technologies in response.
Rather than a box-ticking or compliance issue, sustainability should be understood as a contributor to business goals. Advances in sustainability such as reducing energy consumption often lower costs and can be a win-win for a business's bottom line.
Sustainability has also gained considerable momentum in equity markets under the environmental, social and governance (ESG) banner, with many major investors and portfolio managers instituting ESG targets or requirements. Green credentials can therefore ultimately enhance a company’s valuation and ability to attract quality investment.