A few months ago, nine out of ten C25 CEOs would have stated that sustainability and the 17 SDGs were key strategic priorities for their companies. But is it still good business sense to prioritise sustainability in the light of the serious crisis that we are looking into, both as society and as companies?
YES, SUSTAINABILITY IS STILL GOOD BUSINESS.
Just as in 2008, we are now seeing governments focusing on supporting the national economy and companies focusing on their short-term needs in the form of liquidity, stabilising their supply chains and controlling their costs. But although we do not yet have a full picture of the impact of the Corona crisis on the global economy, there are signs that the current crisis is different from the financial crisis of 2008 on a number of key issues, not least from a sustainability perspective.
Your shareholders want it
First, the global investment society have really begun to realise the business potential in climate and sustainability. This trend has been long coming but has really gotten a foothold in recent years. The proportion of asset management focused on sustainability is estimated to constitute 25% of the total volume of asset management in the US according to Deloitte. In 2025, this share is expected to constitute 50%.
Considering this development, no wonder that the world’s largest asset manager, Blackrock, has an-nounced their ambition to be frontrunner on sustainable investments. There is a simple explanation for this development. Sustainable companies tend to have stronger bottom lines and higher valuations over time than their non-sustainable competitors.
Companies which make sustainability a priority and work strategically on the link between sustainability and opportunities for new business are better positioned to capitalise on the changes brought on by e.g. climate change in their markets and on the business risks that e.g. unethical behaviour causes. And companies with focus on sustainability tend to also have a culture of optimisation. Less energy consump-tion and optimised production processes make sense with respect to both the business and the climate.
The politicians want it
Second, the political development supports the market trend. The Danish Minister of Climate, Energy and Utilities Dan Jørgensen (S) is currently negotiating with the parties of the Danish parliament on which sectors to focus on and how when Denmark is to realise its target of reducing the country’s carbon emissions by 70% before 2030. For the same reason, there are signs that any recovery packages aimed at stimulating the economy once the temporary aid packages expire will come with a set of green re-quirements. The same tendency is seen across the EU.
Your (future) employees want it
Third: If you want to be able to recruit and retain (especially young) employees, sustainability is more of a requirement than an advantage. Whether or not you agree with Greta Thunberg’s viewpoints, you can be sure that a lot of the young graduates do.
An increasing number of studies show that employees are attracted by working for organisations with focus on sustainability, and that this plays a greater role in their perception of their workplace than e.g. paid holiday, home office, career opportunities, competence development, etc.
THE CORONA CRISIS IS NOT THE SAME AS THE FINANCIAL CRISIS.
The Corona crisis is not a systemic, economic crisis. We are seeing a decrease in demand and disrupt-ed supply chains because of the global lock-down of societies. But we are not seeing a pile of rotten mortgages that should never have seen the light of day, threatening the financial system.
So, when you begin to revise your strategy, whether it is tomorrow, next week or next year, our advice to you is: Think short term and think long term. The current Corona crisis will change your priorities in the short term. But if you wish to remain relevant in the long term, sustainability and the SDGs should remain one of your strategic priorities.