Time for businesses to own up and act on climate change

THE recently released Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report makes for some very troubling reading, declaring in no uncertain terms that the world is at the brink of a climate catastrophe. United Nations Secretary-General Antonio Guterres perhaps best summarised the tone of the almost 4,000-page report by stating that the findings must "sound the death knell" and represent a "code red for humanity".

Make no mistake, we are in very dangerous territory climate-wise. We can still initiate some damage control by reaching the lofty goal of net-zero carbon emissions, along with strong reductions in other greenhouse gas emissions, but to do so, we must first understand how we got here.

As it happens, the world has reached this precipice probably through a combination of unchecked industrialisation and decades of human apathy. A rampant, callous disregard for the environment started as rapidly urbanising economies were all too happy to use an abundance of carbon-heavy biofuels to raise living standards for a burgeoning middle-income consumer base.

Industrialisation has definitively helped to transform our quality of life and also sustain a period of unprecedented economic growth, but future generations may have to pay the price, as we realise that we cannot continue to ecologically borrow from Peter to pay Paul.

However, we didn't get here from consumerism alone. Many corporations are complicit in the climate crime of the century, all too happy to oblige in the name of capitalism and profits.

Some of the more prominent companies involved include top oil and natural gas companies which knew about the man-made effects of climate change even decades earlier. This clearly highlights the conflict at play for some corporations in addressing the issue of climate change and its impact.

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Therefore, there needs to be more avenues to rein in the extent of corporations' impact and their interactions with the natural world.

However, there is a risk that this leads to "greenwashing" - when corporations convey a false impression of how their products or services are more environmentally friendly than they actually are.

REGULATORY OVERSIGHT

This is an area where greater regulatory oversight can play an important role. Major stock exchanges in Asia including the HKEX and SGX have introduced frameworks that broadly mandate companies to report on their environmental, social and governance (ESG) impact in addition to their bottom-line profitability. This is a holistic and welcome look at the net positives of corporate activity, beyond just maximising profits for stakeholders.

In the future, environmental audits will become more mainstream, along with further and more extensive monitoring and reporting. Companies are required to dedicate specialised resources and manpower to ensure that they do not fall below certain environmental thresholds.

Taking the lead from many FMCG brands, more companies have appointed a chief sustainability officer, with board-level representation at many companies.

However, to truly change the paradigm from doing the bare minimum (which is unfortunately common to most "comply or explain" regulatory regimes), consumers must play a role in influencing corporations to behave more responsibly. Through advocacy and activism, they must collectively reward the environmentally conscious and punish those that are not. This will further incentivise the proliferation of environmentally-friendly products and services.

Finally, our climate crisis was not created in a vacuum and thus cannot be solved in isolation. Companies must work together with other like-minded entities and collectively raise awareness of the issues and challenges that they face and what low-carbon solutions are available.

Working with others will also allow corporate services partners to adopt a more proactive and concerted approach in helping their clients to reduce their impact on the environment. Some of these initiatives that have seen some success include the introduction of low-carbon office operation programmes (LOOP), closed-loop initiatives, carbon neutrality targets, net-zero alliances, green building certifications, circular economy, etc.

These can extend throughout the entire value chain too, as more companies take a stand on working only with other similarly environmentally-minded partners and vendors. Many organisational compliance teams already require declarations or certifications before engaging with third-party vendors, and it is not a distant reality to imagine that this will soon include a company's environmental footprint.

Digital solutions will pave the way for companies to work in a more sustainable way. For instance, a digital portal for the boardroom can help countless executives to securely manage meetings, agendas, documents and minutes through cloud-based platforms - helping to save cost, reduce administration and eliminate the need for wasteful paper-based filing systems.

Other digital systems such as online meetings, electronic voting or electronic agreements, are especially important in the context of an unprecedented pandemic that has curtailed businesses' general meetings.

SLIVER OF HOPE

The IPCC outlines that a near-term reduction in emissions can significantly reduce the rates of unprecedented warming. Achieving longer-term net-zero goals can also go far in stabilising Earth's surface temperature.

The sins of our past have caught up with us and we will have to pay a price in the future, particularly with irreversible changes to our world's oceans, ice sheets and global sea level. However, there is a sliver of hope - we can start targeted action today in tandem with the corporate agenda. This will help establish a clear and clean path to tomorrow and hopefully pull us back from the brink.

• The writer is the CEO of Tricor Group