In half a century, two thirds of animals have disappeared from the Earth's surface. The numbers of birds, fish, and mammals continue to decline, with only few thriving in the polluted environment. However, there are animals that thrive particularly in the inhospitable environment and their numbers are increasing: rats and bats. Because of extreme deforestation, they are getting closer and closer to humans, and with them the diseases they carry. Viruses that have been deeply hidden in rainforests for millennia are thus increasingly threatening humans. However, sustainability experts point out that there is still a tipping point where the situation can be turned around: in the form of sustainable business.
The pandemic has accelerated digitalisation, increased employee productivity, and streamlined banking processes. Many companies saw record profits, others fell to their knees. There was less travel and less smog, but more disposable waste. In the meantime, forests continue to disappear as populations increase, and fields and pastures must expand. Trees are also giving way to infrastructure and logging. Burning forests not only destroys biodiversity, but also releases CO2, which reinforces the climate crisis. Deforestation of the Amazon rainforest is, according to scientists, the fastest it has been in 15 years.
The most burning topics through the lens of business leaders
A survey by GlobeScan investigated which environmental and social issues are of most concern to business leaders. The climate crisis topped the list, followed by the loss of biodiversity, threats to water resources, increased poverty, and social inequality. The survey also confronted these responses over a 10-year horizon. The comparison showed that all the concerns were increasing from year to year.
Integrating sustainability into business strategy is a sign of leadership
The survey also assessed what environmental goals are valued by the public or clients. Respondents rate very highly if a company has sustainability at the core of the business - that is - if it is a solid part of the business model. They appreciate when companies set ambitious goals that are scientifically based. They also appreciate communication and social commitment, offering psychological support, sustainable products and services as part of the business model.
How to link business goals with sustainability
Most companies set out in their business objectives what they want their turnover to be and how much of it should be generated from green products. They define in detail what a green product means and what they want to achieve in 3 to 5 years. Another way of linking sustainability to business is if the sustainability agenda is supported by an HR strategy through employee remuneration. The variable component of top executives' remuneration can be based on indicators such as accident rates, carbon footprint or gender diversity. However, some companies extend the bonus structure not only to management but also to all employees, e.g., when it comes to waste. In practice, this means that the higher the waste reduction, the higher the variable part of remuneration.
Internal ESG management
Mazars' survey has shown that up to 74% of companies have strengthened their internal structure which has sustainability management and culture at the top of the agenda. Last year, it was only 49%. There is a growing trend for companies to set these targets according to scientifically proven facts and strategies when reducing emissions. Internationally recognised companies such as Science Based Targets or Pacta can calculate exactly how much companies need to reduce their emissions to be in line with global commitments, whether according the UN climate conference in Paris or in Glasgow. Each sector has a precise quota of how much it must reduce its carbon dioxide production. At the moment, about 2,000 companies have such scientifically-based commitments.
Responsible products and services
Business patterns are changing in all types of sectors - from textiles and energy to food. For example, many retail chains not only try to accommodate customers who prefer vegan products, but also proactively offer them to those who have not yet considered this alternative. They promote plant-based and vegetarian products so that they become the preferred choice and customers start to trust them. If the planet is to feed all of humanity, this revolution in the food industry will be necessary.
The British chain Morrison managed to solve the problem of unsold fruit and vegetable waste elegantly, creatively and sustainably. In the European Union, it is forbidden to feed it to livestock because of strict standards. They therefore decided to feed it to crickets, which are an extremely rich source of protein. From the crickets fed with expired vegetables and fruit, they produce granules for hens and sell their eggs. Waste is put to good use; the carbon footprint is reduced and even forests are protected. Previously, hens were fed with soya granules, but up to 80% of soya is imported from Brazil or other biodiversity-rich countries, where forests must give way to the cultivation of the crop. The chain also eliminated the climatically demanding transport from South America to Europe.
Financial sector sustainability
While green bonds are not a new thing, what is new is that their attractiveness is growing. The European Union launched the sale of its green bonds in the autumn with great success and with demand breaking records. They are particularly attractive to the younger generations, who are different from their parents' generation. Through investing, they want to express their personal values and contribute to a positive impact on the environment. Green bonds finance green energy, sustainable transport, or green buildings. In addition, their yields are currently higher than with traditional funds and they have shown greater resilience to fluctuations during the pandemic.
Community strategies and trends during the pandemic
The pandemic has fostered cooperation and partnerships in business. For example, Unilever, a manufacturer of food and cosmetics, has teamed up with Uber to donate disinfectant sprays to drivers. Ford, GE and 3M collaborated to increase production capacity of respirators and face shields. Many companies were changing production capacities from one day to the next. However, companies did not only associate with each other during the pandemic, but also with the public sector. Adecco, for example, worked with the Swiss government to define the best steps for economic recovery. Bill and Melinda Gates Foundation and Mastercard founded Accelator to research treatments for Covid-19.
Faster pace, higher volume
Grant programmes have become simpler. Application forms are shorter, their assessment is faster and more flexible. For example, Just Fun platform was created in the US. This tool dramatically reduces bureaucracy. The applicant submits only one application for project support through it, but the application reaches several potential donors at once. During the pandemic, some donors doubled or quadrupled their philanthropic contributions. The largest private donors currently include Twitter, Bill and Melinda Gates Foundation, Soros Fund Management, Amazon, Dell, and Bloomberg. The largest private contribution to Unicef came from the Danish company Lego, amounting to €150 million.
Mazars and sustainability
Mazars has its own Sustainable finance policy tracker. Under the auspices of the UN Climate Conference in Glasgow, it also contributed, among other institutions, to the development of Sustainable Infrastructure (SI) Label, supporting the FAST-Infra initiative. This is the first-ever global label designed to make it easier for investors to make decisions when looking for sustainable assets, products, services, and investments. If, for example, buildings or renovations under the European plan receive this label, they are likely to become more attractive to private investors.
Mazars can help companies set strategy and create policies that are responsible to the environment, employees, customers, partners, suppliers, and the community. It will help the company in designing sub-projects, setting goals, or reporting. It offers implementation of corporate responsibility, dialogue management, training implementation. Reporting is processed according to the standards of the Global Reporting Initiative (GRI), UN Global Compact Initiative, 17 Sustainable Development Goals (SDG), UN Guiding Principles, IIRC. It also audits non-financial data.