How The Climate Crisis Is Transforming The Meaning Of ‘Sustainability’ In Business

from Fast Company

In his 2021 letter to CEOs, Larry Fink, the CEO and chairman of BlackRock, the world’s largest investment manager, wrote: “No issue ranks higher than climate change on our clients’ lists of priorities.”

His comment reflected a growing unease with how the climate crisis is already disrupting businesses.

Companies’ concerns about climate change have typically been focused on their operational, financial and reputational risks, the latter associated with the growing importance of the issue among young people. Now, climate change is calling into question the traditional paradigm of corporate sustainability and how companies address their impacts on society and the planet overall.

As a professor working in strategic design, innovation, business models and sustainability, I’ve been tracking how climate change is transforming the meaning of “sustainability” in business, and I’m starting to see early signs of change.

More here.

Posted in Future Thinking, Science and tagged , , .

14 Comments

  1. This article discusses how one of today’s consumer’s top priorities is sustainability in the companies they support. Corporations have been known to be the highest contributors to environmental destruction because of their high carbon footprints from carbon emissions. Green washing is a term that discusses a company’s attempt to become more environmentally conscious but in a way that is not as effective as it could be. For profit businesses are just that, for profit, so their biggest concern is what will make them the most money in the long run, despite the harm they are causing to the environment.
    In this article, the concept of “sustainability as usual” is introduced. This concept covers how businesses are making environmental changes but only to the extent that they are comfortable with and that continue to serve their intentions of increasing revenue. In order to stay a successful business and please shareholders, the company must do everything in its power to keep revenue up. Most of the necessary changes that scientists recommend go directly against that goal. In my opinion, it will take a true environmental emergency that directly affects the shareholders and people in charge to change their ways.
    Most people in a position of power do not want to change their position of comfort until that comfort is threatened. The shareholders and CEOs of these large corporations have enough money and protection for the environmental impacts that their organizations are putting on the rest of the world. They are blinded to the impacts because of their greed and lust for profits. Environmental issues disproportionately affect people of color and people in poverty. These populations are further put at risk because of these corporations and their disregard for the average person’s safety. If large companies do not change their ways, they could lose their customers completely due to disinterests or even their passing due to the growing environmental crisis occurring every day.
    Some companies have attempted to show they care by taking on Corporate Social Responsibility plans, but even they fall under the “sustainability as usual” concept because they lack the grandiosity of change that is required to eliminate such a large carbon footprint. A true change will most likely not be made until the environmental issues affect a company’s supply chain or higher management team directly. For now, these higher people in power will continue to reap the rewards of their flourishing business at the expense of the average person who has no say in a business’s activity.

  2. The recent importance bought to the climate change topic is calling for change everywhere. The most important place for change is most likely businesses. Businesses are responsible for the choices that are made when it comes to how a company is ran. Lately, making sure that the business works efficiently and eco-friendly has been a challenge. Eco-friendly routes of business usually are more expensive as well as being harder to maintain or run. The article How the climate crisis is transforming the meaning of ‘sustainability’ in business talks about sustaining business through this time of change, both environmentally and socially. Sustainably also deals with the better conditions for workers. In business details from 2020, even though there was seemingly a rise in business sustainability, improvement wasn’t seen. Greenhouse gas emission proceeded to rise along with the wage gap between CEOs and employees. With this said, working towards future sustainability is a timely and careful process. These business changes could be full turn arounds from how that business was operating a few years ago. In order to make the change seamless and less risky, changes are usually slow and thoroughly thought over. The article talks about this as well. In the section talking about the problem with sustainability, it is bought up that a business’s main goals no matter what is to make profit. This often leads to backhanded responses to some of the problems that their company is creating. An example of this from the article is how that most companies focus on bettering the recyclability of one-use products oppose to going in a different direction in that category which would eliminate the problem. A recent example of a environment change comes from Heinz ketchup. Heinz decided to change the material that their bottle caps are made out of to a 100% recyclable one. This change would end costing the company $1.2 million and over 185,000 hours of work across 8 years. Something as small as a bottle cap change costed all of this money and time. Companies see stories like this and determine that changes like this are healthy for the environment but are a huge waste of time and money.

  3. I believe this article made a lot of good points, especially in regards to the huge shift of attention on running a sustainable business and caring about the environment. Furthermore, there is also the very relevant subject of consumers only shopping where they believe the business is being run ethically and in a sustainable nature in regards to their manufacturing process. Also, with sales moving to eCommerce rather than in person, the huge issue is meeting demand while also doing so sustainably. As referenced and heard numerous times throughout the past few years, many consumers are moving their purchases to be based online and only with certain retailers they like. Therefore, the issue truly arises from whether retailers can sustain themselves through this change while keeping costs low while also producing product sustainability. As the article discusses, the approach of each business in their efforts is also lacking, but when considering that the main question in that issue could be why? Although, it is reasonable to conclude that changing your whole business model to be more sustainable is not something that can quickly be changed. As the article mentions, there are many consumers that truly care about a company’s effect on the world rather than the price., but it all comes down to the actions and decisions made to prove it.

    Many consumers will pay more for a better-sourced product, but many companies may not want to take in those extra costs to gain those customers, therefore there is also the issue of resisting this movement and potentially losing a large amount of your consumer base. This will continue to uproot the companies that are operating in such a fashion, which can lead to their demise if they do not get ahead of the issue before consumers even realize it. Also, with the issue of climate change, the prevalence of sustainability in consumers’ minds is also skyrocketing.

    Technology is becoming the driving force for many in how to change a company’s business model, but again that relates back to the money of doing so. As described, many have already done this but many cannot do it. Therefore, the next issue that could arise is what a company is to do if they cannot afford to do such research to be more sustainable. The issue of sustainability is also causing some companies to basically be stuck in a corner and due slowly due to not being able to change. Therefore, sustainability and consumer interest can also be described as the death behind a lot of companies. It can be concluded that this change can be described as a bad thing just as much as a good thing. Furthermore, this trend is really important to watch, simply based on capitalizing on the market and getting in now to dominate the market or to watch and see if a business can survive without adapting. Either way, it will be interesting to see who will adapt due to high research costs, and who will try to fight the movement and survive against the change.

  4. One of the major trends that have emerged over the past few decades is centered around the idea of promoting sustainability, as many corporations are being called on to improve their impacts on society and the environment as it relates to climate change. This is evident when looking at the participation rate of major companies in sustainability reporting with 96% of the world’s top companies by revenue, submitting a report. However, Just because these companies submitted a report does not mean that they are taking action towards improving the overall sustainability of their corporation. In regard to sustainability, the majority of the time companies will only commit to changes they feel comfortable with, regardless of whether or not these changes are compliant with science behind slowing climate change or recommendations, made by the United Nations, for an equitable society. Even though they are beginning to pay more attention to social and environmental issues, these companies will continue their incremental approach as long as their top priority is maximizing profits for shareholders. Instead of focusing their attention towards creating business models that could have a greater positive impact on sustainability, some companies are directing their efforts towards smaller efforts that have a lesser effect on their bottom line, but still gives the impression that they care about the environment.
    Even though many companies are beginning to understand the importance of the climate crisis, they won’t be able to make a difference until they start making “big picture” changes, instead of the small adjustments made to keep the public happy. This lackluster performance when taking steps to improve company wide sustainability is especially evident when looking at the topic of emissions reduction. Since the Intergovernmental Panel on Climate Change released their goal to reduce emissions to zero by 2050, companies have been very slow to commit to the plan, with only about 20% of major companies having 2030 goals that are in line with reaching net-zero goals by the mid-century mark. Many of these companies that do not set net-zero targets are doing so in a way that allows them to continue emitting greenhouse gases, and continue to be dependent on carbon offsets, which allow them to pay for potential carbon reductions in other areas without making any significant changes to their personal value chain. Companies won’t be able to effectively fight climate change until they change their mindset to prioritize sustainability over profit.
    Even though the overall movement towards sustainability has gotten off to a sluggish start, there are a few companies that have begun taking steps in the right direction. A number of companies have begun severing ties with the fossil fuel industry, due to its negative impact on the environment. This includes newspapers refusing to advertise for fossil fuel companies, as well as banks and insurance companies no longer financing coal projects. Another sign of evolution is companies adding a sustainability clause to its contracts, which require suppliers to set carbon reduction goals. We are also beginning to see some push from investors as they urge companies to take a more prominent stand against climate change. Ultimately, it will come down to whether or not companies are willing to lose money in the short run, in order to help protect the environment.

  5. The article sums up very well how companies have to find a certain balance between monetary profit and the fight against climate change. For a growing number of companies, the climate crisis is a fundamental challenge. It is permanently changing the view of the corporate world, increasingly influencing decisive success criteria of existing as well as new business models, making it necessary to adapt existing corporate processes or, in some cases, even jeopardizing the entire business operation. Consequently, the corporate strategy must take the climate crisis into account. Gone are the days when companies could close their eyes to this issue or get away with formulating vague goals. The climate crisis will change the lives of their employees, it will change the regulatory environment in which business is conducted and, in most cases, it will also lead to drastic changes in corporate strategy. Companies are increasingly recognizing that the issue is central and that a response is needed that combines strategic thinking, legal and regulatory expertise, and dedication to the difficult business of cultural change. What is clear is that action must be taken. But should it be up to companies to bring about the change? Not for the sake of society alone, but for the sake of the companies themselves. Those that don’t adapt will have a hard time surviving and thriving. For all those companies whose leadership may still not want to change, the law will in all likelihood provide an impetus. Companies will encounter legal challenges in their decision-making processes that are geared to climate impacts. These legal challenges will have consequences for CEOs and board members as they seek to both avoid risks to the company and prevent threats to their own position. So, companies need to change their mindset. Away from unconditional short-term success and toward long-term success. Economic incentives from governments can also help to avert the lethargy of the business world.

  6. One of the first points addressed in the article was the current way companies are approaching climate change. In the increased concern- usually from younger audiences- companies are making promises on a reputational basis. This claim stuck with me especially. I feel that today many companies do or don’t choose to openly discuss and support certain issues out of fear that they will be attacked or lose following by not standing up for the “right” things. Many times, companies won’t make statements regarding discrimination or environmental policies until others are called out for not doing enough. This concept of “sustainability as usual” is when companies record and almost brag about their efforts without true progress being made. I worked for a clothing company in high school and I was able to see some of the inside issues they either did or did not face. I would always feel so guilty throwing out items like old paper, cardstock, and plastic that could be recycled but weren’t because of the cardboard only dumpster. I actually ended up taking a lot of the trash home so it could be recycled in a bin were it could be repurposed. On the other hand, costumers would see the company’s plastic clothing bags that were able to be recycled, despite what the company did behind the scenes, and assume the best. Now that reporting a company’s sustainability is becoming more common, I hope that large corporations will continued to be called out for their lack of effort. I understand sustainability is expensive in a business setting and everything comes down to one common principle- money. Even then, with the climate increasing and weather becoming more extreme, a company could almost save more in investing into real action now. Similar to Heinz, a recyclable ketchup bottle cap was quite the investment of time and money. Now that they have achieved that though, the world has thousands of less pounds of plastic being thrown away every year and if anything the company’s reputation has only grown more positive. It is my hope that before 2050- when most companies have promised to become net-zero, more business will understand the importance of action.

  7. Human beings have roamed the Earth for around 6 million years. Throughout history, we have made countless inventions that harm the ecosystem of our planet and affect the air we breathe. Climate change is quite frankly the entire world’s biggest problem. Planet Earth, the only planet to sustain human life, has been going through a series of drastic changes since humans have evolved. From companies that operate large factories to car manufacturers in which both play a part in damaging the climate of our planet. One way businesses choose to combat climate change is through sustainability which refers to the conserving of the world’s resources. An example I found was Tesla and its goal of going zero emissions on its vehicles but cars with their hefty price tag aren’t accessible to average consumers. Hopefully, in the near future, electric cars will be an affordable option people have to choose from because as of now 80-90% of cars are responsible for negatively impacting the environment. The living circumstances in India are so bad that an article by CNN states, “the air pollution likely reduces the life expectancy of 40% of Indians — which is about 520 million people. India has long struggled with its smog problem, which ranges from choked urban centers with high amounts of vehicular pollution and industrial waste, to more rural agricultural areas that suffer from pollution caused by crop burning”. All the negative effects gradually build up and leave the planet looking empty. Especially when companies who brand themselves as climate leaders are using fossil fuels to operate. Our hope is that future company owners prioritize climate change over profits and attempt to uphold promises to combat climate change. If companies can harm the world with their products then they should also be responsible to work towards a solution to reduce the harm done to Earth.

  8. Climate change has been a hot topic for a few decades now, but little is actually done to combat global warming. Businesses have pledged to have the environment at the top of their priority list, but greenhouse gas emissions have only continued to increase. Raz Godelnik’s article talks about ‘sustainability as usual’, where there is a growing gap between climate change awareness and action. Everyone has heard of global warming and young people especially are big advocates of protecting the environment. As people start to become more aware of the situation at hand, they try to do their part by strictly only doing business with companies that have the environment in their best interest. This in turn affects businesses because if a company doesn’t change their ways, they will start to lose business. Businesses have adopted sustainable practices, but they have been very slow and comfortable for them. These changes are not going to contribute much to the global effort and it falls in line with Godelnik’s saying of ‘sustainability as usual’. Companies will only continue to slowly implement environmental changes because although they pay attention to societal issues, their number one priority is maximizing profit. The example Godelnik uses is with Heinz Ketchup; they supposedly invested $1.2 million over eight years to come up with recyclable ketchup caps for the bottles. Instead of investing in recyclable packaging by changing their business model, they went with their single-use products, which will have less impact on the environment. Companies like Heinz will look to appeal to pro-environment audiences by changing their practices, but most of these businesses have false initiatives. In order to contribute to the globe, businesses should be focusing on reducing carbon emissions, rather than changing bottle caps.

    Luckily there are people taking this issue seriously and are willing to take short term loss for the greater good. Insurance companies and banks have stopped financial coal projects. Newspapers like The Guardian, have banned advertising from fossil fuel companies. Software company Salesforce, added a sustainability clause in its contracts, requiring suppliers to set carbon reduction targets. Changes in business regulations and policies are also shifting in favor of sustainability, pushing companies to reduce carbon emissions even faster.

  9. In the article “How the Climate Crisis is Transforming the Meaning of ‘Sustainability’ in Business” by Raz Godelink, Godelink discusses the dire consequences of climate change, the precautions that businesses need to take to promote awareness and their social responsibility to do their part to fix it consider the fact that they are infamous for being the biggest part of the problem. Larry Fink, the CEO and chairman of BlackRock, wrote: “No issue ranks higher than climate change on our clients’ list of priorities.” Although there are many people who doubt the reality of climate change, nobody can deny the reality considering that in late October, New Jersey is still in the mid-high 70 degrees.

    In the business view, making a profit is more important than the long term effects the products they are producing effects on the environment and it is drastically affecting the current environment. However, as consumers have started to become more aware of the problem, they are forcing businesses to change their ways and become more aware of the damaging effects of their business ways. More consumers now tend to lean towards businesses that are eco-friendly and sustainable. The article states that, “companies have taken incremental approaches because while they have paid more attention to social and environmental issues, their first priority has remained maximizing profits for their shareholders.” Companies who have not made an effort to show their sustainability have been put on backlash. Fast fashion companies such as the popular clothing site as SheIn is a prime example. Although they provide trendy and very affordable clothing, their business practices are anything but ethical. They are one of the fastest growing online fashion retailers with 18 million followers on Instagram. They have been reported to use hazardous chemicals to carbon emissions to microplastics showing that they are contributing zero effort to fix their environmental impact. Many influencers and consumers bash the site contributing to the large ‘cancel culture’ to persuade other potential consumers to buy from a better brand that can provide a better quality product as well as a better sustainable option.

    Greed is not a financial issue, it is a heart issue. Until CEO’s can decide that the importance of future generations is more prominent than the temporary profit they will make in their lifetime is more important, we as humans might not even exist in 30 years. However, there are some companies that have started to implement better sustainability tactics such as returning old shoes so they can be scrapped to make new ones and offering customers 10% off their purchase when doing so. Another example is the success of Toms the shoe brand. They were one of the first companies to gain a following due to their societal impact in the world with their promise for every shoe bought, one would be donated. This gained many new consumers and media attention for them. Doing the right thing may not always be praised, but it will always be noticed.

  10. Climate change has become a serious issue for us that must be addressed as soon as possible. The article explains how while there are many companies that are currently promoting sustainability, those reports didn’t include any improvements involved in climate change. So while 96 percent of the world’s top leading companies by revenue sent out reports about their efforts involving sustainability, there is no actual proof that these companies are helping the climate crisis. Sometimes companies will only assist in the climate crisis if companies in the same industry are put on the spot for not addressing global warming. The term “sustainability as usual” refers to how companies will not commit to real change, but instead, just do what they’re more comfortable with and as long as it wouldn’t affect their business’s revenue and profits. The vast majority of companies are currently not willing to commit to a whole new approach when it comes to solving the climate crisis. According to the article, only about one-fifth of America’s largest companies have 2030 goals for zero net emissions, and with the year 2050 being the latest. The intergovernmental Panel on Climate Change says that in order to avoid the worst effects of climate change, businesses must commit to zero net emissions no later than mid-century. Although switching to cleaner and renewable energy can be very costly for some companies, the effects of climate change in the future will be devastating for the world’s environment and economy. In order for businesses to fight climate change, they must care more about the world’s environment instead of trying to make as much profit as possible. Companies in America and around the world must do more to help solve the climate crisis before the damage done by climate change becomes irreversible.

  11. In the last few years sustainability has been a big focus that many larger corporations want to add to their mission, vision and/or values, especially with climate change being a larger discussion in all facets of the world. While getting large corporate support for this is great, if they don’t have the right perspective it will do no good. The foundation of a business is thinking about the bottom line and in most cases taking a sustainable route in products, services, etc is more costly which will negatively effect the bottom line. Corporations and business leaders need to change their perspective, while changing their mindset from profitability first to sustainability first is a lot to change, asking corporations to invest in proper organizations or having one long term project can help start that change.
    The main difference between the people who push climate change, like scientists and environmentalist and business leaders is that business leaders are always pushing the bottom line and making their customers happy oppose to scientists and environmentalist who have a deep care and understanding for climate change. While this is not the case for all corporations, it is for many, so they are essential pushing the incorrect message out when it comes to sustainability. They need to find a balance between the bottom line, their customers and sustainability efforts.
    Another difference is that business leaders think about their reputation and how they can fit into the norms of corporate America through sustainability. Business leaders may also want a quick fit that will show immediate action to their customers, like the Heinz, of what they are working towards in terms of sustainability but like the true definition of sustainability it is about the long run not the short run.
    To invest in sustainability is a novel idea and with the way the workforce is looking at their career and companies chooses they are looking for meaningful work which could include sustainability. The main improvement corporations need to make is by thinking long term and following up on what they say they are going to do. It is one thing to brand yourself as a corporation that supports sustainability but it is another thing to actually show your support for suitability. We many even see a required push towards sustainability where companies may not have a choice. For example in New Jersey all grocery store are no longer going to be able to supply single-use bags and right now they are asking customers to bring reusable bags . While they may sell reusable bags what other ways can they support the cause and ensure their customers are happy. In a busy world customers may forget to bring bags, what solutions will these companies have? Also what other ways can they show their support besides mandates?

  12. This article primarily discusses how companies are addressing the ever-increasing issue of climate change. One of the most interesting points in this article was how companies do not put their actions into words. An example that was explained in the article was how companies that promote themselves as climate leaders but at the same time donate money to politicians opposing climate policies are being increasingly scrutinized. I think that companies do this because they are trying to appeal to everyone. They are trying to please the people who support climate policies and also the people against them. All in all, I do not think that this is an intelligent thing to do. Although the goal of the companies is to appeal to everyone, I believe that these actions have the opposite impact. Playing both sides gives the impression that you do not have a stance. Another reason why I think companies sometimes contradict themselves is because of public pressure. Often when companies do not publicly support specific issues, they are heavily scrutinized by the public, forcing them to put out a public statement supporting the problem even if they do not truly support it. Even though I believe that companies should not fold under public pressure, I completely understand why they do it. Not supporting a particular issue is not worth losing consumers and money over. If I were in their position, I would do the same thing. An encouraging point that the article brought up was that a growing number of insurance companies and banks had stopped financing coal projects in support of climate policies. The French bank Crédit Mutuel went as far as to say that they were willing to lose money in the short term because it saw the impact of climate change on its customers, and they wanted to respond to the risk. I think that more companies need to be doing this. Climate change is a genuine and prevalent issue right now, and more companies need to be willing to take losses in the short term to help stop climate change, resulting in a more positive long-term. Overall, this article brought up a lot of great points about how businesses are responding to the ongoing climate crisis, but in the end, I feel like more needs to be done.

  13. The climate has been changing ever since its birth billions of years ago. In the era of mankind, we’ve come to a point where we are consciously aware of the impact that we as humans may have on the planet and its future. Regardless of how much or how little human activity affects the planet, it should be in the best interest of everyone that lives on this beautiful rock suspended in space to take care of it, as well as the lifeforms that live on it. This seems to be a shared sentiment among the newer generations, and because of this, the way we conduct business in this modern era has shifted. Companies all over the world are making a transition, taking stances towards more socially conscious business practices. Although this is something we should all be praising, there seems to be a disconnect with what some companies say compared to what they actually do. Since sustainability and environmental awareness has become a major selling point from a marketing standpoint, it’s very trendy for companies to tout about their concern for the environment and the changes they are making that represent that. However, it seems as if as long as the company appears to care, they don’t actually have to do anything about it. Many companies have gone under the radar for their unethical practices or environmentally harmful products because they advertise how much they care. These false impressions about how a company’s products or practices are more environmentally sound is called Greenwashing. Yes, it happens so frequently that there is a term for it. Take Volkswagen and their ads for a “clean diesel” model as an example. Volkswagen had sold 11 million of their TDI clean diesel cars, only to later admit that they equipped all of those cars with software that could be used to cheat on emissions tests. Besides having to refund billions of dollars to consumers, their reputation also took a big hit. This was one of the cases that actually came to light, but think about all the other companies that could be following the same mentality, completely unaware of the public eye.

    We should all be doing better to make this world cleaner and more sustainable, and that starts with holding people accountable for their actions. Unfortunately, we here in the United States only have so much power to limit the amount of CO2 emissions on the global stage. It is great that businesses are pushing towards a more sustainable and eco-friendly future in the US, but that only means so much if we don’t address the main problem facing the world today. The real problem lies in the most industrious country in the world right now – China. Currently, China creates over a quarter (28%) of the total global CO2 emissions, and it doesn’t seem like we are taking appropriate measures to keep them in check. We can have as many UN climate conferences as we want, but it does not seem to change the fact that China is ripe with pollution, unethical working conditions, and emissions. Unless we stop patting ourselves on the back for having meaningless talk at climate conferences and conventions, we are never going to address the main problem facing us.

  14. In this article, Godelnik explains one of the most prominent concerns facing businesses and consumers recently- sustainability and the climate crisis. Previously, many companies had only been concerned about climate change because they wanted to minimize any “operational, financial, and reputational risk” that the crisis would impose on their organization. These companies have begun to notice how important the climate crisis has become among consumers (especially younger individuals) and have recognized that not committing to sustainability efforts may actually begin to serve as a disadvantage financially. Godelnik further explains that recently “many companies [have come] to embrace sustainability” and that it has become the “norm to seek ways to reduce a company’s negative impacts” on the environment. Companies have slowly progressed into becoming more environmentally conscious, but Godelnik believes that what they are doing isn’t enough. Right now, companies are only making changes that are easy and comfortable and aren’t focusing on the changes that need to be made within their organization to actually make a difference. Often, companies aren’t willing to sacrifice what is necessary to create change if it risks negatively impacting their operation or their profits. Instead, organizations will make the changes that show that they are trying to make a difference to help the environment, but in actuality, they know that they could be doing more, but ultimately choose not to for the sake of maximizing their profits.
    Godelnik describes how companies are trying to hold on to their good reputation held by consumers by “rebrand[ing] their efforts” in a way that sounds as though they are almost trying harder and doing more to help the environment. Consumers aren’t that easily fooled, so they pay attention to the promises that companies are making and take note of what steps they are taking to achieve these goals. If it is seen that organizations aren’t doing what is necessary or what they promised, they “meet resistance from activists, investors, and governmental and regulatory bodies.” Environmentally conscious organizations understand that in order to help combat the effects of climate change, they need to shift their focus to prioritizing sustainability and encouraging other organizations to do the same. Not only do companies have to take note of the changing regulations and policies all over the world that “aim to put in place key sustainability principles” to help the environment, but also have to take into account the popularization of climate change efforts among younger individuals entering the workforce. These new workers will likely push these companies to become more environmentally conscious and encourage them to do whatever possible to help fix the climate crisis.

Leave a Reply

Your email address will not be published.