Sajjeed Aslam, Partner, SpectrEco on LinkedIn

In the recent past, there has been a growing focus on #sustainability, especially for large and global enterprises and consequentially, their #SME partners are also feeling the heat. The global recession is expected to set in, the cost of #talent and capital is rising and the cost-of-living crisis is hurting everyone. In the next two to five years, businesses will need to find their focus areas for growth, or rather, survival in many cases.

Let’s use the following four elements to do a deep dive into sustainability emergency

1.       Climate action – Greenhouse gas emissions (GHG or CO2 emissions) raise the atmospheric temperature and drive floods and drought cycles, food security issues, water scarcity and living conditions challenges for humans and animals. All efforts are being made to keep the temperature rise below 1.5 degrees Celsius by 2050. This requires a significant change in our energy mix, water conservation efforts and climate resilience strategies and #infrastructure. The private sector has invested US$ 1.17 trillion vs US$ 0.55 trillion by the governments in critical climate action themes.

2.      Circular economy – The world is wasting numerous resources which can be put to reuse and help reduce cost and #environmental impact. Out of 9 billion tons of plastic produced since the 1950s, 7 billion tons are sitting in landfills and oceans.

3.     Income inequalities – In 30 seconds, we waste 12 tons of food (good enough to feed 30,000 people) and two people die from hunger. Wealth is concentrated in the hands of a few, restricting access to basic needs for many.

4.     Corruption – Financial and moral corruption across societies, #businesses and #governments induces trust deficit in institutions and people and leads to social dysfunction.

#Investors, #consumers, #regulators, and civil societies are putting enormous pressure on businesses to respond to these common goals, which are essential for the future of humanity. However, it is important to ask whether it is fair to expect businesses to bear the burden of sustainability disproportionately.

Energy contributes two-thirds of global #GHG and in most jurisdictions, the choice of fuel is made by the government, based on availability, ease of distribution and affordability. Businesses are mere user of the energy in most cases, unless they are in the energy business, which is again a regulated space. In the past five years, over 600+ regulations and standards have been introduced for businesses to track and report their Scope-1, 2, and 3 GHG emissions. There is an alternate view that everyone should be responsible for tracking and disclosing their Scope-1 emissions only and adopting that approach would help consolidate the total emissions. But that approach would put pressure back on governments and regulators for adoption, rather than on businesses to identify Scope-2 and Scope-3 emissions and exercise their influence to drive change in behaviours. Is it fair to expect businesses to invest in resources to track and influence, rather than focusing on core business deliverables i.e. provision of products and services to customers and expanding profitably?

Nature provides carbon sinks in the form of oceans, soil, and forests, which are also regulated by governments. There are many new technologies in the pipeline for carbon capture, which could capture GHGs from the environment or production process and convert them into tradeable commodities, such as liquefied gas. These technologies are expected to be more cost-effective and efficient than transitioning to renewable energy or compromising on industrial activities and economic growth in the next two to five years. This R&D and commercial production will require funding support and subsidies to accelerate commercial production and adoption.

The circular economy is all about creating a viable business case for collecting, sorting, and transporting waste to recycling facilities. However, this requires society to support the segregation of waste and disposal according to the law. Plastic is a versatile material that has revolutionized the supply chain, product development, packaging, and transportation of products across different countries. The challenge is single-use plastic and waste management and recycling or R&D to develop affordable replacements for plastic. #Kenya is a good example of a country that has banned the #import, #manufacturing, and use of single-use plastic bags and has imposed heavy fines. However, this was not an easy task, and the government faced court cases before it became effective in protected areas. #Denmark is another example of a country that has incentivized recycling to support the SME sector.

Income inequality is a function of opportunities, skills, hard work, education systems and the justice system in a country. #Businesses can definitely help by creating job opportunities and training local communities, not just because of sustainability, but because they need talent and local talent is usually cheaper. Businesses can contribute to the education system to a certain extent, but it is not fair to expect them to take over the government’s role in education. A robust justice system is a basic human right and without it, it is difficult to eradicate inequalities, including income inequality. A study of history reveals many other reasons for income inequality across different continents and highlights loopholes in the application of international laws.

Corruption and corruption perception in society drive the behaviours of individuals and businesses. The corruption level in a society is generally influenced by the justice system. Poor or unpredictable justice promotes corruption due to a lack of timely accountability. Businesses can take charge and responsibility for governance with the aim to protect their interests, but they also struggle if justice is not dispensed with speed. Corruption in procurement is the most common evil in the public and private sectors alike. Despite the processes, policies and technology, it is difficult to curb it unless there is a fear of the law.

Businesses are responsible for providing products and services aiming to create wealth and jobs in the society they operate in. Entrepreneurs bring hope and vibrancy to a community, and large and small businesses equally need a fair opportunity to grow profitably. Businesses that are bold and strategic can use sustainability as an opportunity, but they need to view sustainability as a lens for their business case, not just as a compliance issue. Sustainability is a common goal for businesses, societies, and governments and it requires a collective effort, but not a disproportionate burden.