Building resilience post-Covid-19: Businesses urged to ‘reinvent capitalism’ and regenerate nature
If the climate crisis is to be averted and the UN's Sustainable Development Goals to be met, businesses must help to "reinvent capitalism" so the "true value" of nature and society are appreciated.
That is according to the World Business Council for Sustainable Development’s (WBCSD) new ‘Vision 2050’ report.
Published today (25 March), the report outlines the ways in which businesses must transform if the world is to meet shared, international ambitions on climate, nature and sustainable development. Specifically, it envisions a world that is aligned with the Paris Agreement’s 1.5C trajectory and in which humanity does not over-consume natural resources. At present, the warming trajectory is at least 3C and humanity is using the natural resources of 1.75 Earths. The report’s pathway is also one in which the UN’s SDGs are delivered in full.
The report argues that businesses will need to adopt three interconnected mindset shifts if they are to play their role in delivering such a world. They are reinventing capitalism that rewards true value creation; focusing on building long-term resilience; and taking a regenerative approach beyond doing no harm.
On the former, the report outlines how, historically, businesses have been encouraged to overlook the destruction of value across the environmental and social axis, often in the long-term, in the pursuit of financial value, often in the short-term. It explains that, while businesses have been able to externalise this value loss before, it is beginning to crystallise in the form of risks like resource scarcity, extreme weather events and reputational damage. Indeed, the World Economic Forum has cited climate and biodiversity as the world’s top long-term financial risks in terms of likelihood and severity for two consecutive years.
The regenerative approach raised in the third mindset shift has been rising up the corporate and policy agenda in recent months, ahead of the 15th Biodiversity COP. In the private sector, businesses including Kering, Ikea and Timberland are targeting net-positive impact. But recent analyses from CDP show that most businesses are failing to properly mitigate risks relating to deforestation and poor water stewardship – let alone delivering an approach that goes beyond ‘doing less bad’.
The WBCSD believes that the mindset shifts detailed in the report will help to underpin transformation of all areas of the economy – including those considered hard-to-abate.
“We have no time to waste – achieving this vision requires a wholesale transformation of everything we have grown up with: energy needs to decarbonize; materials need to go circular; food needs to be produced sustainably and equitably and provide healthy diets,” WBCSD president and chief executive Peter Bakker said.
“Our future depends on transformation. One of the keys to success will be a mindset shift around capitalism. Our economic systems, incentives, global accounting standards and capital market valuations can no longer just be based on the financial performance of businesses: we must integrate our impact on people and planet as part of how we define success and determine enterprise value.”
The Vision 2050 report has a foreword signed by 42 big businesses, including PwC, 3M, Olam and Natura – the parent company of The Body Shop. Time will tell if they, and the WBCSD’s broader membership, which spans more than 200 corporations, adopt the recommendations in full.
The publication of the WBCSD’s report comes as PwC publishes the results of its annual CEO Survey, which polled more than 5,000 chief executives across 100 countries and territories during January and February. Of these respondents, a representative sample of 1,779 was selected for inclusion in the final figures.
When it comes to respondents from the UK, 70% stated that they are concerned about the impacts of climate change on their business. However, almost all respondents said there are other, more important threats to growth in the long-term; 29% said that climate change is not an immediate threat to growth at all.
The survey also revealed a mixed picture of sustainability investing and reporting plans. Six in ten of the UK chief executives said their business is planning to increase investments in environmental, social and governance areas in the future, on the former. On the latter, the spilt was fairly even between those who believe more should be done to measure and report the environmental impact of their business, and those who believe sufficient progress has already been made.
While the figures show more climate concern and a greater willingness to increase investments and transparency than in previous years, PwC believes there is still more to be done. Its survey revealed that many UK chief executives see a lack of policy support as a barrier to accelerating environmental improvements and setting more ambitious targets; 55% of respondents did not believe that the Government’s current policymaking approach will deliver the nation’s long-term environmental goals. These include net-zero by 2050 and the pledge to leave nature in a better state for the next generation.
“The Chancellor laid some foundations for the transition in the Spring Budget, but the need for a robust roadmap with bigger and bolder moves to accelerate the changes needed to deliver the Government’s Ten Point Plan is becoming more urgent,” PwC’s UK leader for climate change and sustainability Emma Cox said.
Ministers have said that the UK’s net-zero roadmap, which will detail interim targets and technology pathways for all major emitting sectors, will be published ahead of COP26.