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How climate change  impacts your performance

Extreme weather and resource constraints along with technology-driven demands for more transparency are three mega forces linked to climate change with direct implications for business strategy. According to author Andrew Winston, putting sustainability at the core of business is a key performance factor in our new “hotter, scarcer, and more open world.”

According to a 2013 global consensus statement signed by hundreds of the world’s top scientists, the current rate of climate change threatens human survival1. The planet has become 1°C hotter since the industrial revolution, which may sound like a minor increase until one considers that global warming must be held to 2°C to avoid large-scale human catastrophe (See box “Setting company targets”). As climate change intensifi es, so do its effects, such as water shortages, rising commodity prices, etc., and their impacts on company bottom lines. For businesses, these converging forces are compounded by better data that makes it easier for the public to hold companies accountable to higher environmental standards. As awareness grows that former unsustainable ways of doing business are incompatible with the reality of climate change, more of the world’s top companies — including Walmart, Microsoft, Apple, Unilever, and many, many more — are pivoting to make sustainability a top strategic priority. As Andrew Winston explains, “The case for meeting this massive change head-on has a hard-nosed, number-crunching, good-for-business logic behind it. It’s not pie-in-the-sky or naïve; it’s the most realistic solution.”

Investing in doing business more sustainably is a “vision pivot” that both supports and is supported by breakthrough innovation.

Fight short-termism
Unlike marketing, or any of the other uncertain ventures on which big companies regularly spend enormous sums of money, the paybacks on green initiatives are highly predictable. They do, however, require a longer-term, systems kind of thinking, which is an obstacle for those businesses that have yet to break free from the short-termism that in previous decades profoundly shaped how value is measured. As Winston notes, it’s clearly not enough to simply say: “Think longer-term…Read more

To read the article in full:

How climate change impacts your performance

Based on The big pivot, Radically Practical Strategies for a Hotter, Scarcer, and More Open World by Andrew S. Winston (Harvard Business Review Press, April 2014), an interview with Mike Barry, Director of Sustainable Business at Marks & Spencer and an interview with Tamara « TJ » Dicaprio, Senior director environmental sustainability at Microsoft Corporation.

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Caroline Schuurman
Published by Caroline Schuurman