January 6, 2016
As I flip the calendar at the start of each new year, I wonder whether all the annual round-ups and previews reflect more than arbitrary dates on a page.
2015 may well be a notable exception. It was a monumental year for sustainability, ending with the high of the climate agreement in Paris and initial evidence that economic growth and carbon emissions are starting to decouple. The arrival of the Sustainable Development Goals (SDGs) is already influencing business, government, and civil society to accelerate progress toward the elimination of extreme poverty. Pope Francis lent moral authority to the drive for sustainability, and U.S.-China collaboration defanged international and domestic opposition to climate action. Last year may indeed be remembered as a moment when things really did change, and for the better.
And yet, the promise of 2015 will only be redeemed with the kind of follow-through that will transform big visions into reality. Here are four things to look for as drivers of even greater—and more tangible—progress in 2016 and beyond.
Avoiding a 2015 Hangover
We live in a short-attention-span world. After such a consequential year, the potential exists for business, policymakers, and civil society to shift attention elsewhere. COP22 won’t be COP21, and the SDGs won’t be measured until 2030. But the instinct to take a breather is self-defeating. On climate, the cost of avoiding irreversible damage grows with every passing day. The template for action starts with the kinds of goal-setting we saw in 2015, but it doesn’t end there. Translating the myriad commitments companies made in 2015 into action means ensuring they are backed up by strong governance, innovation for sustainability, value chain solutions, policy engagement, and measurement of progress. One of the Paris Agreement’s most important elements was the commitment to reviewing progress on five-year cycles. Companies should extend the same principle inside their businesses, to ensure progress toward—and beyond—existing commitments.
In an Era of Disruption, Embrace, Don’t Resist, Change
Based on our work with our member companies in 2015, it is clear that we are living through an era of massive change. Incumbents are experiencing an unusual, if not unprecedented, period of disruption. The urge to protect an existing franchise is natural, and also self-defeating. The best example lies in the utility sector, which is facing existential change and adapting with uneven results. The companies that will emerge from the wave of technological, cultural, economic, and environmental change are those that reinvent themselves, or build new business models that harness these changes instead of avoiding them. And sustainability is at the core of these efforts: Companies that decouple natural resource use from the provision of value, innovate for a climate-compatible world, and meet the basic needs of the emerging consumers at the base of the pyramid will be the big winners of 2025.
Getting Serious About Income Inequality (or, Sustainability Begins at Home)
In the mature economies of the United States and Europe, discomfort about income inequality has grown over the past decade, and we should expect more in the coming decade from the disruption likely to result from the fourth industrial revolution (e.g. automation). The distemper is affecting our politics, as evidenced by the rise of Donald Trump and Bernie Sanders in the United States and populist movements in Europe. Business has a big stake in ensuring economic security in an era of disruption. Businesses would do well to place a higher priority on the communities in which they operate. In addition to the traditional contributions of creating employment, this takes many forms, including actively helping shape social contracts that make sense in the 21st century, using their voice to combat prejudice, and ensuring tax fairness.
The U.S. Election Matters—A Lot
2016 is an election year in the United States. No other OECD country has such a partisan divide when it comes to climate change. Much climate action in U.S. President Barack Obama’s second term, including the Clean Power Plan and commitments in Paris, could be reversed by executive order under a new president who acts on the climate-skeptic consensus in the Republican Party. And while there are some voices among Republicans calling for a return to engagement on climate (remember, the party has not always been hostile to climate action, and many in the traditionally right-leaning business community are calling for action), this still represents a minority view. The business community should aim to stay focused on science and economics, and push hard for ongoing—and depoliticized—commitment to American leadership on this central issue.
If 2015 was the year when the business world said a loud “I do,” making a bold commitment to sustainability, 2016 needs to be the year when we start building a strong marriage.
In 2016, we will continue to serve our more than 250 member companies by strengthening their considerable commitments to building businesses that navigate our changing climate; create inclusive economic growth; and integrate core sustainability commitments on human rights, supply chain, and effective governance. We will do this through focused consulting, powerful collaborative initiatives, and inspiring ideas.
BSR was founded on the belief that business at its best creates unparalleled opportunities for people to live in dignity and in harmony with the natural world. We look forward to another year of working with you to turn that simple yet powerful vision into a reality.
Let’s talk about how BSR can help you to transform your business and achieve your sustainability goals.