HOW we live and what we do is changing Earth’s climate in ways that threaten the natural environment and civilisation itself. The stakes are high and we have a responsibility to protect Earth. It is on us to drive climate change and to have a broader sense of purpose in the activities we engage in, both personally and professionally.
For businesses, unchecked climate change can jeopardise enterprises’ stock of social and natural capital. The climate crisis can be understood as one of the root causes of market failure the world is facing today. This is on top of the current volatile, uncertain, complex, and ambiguous world of pursuit.
It is also worth noting that the regulatory environment in the environmental, social, and (corporate) governance (ESG) scene will only grow more stringent going forward. A company’s societal “licence to operate” will likely be contingent, in part, on it being a responsible steward of Earth.
Finding a realistic and effective response in the infinite yet bounded space between “everything” and “nothing” remains a challenge for the business community.
Here are three basic things that companies can do:
1. Climate change mitigation – reduce/prevent emission of greenhouse gas (GHG) at the source, as well as efforts to remove/reduce existing GHG emissions from the atmosphere. Businesses can help by considering the following:
> Shifting power generation to less-emitting sources, such as solar, wind, and nuclear;
> Electrifying systems that rely on the burning of fossil fuels including vehicles and building heating;
> Reducing emissions through increased efficiency and decreased consumption of existing GHG-emitting activities;
> Capturing and sequestering carbon to offset emissions from sources for which we have no viable non-emitting substitute and removing/reduce past emissions from the atmosphere.
Businesses need to move from an approach focused primarily on the enterprise itself to one that encompasses multiple fronts to consider collaborating with customers, stakeholders and even competitors to enable change. Often, business-related GHG emissions fall under the indirect emissions related to a company’s operations, value chain, and product usage are most difficult to manage. It is certainly an impactful decision to make if business is to terminate and leave behind non-green stakeholders during a business growing stage.
These targets and associated measures must be enacted at a scale with urgency and is widely expected to be humanity’s best hope to avoid acute future disruptions to economies, societies, and ways of life.
2. Climate change adaptation – companies need to start relocating vulnerable links in the supply chain. The severity and frequency of the impacts are likely to only increase and compound with time even if global mitigation efforts succeed, adding urgency to business leaders’ efforts to make organisations more climate resilient. For example, our food supplies and agricultural systems are obligated to look into resistant varieties of crops, crop diversification, changes in cropping pattern and calendar of planting to ensure a continuous supply to the world.
3. Value creation – create business strategies, products, and services designed to exploit the beneficial opportunities presented by climate change, or to design mitigation and adaptation activities with a resulting commercial benefit in mind.
When addressing climate change risks, we need to augment the ways companies have traditionally evaluated actions by expanding the scope and scale of ESG-related activities that are in play.
Grappling with the enormity, complexity, and direness of climate change can be a grim affair. The silver lining is: We have the tools and technology needed to head off the worst outcomes and we need to address them in an increasingly narrow window of time.
A business’s success is not principally about technical advances — it’s about a business’ systemic change. Collective action on mitigating climate change issues can realise rapid, effective outcomes on a planetary scale. We need to focus on the ESG priorities, constraints, and objectives when we evaluate mitigation and adaptation actions.
Companies should take advantage of the Malaysian government’s support to drive sustainability:
> RM570 million allocation towards initiatives that address waste management, biodiversity, environmental quality monitoring enforcement, and preservation of mangrove swamp areas.
> Income tax exemption till 2025 for Sustainable and Responsible Investment green sukuk grants and bonds.
> RM2 billion Green Technology Financing Scheme 3.0, guaranteed by Danajamin until 2022.
> The Sustainable Development Financing Scheme which has been extended until December 2023.
This article was contributed by Deloitte Malaysia sustainability services director Chin Foong Ling.