This week saw leaders from business, government and the climate community, in conjunction with the United Nations General Assembly and the City of New York, come together to drive climate action. Fast.
Because the numbers are clear. Climate change is costing the earth.
This year, Pakistan experienced flash floods that saw lives lost and millions of homes ruined while Europe faced its worst drought in 500 years. Natural disasters like these, exacerbated by climate change, cost the world $210 billion in 2020This is a financial expenditure that not only impacts local communities, but also the economies, businesses and infrastructure that support them.
Climate risks impact financial risks
Reducing such risks is one of the most commonly cited economic reasons for investing in climate action: money spent on equipment, emergency logistics, damaged products, lost sales, and more shows up clearly on companies' balance sheets.
But the business case for investing in sustainability should focus on opportunities as well as risks.
“More and more companies are changing their business models to embed sustainability into their corporate strategy,” says Chief Supply Chain and Business Operations Officer Reginald Ecrisato. But while 86% of organizations have developed a sustainability strategy, only 35% are acting on that strategy.
Unilever is one of them.
And we work hard to ensure that commitment is clearly communicated to consumers and the investment community.
The business case for decarbonization
We believe in a business model that can simultaneously serve shareholders and stakeholders. It can be an engine of growth that provides economic opportunity and climate justice. As a global company, it is impossible to fulfill our fiduciary responsibilities without considering climate change, environmental destruction and social inequality.
In 2021 we Climate Transition Action Plan (PDF 7.98 MB) We have set a goal of achieving zero greenhouse gas emissions by 2030 and net-zero greenhouse gas emissions across our entire value chain by 2039.
“We are the first company in the world to put a decarbonization plan to a shareholder vote,” Chief Executive Alan Jope told a business audience in New York. The plan was backed by 99.6% of investors.
“Declaring a climate emergency is becoming increasingly unpopular,” Jope added. “We are not going to back down from this agenda.”
Across our operations, we are working with suppliers at the local and state level to transition to 100% renewable energy by 2030. Future Foods The commitment works to transform global food systems and reduce the impact of waste. Clean Future As part of a commitment to replace 100% of fossil-based black carbon with a renewable or recycled alternative, the beauty and personal care brand is Positive Beauty.
In addition to decarbonizing our product portfolio, we are investing €1 billion in the Climate & Nature Fund over the next decade to fight climate change and also support the COP26 call for $100 billion per year to help developing countries tackle the climate challenge.
All of these investments are driven by companies that want to do good for society, but they are also good for our business.
Engaging consumers with climate-focused brands
in IBM survey Among 16,000 consumers across 10 major countries, 51% said environmental stability is more important to them than it was a year ago, and 49% said they would pay a premium for products branded as sustainable or socially responsible.
“By sourcing sustainably and using recycled and recyclable packaging, we're making it easy for consumers to choose the brands they already trust, knowing they're doing no harm,” said Chet Henderson, vice president of the consumer insights team.
And the strategy is paying off.
Today, the $13 billion brand is shaped by sustainability and purpose. more than 50% It accounts for 9.4% of the Group's sales, and achieved a real growth rate of 9.4% in the first half of this year.
Winning the war for talent
It's not just consumers who are demanding sustainability from companies. One in three Those who changed jobs in the last year accepted a job with an employer they view as environmentally sustainable, and 34% accepted a job where they could directly impact environmentally sustainable outcomes.
As the company of choice for over 50 companies to hire their graduates, we know that tackling climate change is a key component to winning the war for talent. And with BCG research showing that companies that attract top candidates see 3.5 times higher revenue growth and 2.1 times higher average profit margins, we're excited to see how these future leaders will impact our bottom line.
Investments will determine our future quality of life
But while we can share our stories and work on climate investing, it is only one story: the world needs more companies taking sustainable actions and the investors who support them, and we need broader multilateral targets to succeed in keeping global temperature rise below 1.5°C.
“There's a $3 trillion gap between what we're doing right now and what we actually need to be doing,” Tom Steyer, co-founder of Galvanize Climate Solutions, told investors and finance leaders at Climate Week New York.
That means investors and financiers need to “invest and underwrite with intent” as capital is mobilized to find low-carbon solutions, said Jason Stohler, CEO of Aviva Canada, a member of the UN Net Zero Insurance Alliance.
The investment community is taking notice.
Larry Fink's investment firm BlackRock $10 trillion it managesIn his annual letter to CEOs, he made it clear: “Stakeholder capitalism is not woke, it is capitalism.”
And momentum is building. Fiona Reynolds is CEO of the Principles for Responsible Investment, a coalition of net-zero asset owners founded by her firm and the United Nations Environment Programme Finance Initiative.
It can cite members of the world's 50 largest asset holders with total assets under management exceeding $7 trillion.
The weight of its capital is now being directed towards making a difference on climate change, with the Alliance committing to transforming its investment portfolio by 2050. It has also set targets for 2025.
Governments are also beginning to take action, with New Zealand 2050 net zero emissions target in lawAssigned NZ$4.5 billion The New Zealand government plans to contribute to the Climate Emergency Response Fund in the 2022 budget, and pre-budget it will allocate NZ$2.9 billion to emissions reduction plans.
In other words, the direction to go is clear.
But more of the investment community needs to put money into climate change because, as Reynolds says, “investment as usual is not enough.”
We don't have the luxury of time anymore. “There is inertia in the existing system and even if a better future is possible, it will not happen unless enough people and organisations step up to show how it can be achieved, and advocate for both the business actions needed and the changes in policy frameworks that will enable it,” says Thomas Lingard, Global Climate and Environment Director at Unilever.
Rebuilding the world in a healthy way requires choices, and when investors and financiers work together with governments, NGOs and sustainable businesses, it can be done.
Sources of statistics in the introduction:
Reuters: Climate inaction costlier than net-zero transition
Swiss Re: Economics of climate change risks
IPCC: Impacts of Global Warming in Natural and Human Systems
