BOARD$ FOR CLIMATE

BOARD$ FOR CLIMATE

Welcome to the “BOARDS OF WISDOM” – September 30th Edition.

During last week’s “Climate Week” held in NYC, key discussions for regulators, investors, boards, and C-suite executives focused on accelerating climate action and leveraging business strategies to drive sustainability and long-term growth. #climateweek

"We only have one environment and we must protect it. The planet will adapt without us – we are not as important as we think we are." --- Helen Clarkson , CEO of Climate Group , urged during the Climate Week.

Central themes included:

1. Integration of Sustainability into Corporate Strategy: Executives were encouraged to embed sustainability into their core strategies. Climate-related risks are not just environmental concerns but significant business threats that require action at scale. Companies that prioritize climate resilience and decarbonization are better positioned to attract investment, build stakeholder trust, and drive innovation.

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2. Navigating Regulatory Changes: As climate regulations evolve, transparency and sustainability reporting are becoming crucial for businesses. Executives were advised to embrace these changes as opportunities, with streamlined reporting helping to meet investor standards and regulatory requirements. Leaders who proactively adapt to these regulations will gain a competitive edge in the low-carbon economy.

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3. Climate Finance and Investments: With financial institutions increasingly prioritizing climate-related investments, there is growing pressure for the private sector to mobilize capital effectively. Discussions emphasized the importance of closing the climate-finance-gap, focusing on investments that align with the goals of the #ParisAgreement. This was seen as a pivotal moment for businesses to contribute to both economic and environmental sustainability.

Overall, Climate Week NYC 2024 highlighted that businesses must act decisively on climate to mitigate risks, unlock new value, and remain competitive in a rapidly changing landscape.

This Climate Week took place alongside UN discussions, where ongoing conflicts (wars) likely influenced the topics of debate.

Based on statistics, businesses are actively involved in the climate change conversation, but where does the public stand? As consumers, taxpayers, and voters, what do they think about all of this?

Millions around the world are facing the devastating effects of climate change, threatening their homes, communities, and futures. The recent aftermath of Hurricane Helene highlights this stark reality: a high death toll, millions without power, and lingering flood risks. While many feel threatened by the impacts of climate change, there's also a concern about the potential impact of policies proposed to address it.

In short, while climate change presents a real and present danger, there's also a divide over how best to address it, creating a complex challenge for policymakers.

In the context, for business case, and because the private-sector will continue to lead, - the transformative uprising-mandate of the commercial opportunity offered by “sustainability megatrend” is to serve consumers – hence, it is a competitive advantage and driver of business growth strategies.

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The projected market growth for sustainability-driven commercial opportunities is significant across various global regions, driven by the increasing emphasis on green technologies and sustainable practices. According to market research, the “global green technology and sustainability market” is expected to grow from “$28.6 billion in 2024” to approximately “$134.9 billion by 2030”, reflecting a compound annual growth rate (CAGR) of around “29.5%”. [Source: GMI - Global Market Insights Inc., MarketsandMarkets]

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Key Regional Insights:

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1. North America: This region is projected to lead the market growth, expanding at a CAGR of “21.1%” through 2030. The U.S. is expected to remain a key driver due to its strong emphasis on environmental responsibility and substantial investments in renewable energy, green technologies, and electric vehicle infrastructure. [Source: GRAND VIEW RESEARCH]

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2. Asia-Pacific: Expected to be the second-largest market, driven by government and corporate investments in technologies aimed at mitigating climate change. Countries like China, India, and Japan are leading with robust clean energy initiatives. [Source: GRAND VIEW RESEARCH]

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3. Europe: With its “Green Deal” and stringent environmental policies, Europe is anticipated to see significant growth, particularly in sectors such as “green building”, “renewable energy”, and “circular economy practices”. [Source: GMI - Global Market Insights Inc.]

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This growing emphasis on sustainability directive presents a vast commercial opportunity for businesses globally, particularly in sectors like “Energy”, “Transportation”, “Manufacturing”, and “Agriculture”, all of which are integrating green technology to meet both regulatory demands and consumer expectations.

Here’s a high-level Corporate Framework for Impact Investors, Board Directors and C-Suite executives to offer an Innovative Strategic Framework for winning these consumers while having deep purpose.

A Strategic Corporate Framework for Impact Investors, Board Directors, and C-Suite Executives        

I. Shifting from Awareness to Action

The Sustainability Uprising directive is a transformative shift in consumer behavior, where sustainability has emerged as a powerful demand-driven #megatrend. Impact investors, board directors, and C-suite executives must adopt a comprehensive strategic framework to capitalize on this vast commercial opportunity. Sustainability is no longer a niche concern but a core business driver that requires “recalibration of business models” to serve consumers, create “competitive advantage”, and generate “long-term growth”.

II. Understanding the New Consumer Demand for Sustainability

Many companies make the mistake of viewing sustainability as an expensive, premium niche, limited to eco-conscious consumers. However, the hidden demand for sustainability goes far beyond this. Today’s consumers value environmentally sound practices equally with price, quality, and brand. This shift is powered by a broader desire for businesses to align with ethical, transparent, and responsible behaviors.

Action Point for Business Leaders:

• Rethink Consumer Insights: Companies need to identify new motivations behind consumer purchases and lower barriers to sustainable choices. This means making sustainability mainstream and accessible to the average consumer by integrating eco-friendly practices into core product offerings without passing additional costs to customers.

III. The Strategic Framework for the Sustainability Uprising

To build lucrative and scalable strategies that serve these evolving consumer needs, the Sustainability Uprising directive framework presents a holistic, five-part strategy:

? Embed Sustainability into the Core Business Strategy From Cost to Growth Driver: Shift the focus from the perceived cost of sustainability to its potential to fuel innovation, growth, and competitive advantage. Successful companies will integrate sustainability not as a CSR function but as a pillar of their core business strategy, influencing decision-making from product development to marketing.

? Data-Driven Insights and AI’s Role in Climate Tech Leveraging AI for Climate Action: AI-powered tools can be used to identify consumer trends, enhance supply chain efficiency, and reduce carbon emissions, particularly Scope 3 emissions (indirect emissions across supply chains). AI also offers opportunities to equitably deploy climate adaptation solutions and monitor real-time sustainability data.

? AI and Sustainability Example: Using AI for predictive analytics, companies can reduce waste, manage energy more efficiently, and align operations with consumer preferences for greener practices. #AI also helps investors assess broader sustainability (Environmental, Social, and Governance etc.) factors by enhancing transparency and accountability.

? Collaborative Advantage: Tackling Scope 3 Emissions Cross-Industry Collaboration: Companies cannot achieve sustainability goals in isolation. The framework emphasizes partnerships across industries to address #Scope3emissions, the most challenging but critical component of corporate carbon footprints. By collaborating with suppliers and stakeholders, businesses can share data, scale innovations, and achieve decarbonization at scale. Key Initiative: Consortium's that pool resources for renewable energy, sustainable raw materials, and shared logistics networks.

? From Awareness to Action: Closing the Value-Action Gap Transitioning to Impact: Many businesses fall short of sustainability efforts because they do not move from awareness to tangible action. Boards and executives must prioritize execution with measurable outcomes and ensure that sustainability efforts are integrated into financial performance metrics.

? Consumer-Driven Example: Companies that integrate clear sustainability benefits into their products, such as reduced emissions or recycled materials, can communicate the tangible impact to consumers, building brand loyalty.

? Visions from the Clean Energy Future Pioneering Innovation in Clean Energy: Embrace technologies such as electric vehicles (#EVs), renewable energy infrastructure, and energy storage solutions to capture new market opportunities. Companies leading in the #cleanenergy space will build future-proof business models and attract investments.

IV. Why Many Sustainability Efforts Fall Short

Many corporate sustainability efforts fail because they focus too much on compliance or incremental changes rather than systemic shifts. Often, these efforts do not align with the broader consumer demand for transparent and impactful change, and companies fail to fully integrate sustainability into long-term strategic planning.

? Solution: Executives and boards must build sustainability into the DNA of the business. This means shifting from greenwashing and green-hushing to authentic, measurable impact, aligning leadership KPIs with sustainability goals, and incentivizing sustainability innovations that meet consumer expectations.

V. Applying the Framework: Building Competitive Advantage

To win the Sustainability Uprising, boards and C-suite leaders must realign their vision, moving away from seeing sustainability as an obligation to viewing it as a growth lever. By building a business model around sustainability, they can create high entry barriers, foster customer loyalty, and differentiate themselves from competitors.

• Measurable Targets: Set ambitious, science-based targets to reduce carbon footprints and improve supply chain sustainability.
• Brand Purpose: Rebuild your brand around purpose and transparency, ensuring consumers see your commitment to sustainability as genuine and impactful.

VI. Capturing the Future

Sustainability is no longer a buzzword; it’s a Sustainability Uprising directive that is reshaping industries. Companies that embrace this movement with scalable, innovative, and consumer-centric strategies will build enduring competitive advantages. Boards and C-suite leaders must view sustainability not just as a compliance measure but as the next frontier for growth and profitability.

The first movers in the Sustainability Uprising will harness this megatrend to redefine the future of business, driven by the world’s consumers who are reshaping what sustainability means.

Helpful Resources:

• America’s Top 10 Companies for Environmental Performance in 2024

https://justcapital.com/news/earth-day-2024-top-10-companies-for-the-environment/

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• Last week’s announcement by 微软 that it will use the Three Mile Island nuclear facility to supply the emissions-free power it needs to grow brings home how seriously companies are taking their climate commitments and how complex the path forward really is. https://www.npr.org/2024/09/20/nx-s1-5120581/three-mile-island-nuclear-power-plant-microsoft-ai

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• How global C-suite leaders are approaching sustainability

According to Deloitte’s 2024 CxO Sustainability Report, organizations are increasing their sustainability investments as climate change continues to be one of the top three priorities. But how are leaders making the transition from awareness to action?

Explore insights by 德勤 here.

https://www.deloitte.com/global/en/issues/climate/cxo-sustainability-report.html?id=gx:2el:3or:4deloitte_2024_cxo_sustainability_report:5GC1000432:6abt:20240912::fortune&tpcc=NL_Marketing

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• Preparing for COP29: Beyond why to how- by 麦肯锡 https://www.mckinsey.com/featured-insights/themes/preparing-for-cop29-beyond-why-to-how?cid=other-eml-alt-mip-mckamp;hlkid=a2c3ec8e740b4a428d901f5c197ba1c3amp;hctky=9798811amp;hdpid=1af4b420-53bd-4237-9ded-3c0785aa7224

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