The High Cost of Ignoring Sustainability

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Awakening to Sustainability: Why Businesses Must Act Now?

The global call for sustainability is on the rise, driven by consumers, governments, and international organizations advocating for stronger climate action. However, some segments of the private sector are lagging behind, raising concerns. The involvement of the private sector is crucial for two key reasons: businesses are responsible for a significant portion of environmental impacts and play a central role in the global economy.?

To emphasize the importance of collective action in the private sector, consider that just 100 companies are responsible for a staggering 71% of global greenhouse gas emissions. Commodity-driven deforestation contributes to 80% of global deforestation , while the extraction and processing of natural resources account for approximately 90% of global biodiversity loss and water stress. These statistics highlight how the private sector drives many of the most severe environmental issues.?

Consequently, numerous companies are embracing sustainability, with positive outcomes for both the environment and their economic success. For instance, Forbes reported in January 2023 that the demand for eco-friendly offices is increasing across businesses of all sizes. Companies within the S&P 500 that implement sustainability strategies show an 18% higher return on investment compared to their non-sustainable counterparts. In terms of social equity, ethnically and racially diverse companies are 35% more likely to outperform and 70% more likely to enter new markets successfully. These examples are just the tip of the iceberg, as ongoing research consistently demonstrates similar results.??

The cost of inaction becomes increasingly evident each year.?

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The Consequences of Inaction?

Environmental Impact?

Business operations directly impact the environment through resource consumption and waste generation. Business-related carbon emissions are a primary driver of climate change, primarily stemming from fossil fuel use. Climate-related disasters pose substantial economic risks, resulting in over $300 billion in business losses in 2022 alone.?

Emissions are categorized into four groups: Scope 1, 2, 3, and 4 . Scope 1 emissions result from a business's direct activities, including company vehicles, on-site manufacturing, and leaks. Scope 2 emissions are indirect energy emissions generated by utility companies to produce the energy consumed by businesses. Scope 3 emissions, known as "value chain emissions," comprise all emissions indirectly generated by a company's upstream and downstream activities. These emissions are challenging to track and reduce but often make up a significant portion of a company's total emissions. Scope 4 represents avoided emissions resulting from a company's actions, such as purchasing carbon credits or adopting low-carbon energy alternatives.?

The generation of waste is another significant environmental consequence resulting from business operations. They contribute with over 2 billion pounds produced globally each year. Much of this waste ends up in landfills, exacerbating waste management challenges and harming natural landscapes. Companies implementing net-zero waste initiatives can benefit from reduced waste disposal and input material costs.?

And don’t forget water availability! Private sector activities are responsible for 17% of annual freshwater consumption , contributing to the decline in water availability. Increasing water consumption exacerbates severe droughts and desertification, affecting regional water supplies. By 2030, an estimated 1.1 billion people will lack access to fresh water, leading to higher water prices and concerns about agricultural and industrial water availability. Water-efficient infrastructure can significantly reduce consumption in the private sector and is integral to green building design.?

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Social Impact?

Neglecting to embrace sustainable practices perpetuates a spectrum of social challenges. Income inequality exacerbates as marginalized communities bear the weight of environmental degradation and resource depletion. Racial and gender disparities endure, with vulnerable groups disproportionately impacted by pollution and deteriorating living conditions.?

Moreover, socially responsible businesses reap tangible financial advantages. According to a Glassdoor study, 76% of job seekers regard workplace diversity as a significant factor when evaluating companies. This, in turn, fosters innovation within a workplace that values diverse perspectives and social consciousness, ultimately enhancing consumer engagement.?

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Health Impact?

Ignoring sustainability negatively impacts public health, contributing to air and water pollution-related respiratory diseases, allergies, and other health issues. This results in 1 in 6 global deaths and 100,000 annual deaths in the U.S., costing the nation $866 billion in annual healthcare expenses.??

In addition, soil quality decline due to climate change affects food production, reducing agricultural yields by 30% and increasing malnutrition rates by 20% . The lack of green spaces in cities further impacts mental well-being and community interaction.?

The cumulative effect of these health-related challenges places a significant burden on society and strains healthcare systems.?

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Business Impact?

Research indicates that sustainability-conscious companies achieve better long-term financial success . They exhibit greater resilience to changing environments, regulations, and consumer values, lower operating costs , higher employee retention rates , and a positive public image.?

However, businesses that implement sustainability initiatives without obtaining relevant building certifications or adhering to established frameworks face significant risks. For instance, in the construction industry, if sustainable building designs lack third-party verification, such as LEED or WELL certification, there's no assurance that these designs meet widely accepted standards. This leaves the company vulnerable to accusations of dishonesty or "greenwashing."?

The same concern applies to carbon accounting, which can be a complex and opaque process for the public. Without an accepted framework , even accurate methods may raise doubts. Green building certifications and accounting frameworks offer universally accepted standards that define what constitutes a "sustainable building."?

Failure to invest in a well-defined, certified, and universally accepted sustainability strategy carries inherent risks.?

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Getting Started with Sustainability?

Choosing sustainability benefits both businesses and society by addressing critical issues while reaping additional rewards. Implementing sustainability programs or ESG (Environmental, Social, and Governance) initiatives may appear daunting, but it doesn't have to be. Overcoming challenges and adopting sustainable practices involves several key steps:?

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1. Metrics & Certifications: Understanding metrics and certifications can appear complex, but they play a crucial role. They serve as a foundation for assessing and enhancing sustainability performance. Moreover, many of these metrics and certifications enjoy broad recognition, lending credibility to your sustainability efforts. To kickstart this process, consider utilizing online resources to select appropriate metrics or collaborating with industry experts who can guide you through certification requirements . These approaches are excellent ways to begin your sustainability journey.?
2. Government Policies: Uncertain government policies may pose challenges, but they also offer a chance for businesses to actively influence regulations. By engaging with policymakers and actively participating in industry associations, companies can play a role in shaping sustainable policies. This, in turn, can foster an environment conducive to business growth. As an illustrative example, consider the recent Inflation Reduction Act , which offers substantial financial incentives to companies aiming to enhance their energy efficiency.
3. Company Change: Introducing sustainability initiatives necessitates a change in mindset and a shift in management strategies. Businesses should cultivate a culture of sustainability that permeates from leadership to every employee, emphasizing awareness, education, and active engagement. Importantly, it's crucial to understand that this change won't happen overnight; it's a continuous journey. To illustrate, at Emerald, we prioritize sustainability in our daily practices, yet achieving Carbon Neutrality took time, and our journey is something you can explore further.?
4. Uncertain Where to Start: Starting is often the most challenging aspect, much like with many endeavors. Sustainability programs are enduring and require years of vigilant tracking to achieve objectives. Creating a sustainability roadmap is an excellent method to ensure efficient utilization of your resources as you embark on this journey.?

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There's No Time to Waste?

Ignoring sustainability comes at a high cost. Businesses that neglect sustainability face adverse impacts on the environment and public health, but also their public image and their financial bottom line. Embarking on this journey can be challenging, but there are resources and partners that can help you find your way. Message me and let me know what sustainability questions are nagging you and I'll try to address them in this forum.