Sustainability agenda moves from talk to action

Over the last 12 months, the sustainability agenda has rapidly shifted gears. Not long ago, we heard a lot of talk but saw little action. Today, we are seeing real, meaningful efforts being taken by governments, companies and individuals to address arguably one of the greatest global challenges we are collectively facing. In our home, this has shown itself through a reduction in meat consumption, shopping for more locally sourced food, moving to green household products and more.

While this is undoubtedly encouraging, there is still more that needs to be done as we continue to grapple with the wide range of complex issues surrounding sustainability, especially at a time when the challenge is only getting harder, as the latest Intergovernmental Panel on Climate Chane (IPCC) report indicates. That is where I believe that EY can support organizations, as they move from pledges to practical actions. ?

As one of the largest and most globally connected professional services organizations, EY has the platform and the means to help drive change through action. EY recently reached a major milestone in the organization’s four-step carbon ambition and are now carbon negative. The plan is to continue to focus on reducing absolute emissions in-line with a science-based target and we are on-track to reach net zero in 2025. EY has also lent its support to other initiatives, such as the Taskforce on Nature-related Financial Disclosures, that aims to develop an international reporting standard for nature.

We are at a pivotal point in our fight to combat climate change.

In addition, there is an opportunity to help clients achieve their own sustainability goals, which means that EY people are working to accelerate the sustainability agenda from multiple directions. I consider myself to be hugely fortunate to be part of this journey and I truly believe that we have the tools and drive to enact real change. EY has a strong purpose to build a better working world, and in this context, it is being brought to life on an issue that will matter for generations to come.

In preparing myself for my new role as EY Deputy Global Vice Chair – Sustainability, I have been undertaking a lot of research on the topic. I have been struck by the asymmetry of those who have contributed to the issue, and those who directly experience the impact. We are seeing that in the case of developed nations contributing more to greenhouse gas emissions and island nations experiencing the impacts. We are seeing it in adaptation levels of policies that will impact those generations that come next. This is where we all need to commit to being a part of the solution, even if we are not experiencing the immediate effects ourselves.

Drivers behind the sustainability agenda

There will, inevitably, be those who are skeptical about what can be achieved and the role that organizations like EY can play in being a part of the solution. They will argue that organizations are too focused on their bottom lines to make meaningful change and will point to the collective failure to respond to the alarm bells as evidence that corporates cannot lead by example.

However, recent EY data shows that sustainability is a critical part of most organizations’ strategy. The EY 2022 CEO Outlook Survey finds that only 3% of CEOs do not have a sustainability strategy in place, and more than a quarter (28%) say they clearly see a competitive advantage in becoming a leader in sustainability. This says to me that sustainable thinking is no longer a differentiator – it’s a necessity and any company that does not give it the attention it deserves is at risk of not only missing an opportunity but causing significant reputational damage – as well as causing harm to the planet.

But what is behind this shift in opinion?

It’s tempting to look for a singular moment and declare, “That was when it all changed.” If you were searching for such a moment, perhaps President Biden’s signing an executive order for the US to rejoin the Paris Agreement or the commitments that came out of COP26 could be it. But the reality is that there are a number of factors that have contributed, all of which should be acknowledged.

Organizations need to adapt their policies and put sustainability at the fore.

Undoubtedly, investor pressure has played a part. In fact, recent EY research indicates that almost three-quarters (74%) of institutional investor respondents are now more likely to divest from companies with poor environmental, social and governance (ESG) metrics than prior to the COVID-19 pandemic. And on top of this, regulators, especially those within the European Union (EU) and international bodies such as the International Sustainability Standards Board (ISSB), are introducing more stringent regulations that make it both more challenging and less profitable to operate in an unsustainable way. For example, the EU plan for reducing the risk of carbon leakage and the U.S. Security and Exchange Commission’s (SEC) recent proposal related to disclosures connected to an organization’s exposure and contribution to climate risk.

But perhaps the most influential factor has been the change in consumer sentiment. Heralded as “The Greta Thunberg effect,” consumers of all demographics are adapting their behaviors to become more sustainable. The impact that this has on buying habits is significant. For the first time, many consumers are prioritizing the planet above all other factors, including affordability. According to the EY Future Consumer Index, we’ve already seen that 21% of Gen Z and millennial consumers have stopped buying products from brands that they perceive are not doing enough to help the environment – ?something that we are likely to see more of in the coming years. As such, organizations need to adapt their policies and put sustainability at the fore. Those that don’t will find themselves rapidly losing market share to competitors.

How can organizations meet sustainability goals?

Of course, every company has its own goals and timeline. In some cases, sustainability has been a priority for many years; in others, it’s the very beginning of the journey. But there are some pieces of advice that are applicable to all organizations, no matter what stage they’re at:

• Undertake a sustainability audit to build a detailed understanding of where the company stands in relation to key topics, such as Scope 1, 2 and 3 emissions, and other areas of consumption like water usage and where improvements can be made.
• Invest in new technologies. As many as 68% of companies are not using data and technology to help improve their organization’s sustainability, according to the EY Tech Horizon survey – a wasted opportunity to boost efficiencies and encourage real change.
• Hire top talent with specific expertise in the field of sustainability and offer training to current employees to help ensure they’re equipped with the skills they need to help the organization become more sustainable.
• Listen to all stakeholders to help ensure leaders have a comprehensive understanding of any sustainability concerns and welcome ideas of how to address them.

We are at a pivotal point in our fight to combat climate change, and we all have a responsibility to improve the health of our planet and safeguard it for future generations. This can be an intimidating prospect, but the changes that I have witnessed in just the past six months, including the commitments made at COP26, the introduction of the International Sustainability Standards Board under the IFRS Foundation, and the preparation for COP27, give me confidence that we can face this fight head-on. I feel privileged to be part of the EY team that is taking real action to support real change. In addition to the privilege of taking on this role, I feel an obligation to do my part and strongly contribute to the impact that an organization like EY can have on an issue of such importance. This will truly be a case of building on the EY purpose of building a better working world?