Companies now face an uphill task to reduce environmental impact

by Search Gate staff. Published Tue 03 Feb 2016 17:30, Last updated: 2016-02-03
Corporate progress on protecting the environment is levelling off or even declining

The world’s biggest companies are addressing their environmental impacts, but it isn’t making much of a difference, according to the latest report from GreenBiz Group and Trucost.

The eighth annual edition of the State of Green Business report, which measures the global progress of large, publicly traded companies around the world in addressing a myriad of environmental challenges, echoes the previous year’s report, which showed corporate progress levelling off or even declining.

“This year’s report offers a sobering reality,” said Joel Makower, GreenBiz Group executive editor and the report’s principal author. “For all that the impressive work that companies are doing to embed sustainability into their operations, it’s not really changing much.”

The metrics from the report were drawn from an assessment of 4,800 of the world’s largest companies by Trucost, a leading research firm focusing on natural capital and sustainability metrics. Those 4,800 companies represent 93 percent of global markets by market capitalization.

“Recent improvements in resource efficiency, although welcome, are not enough to break the link between economic growth and environmental decay,” said Richard Mattison, CEO of Trucost plc. “As a result, the business risks of unsustainable natural capital consumption are increasing.”

One possible reason for the decline of progress by companies is that most have already addressed the so-called low-hanging fruit — the things they control inside their operations, such as facilities and fleets, and which have attractive financial paybacks. However, as the State of Green Business report shows, for most sectors, the biggest natural capital impacts are in their supply chains.

Supply-chain impacts can be harder to address, as they are often thousands of miles and several intermediaries removed from companies’ direct control or influence. That’s creating new, deeper levels of awareness, but most companies have yet to fully understand their supply-chain sustainability impacts, let alone how to address them.

It’s not all bad news. The report reveals “a hive of activity among companies taking these practical steps along the way to developing more sustainable business models,” according to Mattison. In particular, more companies are using the concept of natural capital in order to integrate sustainability into their businesses. The number of companies involved in natural capital initiatives has grown by 85 percent to reach 300 over the past year.

The report also includes the 10 sustainable business trends for 2016. They include the rise of “stranded assets” as a potential liability for companies and the global economy; the increase in open and distributed sustainability solutions; increased supply-chain transparency; the growth of science-based corporate sustainability goals; and growing markets for “green bonds” and other mainstream financial instruments and business models that funnel investments to sustainable energy, “green infrastructure” and the like.

The State of Green Business report will be the centerpiece of the upcoming GreenBiz Forum (February 17-19), taking place in Phoenix, Ariz., where speakers will address many of these trends and metrics.



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