Why policy and collective action will be key to advancing net zero targets?
Blog: Capgemini CTO Blog
I was delighted to represent Capgemini Invent on the panel for the closing session at the World Climate Forum EUROPE that took place on 29th of June during the London Climate Action Week 2021. The Forum itself — held virtually — was the first in a series across the world in the run-up to COP26 in Glasgow later this year. My fellow panelists were largely drawn from government and the public sector so, understandably, the conversation was heavily focused on the role of policy in accelerating climate action.
This focus reflects my own belief that policy is an important tool for supporting rigorous carbon commitments. Why? Because it creates a sense of urgency and gives the corporate world specific direction that helps to prioritize the business case for climate action. It also creates a level playing field because all businesses must respond with an aligned approach.
At the same time, policy responds to what business wants and citizens demand. Yet policy can also help to shape these wants and demands, and this has never been more urgently needed than in the global response to climate change. There is a symbiotic relationship between the policymakers and the corporate world — and somebody needs to take the lead. Some policymakers are already doing this, from the European Commission’s Action Plan published in 2018 to the European Green Deal, and more localized national environmental policy.
Non-financial disclosure makes a difference
A recent Capgemini Invent report focusing specifically on the financial industry talked about the “growing number of regulations and norms aimed at funneling financing towards the most sustainable companies, ventures, and projects”. One such regulation is the EU’s Sustainable Finance Disclosure Regulation (SFDR) and this goes right to the heart of how policymakers can drive tangible change. That’s because it forces industry players to disclose just how committed to sustainability they are.
The Capgemini Invent report notes that non-financial performance metrics, such as Environmental, Social and Governance (ESG) performance, offer “a powerful tool for financial institutions to evaluate, measure and monitor where they stand in terms of sustainability, steer decision making, and communicate on progress towards sustainability commitments”. Once again, we can see the vital role of the policymaker taking the fight against climate change to the business world.
Creating the optimal consumer choice with policy
The consumer too has a role to play and I believe that policy must be part of this story as well. We know that business cares about both its competitors and its customers. So, if customers start asking for sustainable products and services, business will listen or risk losing customers to the competition. Currently however, while there is growing public awareness and debate around the need to take action, consumers aren’t always putting their money where their mouths are.
For example, a survey by the Capgemini Research Institute found that 42% of consumers had changed their purchase preferences based on social, economic and environmental impact, but a further 37% said they ‘might’ do the same — although they hadn’t yet. That left 21% either not concerned or simply not planning to change purchasing behaviors. It’s clear there’s still a long way to go and I believe it’s only when policy makes unsustainable products more expensive than their greener counterparts, that a consumer purchasing revolution will happen.
Beyond policy to practical action
Of course, the onus is not all on the policymakers and there are practical solutions that business can use to action absolute carbon reduction, while driving efficiency. In the recent Capgemini Sustainable IT report, we discovered that while enterprise IT contributes significantly to the world’s carbon footprint, 89% of organizations recycle less than 10% of their IT hardware. Further, out of the 1,000 global companies surveyed only 43% of executives said they were aware of their organization’s IT footprint. There is clearly significant scope for transforming carbon-hungry enterprise IT into sustainable IT. If we come at this from a purely business perspective, enterprises are missing a huge opportunity to cut costs, improve brand image and drive efficiency by failing to scale sustainable IT.
At Capgemini, we’re working with many clients on the practical steps they can take to reduce their carbon footprint and have a target to help them save 10 million tons of carbon by 2030. We believe that this demands new business models linked to sustainable development, as well as new collaborations.
Collective action for sustainability
At the last World Climate Summit, part of COP25 in 2019, Capgemini Invent released its in-depth point of view Sustainable Business Revolution 2030. This offers us a clear articulation of the need for collective action: “The scale of the transformation needed to meet emission reduction targets demands a huge level of investment from business; one that very few organizations will be able to make on their own. Rather, they must find their place in an ecosystem of new partnerships, through which they can combine their investments and leverage their specialist strengths to achieve more than they could by working alone.”
These ecosystems encompass businesses, industries, public bodies, academia, social enterprises, non-governmental organizations (NGOs) and consumers — as well as the policymakers. Capgemini Invent is already facilitating many of the conversations shaping the sustainable outcomes of these partnerships. We recognize that the real challenge will be agreeing to and articulating how we sustain a renewables-based economy in the long term. This will require many more hands on deck, particularly ones that can offer creative ideas. Organizations like the World Business Council For Sustainable Development, the World Economic Forum, and others can play a significant role in steering these ideas and conversations, while helping to shape international regulations.
Changing the conversations
These regulations will hold everyone to account. They will keep us all focused on building the new value structure we urgently need to tackle the complexity of the systemic issues we must address. The world is not there yet. We need more conversations between public and private sector organizations — conversations that challenge us all to think (and act) differently at both policy and business levels. Thinking and acting differently is an urgent imperative because the way we live today will not exist in the next decade.
This conversation about the need for both policy and collaboration will continue at the World Climate Summit (WCS) taking place during the UN’s Climate Change Conference COP26 in Glasgow later this year. Capgemini Invent will again be a keynote speaker, continuing our partnership with the World Climate Foundation. I have no doubt that the nexus of public and private sector organizations will be a key area of debate. Let’s hope we can move beyond the debate to affirmative, collaborative action.
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Vice President, Sustainability Solutions at Capgemini Invent