What Are the Business Benefits of Climate Action?

ClimateAngels | Sep 11, 2023

“Learn how unlocking pathways to climate action can fuel business success and make profits greener. Turn environmental responsibility into a competitive advantage and tap into the untapped potential of climate change initiatives for holistic business growth.”

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Buckle up! This article is about businesses meeting environmental stewardship! Meaning, how a concrete climate action plan can lead to holistic business growth.

In this exploration, you’ll be diving deep into the realm of ‘What Are the Business Benefits of Climate Action?’

You’ll also have the opportunity to the green side of profitability, decode the language of sustainability, and navigate the promising path where companies champion climate action and thrive.

Let’s hop on the bus for an eco-conscious adventure together, discovering how businesses can drive positive change, make their profits greener, and contribute to a more sustainable world.

Climate Action: Business Benefits 101

There are several business benefits associated with Climate Action, including:

The Durability of Business Models

Rising CO2 emissions risk a 2°C global temperature increase, triggering severe storms, floods, droughts, and wildfires. These disrupt businesses, infrastructure, and food security, straining supply chains and financial markets.

Business leaders must bridge the knowledge-action gap, aligning sustainability with global goals to achieve net-zero emissions by 2050, as per the Paris Agreement.

The Increasing Legal and Regulatory Demands

Due to greenhouse gas (GHG) emissions data inconsistencies, countries push for mandatory reporting. UK and EU mandate climate risk disclosures, while the US SEC considers a proposition for GHG emission and climate risk disclosure rules.

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This aligns with growing focus on climate’s financial risks. Proactive alignment boosts trust, public image, and avoids penalties.

Increasing Investor Concern Over Sustainability

In 2022, sustainable investments gained momentum, reaching $2.5 trillion in global ESG fund assets. A PwC report indicates that ESG investing’s popularity continues to grow, projected to surge by 84% to $33.9 trillion by 2026.

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Source: ESG fund assets in a PwC report in 2022.

Investors worldwide are prioritizing businesses with a profit vision aligned with environmental sustainability.

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Institutional investors, focusing on long-term returns and pension fund security, seek reliable GHG emissions data. Businesses providing data and emission reduction plans appeal to investors seeking commitment to sustainability.

The Values of Customers and Employees

Consumers are showing a growing preference for businesses that genuinely address environmental sustainability, especially in the context of climate change.

A collaborative study by McKinsey and NielsenIQ reveals compelling figures: 78% of consumers deem sustainability a crucial factor in their purchasing decisions. Furthermore, over 60% of those surveyed expressed a willingness to pay a premium for products with sustainable packaging.

The data underscores this trend. Products boasting Environmental, Social, and Governance (ESG) claims witnessed a 28% cumulative growth over the past five years. In contrast, products without such sustainability credentials lagged behind, growing only by 20%.

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While many businesses are rolling out green campaigns to align with these preferences, discerning consumers are quick to differentiate between genuine efforts and mere lip service.

They are becoming adept at spotting “greenwashing” – where companies overstate their environmental initiatives or focus on trivial actions that don’t reflect a substantial impact when weighed against their total environmental influence.

Source: X(formerly, Twitter)

Ultimately, businesses that authentically embed environmental sustainability into their operations and showcase tangible commitments to combating climate change are positioned to garner stronger consumer loyalty and support.

The Link Between Sustainability and Profitability

We stand at a pivotal juncture where consumers, investors, and policy leaders are converging on the importance of sustainability. Businesses that seize this opportunity to address climate change could tap into a staggering financial potential estimated at $26 trillion, as reported by UNFCC back in 2018.

Yet, the vast scope of business opportunities in this realm remains largely untapped. The recent IPCC report indicates that to meet the Paris Agreement Goals, we need to ramp up investments in clean energy technology by 3 to 6 times the current rate.

Sustainability 101: Watch This 3:46 Minute Video

Source: Constellation

The business case for sustainability extends beyond just environmental responsibility. Addressing climate change can lead to significant reductions in operating costs, spanning areas such as materials, water, heating, electricity, waste management, and even health insurance premiums.

Embracing efficiency and curbing pollution from fossil fuels translates directly into tangible financial gains.

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Furthermore, aligning with the mounting demand for sustainability can supercharge a company’s financial health.

Sustainable businesses consistently show a heightened capacity to draw in investors, captivate customers, and recruit forward-thinking talent.

As an endorsement of this approach, reports from the S&P 500 indicate that businesses with proactive climate strategies witness an impressive 18% return on investment.

How Businesses Can Achieve Green Transformation?

Businesses should seize the moment to pivot towards a low-carbon future by implementing these actionable steps to transform their sustainability landscape and help achieve net zero by 2050.

5 Key Steps for a Low-Carbon Future:

Infographic: 5 Key Steps for a Low-Carbon Future👆

All in all, it’s the need of the hour to minimize the impact of climate change on Earth, businesses must act now to combat it.

By doing so, companies can enjoy the benefits of sustainability and lead the way towards an environmentally conscious, economically prosperous, and greener future for all.