Give people what they want: A sustainable business model
Consumers, investors, and partners are increasingly making decisions about your company based on a sustainable business model. Here, we examine the rise of sustainability as a business value.
In 2021, data showed that 8.7 million people die each year as a direct result of fossil fuel pollution.
And the latest report from the UN holds even more distressing data – if the world stopped producing carbon emissions tomorrow, it’s already too late to avoid climate chaos:
The message of the most recent @UN climate change report? “Delay means death."@jake_bittle breaks down a few of the most urgent and important ways governments need to adapt if they want to manage and avoid more climate-driven catastrophes. ⬇️https://t.co/ci7AJSRFXG pic.twitter.com/Keg7VBlDko
— Science Insider (@SciInsider) March 9, 2022
Considering the adaptations within these big economic blocs, it’s clear the global economy is about to become the climate economy.
Consumers, investors, and partners are increasingly making decisions about your company based on a sustainable business model. Here, we examine the rise of sustainability as a business value.
Other stakeholders getting involved are judicial and financial systems. In October 2021, courts in France ordered the French government to meet its own greenhouse gas reduction targets. A court case taken against the government and the government losing signals countries will be held to meeting self-set targets. And it’s not just France – similar rulings also happened in Germany and the Netherlands. The US Treasury plans to oppose development banks financing fossil fuel projects. Similarly, China has said they’re not going to fund new coal-fired power projects outside of China.
Climate 21 is an SAP initiative that allows our customers calculate, report, and reduce their greenhouse gas emissions. The podcast showcases best practices by SAP, our customers, our partners, and our competitors in climate emissions reductions.
This will have major implications. The cost of capital for offshore oil is over 20%. For liquid natural gas, it’s over 10%. Whereas for offshore wind, onshore wind solar, it’s below 5%, and dropping for natural gas.
Offshore oil is going up because of the inherent risk of a carbon bubble – do you want to invest money in something like offshore oil, gas, or coal, which legislation could shut down in five to 10 years?
Where would you get a return on that investment? It’s not going to happen, or it’s an extremely risky proposition. And because it’s a risky proposition, the cost of capital goes up. Therefore, these projects are going to find it harder and harder to get backing.
GFANZ is the Glasgow financial alliance for Net Zero. With 450 firms across 45 countries and access to $130 trillion who’ve committed to only financing net-zero projects and not fossil fuel projects, a massive difference in moving away from fossil fuels and into the clean energy space can be made.
Companies that have – and practice – purpose, including sustainability, are attracting the best and brightest, because younger generations increasingly want to work for such companies. That helps drop recruitment and retention costs, while also attracting and keeping higher quality customers.
Saving money on the employee side, and gaining money on the customer side: huge reasons for companies to become more sustainable.
The oil age is ending; peak oil happened around 2017 and 2018. The demand for oil is dropping for economic reasons, not just because people want to be more sustainable. It’s now cheaper to build new renewable generation than to power existing fossil fuel plants. This is an incredible landmark moment in the history of energy.
Today corporate social responsibility must include sustainability. Discover examples, definitions, and how to attain sustainable commerce.
With lowered demand for oil, we’re seeing more renewables, and the storage of the energy created by those renewables, because renewables are variable generators, so you’ve got to have some way of backing them up.
One way of doing that is using the likes of lithium ion batteries – whose price has fallen over 90% since 2010. The cost keeps falling about 15% per annum, based on economies of scale, and on rights law. Meanwhile, the energy density of those batteries is increasing 5% – 8% year on year since 2010. The future market for these batteries is about to boom – and that’s just for stationary storage.
The desire to reduce waste across supply chains and enter a circular economy is driving organizations to embed corporate sustainability in their mainstream business.
“A developed country is not a place where poor people have cars. It’s where rich people use public transportation.” – Enrique Peñalosa
What can or should your business (and yourself) do to help protect our world for tomorrow? There are a some quick, easy wins.
With the rise of conscious consumerism, businesses need to prioritize circularity. Discover how brands can become more sustainable in the circular economy.
We’ve said the 2020s are going to be the decade of action. They have to be, because we’ve got to get to that 55% reduction in emissions.
But here’s the thing: That 55% is going to be the low hanging fruit, which means the next 45% will require a whole lot more work out of the system, meaning the 2030s will be the decade of more action.
And if you think that’s too much to accomplish, think again – we can adapt now, or suffer later.