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Network Feb 02, 2024

Redefining business values by integrating ESG targets: the time is now

By Steve Coakley, Head of Network Propositions, and Emily Watson-Breeze, Sustainability GTM Lead

As the landscape of global business evolves, so do ideas about how we should measure the value of a company.

There’s a growing consensus that definitions of ‘success’ should look beyond traditional financial metrics to include the positive impact an organisation has on both nature and society. This paradigm shift has sparked discussions about the need for a new executive role at the board level - the Chief Valuation Officer, tasked with overseeing the fulfilment and delivery of the strategy to achieve key Environmental, Social and Governance (ESG) targets as they impact on the value of the business.

The critical challenges shaping net zero success 

As we gaze towards the horizon of 2050, and the Paris Agreement deadline for having achieved net zero, long-term planning to make this a reality has become an imperative. Business leaders are grappling with three pivotal challenges that will shape the future of corporate decision-making:

1. Balancing profitability and sustainability

How can business models thrive while maintaining a positive impact on the environment and society? Organisations must navigate their way through the tension between profitability and sustainability, seeking out innovative models that prioritise both.

2. Breaking incrementalism and short-termism

How can organisations break free from the shackles of incremental thinking and short-term objectives? To achieve sustainable growth, it’s crucial they embrace a visionary approach and redefine success beyond immediate gains.

3. Shifting to collaboration to make systemic change

How can organisations foster a collaborative approach that can tackle societal challenges and drive systemic change? It’s essential that global organisations set aside traditional business secrecy in favour of knowledge sharing if ambitious - yet achievable – goals known as ‘hairy targets’ are to be met. 

Key sustainability takeaways from our Executive Leaders Forum

Our recent Executive Leaders Forum gathered eminent businesspeople and innovators to explore the pressing issue of sustainability. Specifically, they delved into what business leaders need to do to accelerate their adoption of sustainable business practices and shared practical advice around how they invested in ESG initiatives.

Rooted in real-life experience, the speakers highlighted the following factors and pointers: 

  • Collaboration is critical

The need for global collaboration emerged as a recurring theme, with the O-RAN alliance highlighted as a strong example of a multidimensional approach underpinned by a comprehensive framework. 

  • There are significant global differences in approach

Disparities in sustainability initiatives across geographies are significant. On one hand, Asia is leading the charge and countries like New Zealand are enforcing obligatory Scope 3 disclosures. On the other, there are concerns about regions like the US, where anti-ESG rhetoric could pose a significant challenge, depending on the outcome of the next presidential election.

  • There’s target acceleration - mixed with caution

Encouragingly, many multinational corporations are setting operational targets to accelerate their net zero journey ahead of the Paris Agreement 2050 ‘deadline’. However, caution does persist, grounded in the transient nature of governments and their associated regulations, as well as the desire for solutions that alleviate immediate challenges, rather than addressing longer-term goals. 

The question of pace in the wake of COP28 came up. Multinational organisations grapple with the fear of unintended consequences and the potential volatility of signed key performance indicators (KPIs). The resounding consensus, however, was that the risk of inaction far outweighed that of action.

  • Science-based targets are essential

For sustainability to be a genuine value-creation proposition, it’s essential commitments are made to science-based targets. However, the search for a north-star metric, whether it’s Return on Capital Employed (ROCE) or the Task Force on Climate-related Financial Disclosures (TCFD), continues.

  • Use tools to focus strategy

The materiality framework created by MSCI, a leading provider of critical decision support tools and services for the global investment community, was put forward as a pivotal tool for focusing corporate strategy. Organisations were urged to delve into MSCI ratings and rigorously test materiality as they embark on their journey toward a more sustainable and responsible future.

  • Leveraging technology is vital

When aligned with sustainability principles, a wide range of technologies can play a part in accelerating the journey to net zero. Front-of-mind technologies were smart grids, carbon capture and utilisation (CCU), as well as using Artificial Intelligence (AI) and data analytics to improve efficiency and to support decision-making. The core mission should be intentionally integrating sustainable digitalisation into organisations to ensure advances in technology make a positive contribution to environmental goals, creating a more sustainable and resilient future. The technology sector will also be important in managing the exponential growth of data, expanding at a rate of 20-30% per year.

  • The energy transition must be fair to all

A strategic departure from the high carbon era is a fundamental part of a transition to net zero that’s fair to every segment of society. Government policies will be key to making sure this energy transition is fair and inclusive. Ireland's wind abundance was called out as a promising natural resource with potential to benefit all. 

Evolve how you measure business value 

Increasing sustainability to achieve net zero is a universal responsibility, and one we take very seriously. As well as transforming how we operate, we’re also supporting our customers to reimagine their own organisations. 

Get in touch if you’d like to find out more about how we can support your sustainability journey.