What business sustainability measures really work?

Which business activities have actually improved the environment?

The world is sharpening its focus on sustainable and environmentally friendly practices – and the good news is that business appears to be getting the message.

Molly Harriss Olson

CEO of Fairtrade Australia and New Zealand

Molly Harriss Olson

Molly Harriss Olson

In this day and age, we can measure the way most of our business activities impact the world around us from an environment, economic and social metrics perspective. The most profitable businesses are attuned to these activities, because they not only pose potential risks, but huge opportunities. 

The business activities that impact the environment are focused around climate change, water, waste, packaging and sustainable sourcing in the core business operation, as well as the impact of the buildings the business occupies and the way we engage with staff on improving their environmental impact. 

Specific examples include:

Companies such as Lendlease that use the Green Building Council of Australia’s Green Star certification to reduce the environmental impact of their buildings.

The Dublin Waste to Energy project, which since 2014 has diverted 600,000 tonnes of non-recyclable waste from Irish landfills per year and is generating renewable energy for 80,000 Irish homes.

Globally, supply chains are becoming more transparent in sustainable sourcing – there is just nowhere to hide if your business gets caught out. By 2020, for example, Unilever has committed to source 100 per cent of its agricultural raw materials sustainably.

In 2016, there are no more excuses. Every business activity, both internal and external, is either part of the problem in perpetuating our world’s unsustainable path or is part of the solution.

Martijn Wilder

Head of global environmental markets at Baker & McKenzie

Matijn Wilder

Matijn Wilder

In the minds of many of our politicians and certain sections of the community, there remains a perception that the protection and betterment of the environment are not outcomes that can be consistent with economic growth and that business and the profit motive is always at the expense of the environment.

While there is no doubt that businesses are major contributors to environmental harm, they often deliver many of the solutions required to address environmental concerns.

Regulating business in such a way that its activities contribute to a better environment requires political leadership, good policy and a willingness to try alternative approaches to managing and protecting our natural resources in ever-evolving circumstances. 

In dealing with the global response to climate change, the United Nations Framework Convention on Climate Change and the Kyoto Protocol introduced market measures to combat environmental problems. This drove large investment by the private sector into emissions reductions projects across the globe, based on the creation and trading of carbon assets.

At the same time, private companies have been conserving critical landscapes and forests. The need for urgent action on climate change has seen many large private investors start to divest from high-polluting fossil-fuel industries and increase their investments in renewable energy. 

As we move toward 2020 and beyond, we will see countries begin to develop their Paris Agreement commitments [negotiated in 2015], and hence clean economic growth plans that again will be driven by business activities.

Paul Burke

Fellow at the Crawford School of Public Policy, Australian National University

Paul Burke

Paul Burke

Business is front and centre of many solutions to environmental problems. From solar cells to electric cars, hopes to decarbonise our economy rely on the private sector inventing and marketing green products.

This is why Australia’s former carbon price was so important. The policy aimed to gently redirect business activities in a low-carbon direction by creating a profit motive for reducing emissions.

Got a low-carbon idea? With a carbon price in place, you could profit from it. Carbon pricing is a free-market and pro-business approach to reducing emissions.

Australia’s current emissions reduction policy – Direct Action subsidies – is too ineffective and a drain on the national budget. Some type of carbon pricing would do a much better job of harnessing the power of businesses to tackle the emissions problem. This is not a call for higher taxes. Any future emissions trading scheme or emissions levy could be part of a tax reform package aimed at reducing inefficient existing taxes.

“Carbon pricing is a free-market and pro-business approach to reducing emissions.” Paul Burke

More broadly, there are many other business activities that help to improve the environment. Motivations vary. Often, consumers are willing to pay extra for environmental outcomes, for example at an eco resort. At other times, there is a happy coincidence between environmental outcomes and business bottom lines.

Tree planting on farms can boost profitability and asset values, for example. Energy-efficiency improvements in a factory can do similar.

Going forward, private-sector dynamism has the potential to play a vital role in bringing environmental problems under control – especially if public policy settings are right.

The experts

Molly Harriss Olson
Molly Harriss Olson is the CEO of Fairtrade Australia and New Zealand. She served nearly six years on the board of Fairtrade International, including two years as chair. Olson has convened, led and been a member of numerous boards, business leadership and sustainability initiatives, including the World Economic Forum’s Global Leaders for Tomorrow program.

In 2014, she won The Australian Financial Review and Westpac 100 Women of Influence Award. She worked at the White House as the founding executive director of the President’s Council on Sustainable Development.

Martijn Wilder
Martijn Wilder is head of Baker & McKenzie’s global environmental markets practice. He is also a director of the Clean Energy Finance Corporation, chair of the NSW Climate Change Council, governing board member of the Renewable Energy and Energy Efficiency Partnership, a director and governor of WWF, a director of the Climate Council and a member of the Wentworth Group of Concerned Scientists.

He is an adjunct professor of law at the Australian National University and an affiliate at the University of Cambridge’s Centre for Climate Change Mitigation Research.

Paul Burke
Paul Burke is an economist who teaches environmental economics at the Australian National University in Canberra. His research focuses on ways to make economic growth greener. He is currently working on an Australian Research Council-funded project on Indonesia’s fuel subsidy reforms. Burke was formerly a private-sector economist with Mekong Economics Ltd in Vietnam.

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