Stakeholder groups including consumers, employees and investors are demanding that businesses rebuild for the better (and more sustainably), in response to the Covid-19 pandemic, according to Karen O’Regan, strategy lead, Accenture in Ireland. “Much of the change will increasingly be supported by legislation and businesses will have no choice but to adapt,” she adds.
Accenture's Delivering on the promise of sustainability report notes that two-thirds of consumers (67 per cent) around the world expect companies to invest in longer-term, sustainable and fair solutions in the post-pandemic world. Furthermore, 71 per cent of investors agreed that Covid-19 will increase awareness and actions to tackle risks related to climate change and biodiversity losses.
"Consumers are asking about the environment, and societal and corporate responsibility," O'Regan points out. "They are asking for businesses to help them make sustainable choices. Irish consumers want to know what goes into a product, how it's produced and how far it's been transported. According to Accenture's new Life Reimagined report, 60 per cent of consumers in Ireland say they are attracted to brands that source services and materials in highly ethical ways while 55 per cent are attracted to doing business with brands that are environmentally friendly."
Government action is adding to this pressure. “With the passage of the Climate Bill, and the upcoming Climate Action Plan 2021, Ireland’s climate ambition is now enshrined in law which will mandate targeted action across every sector of our economy’,” O’Regan notes. “There is also significant change coming down the tracks as a result of the EU Green Deal, Taxonomy and CSR Directive. Environmental considerations are and will continue to drive an abrupt global response from governments, and this will force industry to respond quickly. But there is more to it than just regulation. It’s not just something companies need to do, there are significant opportunities for those who get it right.”
The demand for greater sustainability is also manifesting itself in the jobs market. “That’s been an interesting learning from our clients and our own business. Job candidates are asking about ESG (environment, social and governance) factors at interviews. Candidates want to see a real link to business purpose and real action.”
ESG delivers value for all
And that shift in the investment landscape is not at all surprising in light of the hard evidence in relation to corporate performance. “Companies that perform higher on ESG have shown consistently higher profits and delivered higher returns to shareholders,” says O’Regan.
“Accenture Arabesque S-Ray Analysis for 2020 shows how they have they have delivered 3.7 times profits and 2.6 times shareholder returns between 2013 and 2020. The reality is that businesses which do better on ESG deliver superior returns over time. That’s where the money is going in the long term. Investors want to see more sustainable products and operations. Of course, the value extends well beyond commercial returns. Higher ESG performance translates to value for customers, employees and broader communities. This provides a compelling opportunity for companies.”
She suggests that companies use the UN Sustainable Development Goals (SDGs) to help guide them on their sustainability journey. “They will vary in their relevance by industry, but they can act as a North Star for where we need to go. They can guide you on the actions you can take. It’s not just about reducing costs or CSR initiatives; it’s about increasing trust in the brand and opening up new opportunities for the business. But there is no one pathway for all companies to follow. Individual companies have to identify the goals where they can have most impact.”
For some time now, the energy sector has been focused on the energy transition and the road to Net Zero. Yet all sectors have a unique role to play if we are to achieve the UN SDGs by 2030.
The consumer goods and retail sector can act in very specific ways, she notes. “One of the main areas they can contribute is in relation to their operational footprint, by reducing waste and their usage of materials; embracing the circular economy. Responsible sourcing is another area where they can make a difference. We are also seeing many examples of the industry turning waste materials into other products. Companies are using innovation to have an impact on the SDGs and open new opportunities.”
The food and agri sector has a different agenda. “This is a very important industry for Ireland and is often seen as a climate challenge for us, but it could be very different. We are seeing regenerative agriculture growing at a global level and this is having a real impact.”
Regenerative agriculture is a conservation and rehabilitation approach to food and farming systems. It focuses on topsoil regeneration, increasing biodiversity, improving the water cycle, supporting carbon sequestration, increasing resilience to climate change, and strengthening the health of farm soils.
The focus on sustainable development will be the key to competitiveness and sustained success for businesses
In an example of this approach, agri-technology company Devenish, in collaboration with Accenture, recently launched a groundbreaking sustainable farming initiative which will help decarbonise the global agriculture sector by supporting farmers to continue to produce nutritious meat and milk, while dramatically improving their carbon balance.
By accurately measuring on-farm carbon emissions and, uniquely, carbon sequestration, it is estimated the Devenish Agrinewal solution will enable over 5 Mt CO2eq to be sequestered by 2030. Consider this in the context of Ireland's total emissions in 2020, which are estimated to be 56.4 Mt CO2eq according to the SEAI.
“This will create new value for Irish farmers and substantially accelerate the achievement of climate goals,” O’Regan explains. “Using the latest cloud-based technology, it provides a carbon balance sheet and identifies actions which will help the agricultural sector reach net zero carbon emissions and beyond, boosting the environmental credentials for producers, processors and every other point on the food chain. This has the potential to place Ireland in a world-leading position. It’s great to see a solution like this coming from an Irish company.”
“ESG is going to be something you hear a lot more about across every sector,” she continues. “Companies are increasingly embedding ESG into their businesses and sustainability must pervade everything they do.”
This will also encompass the workforce. “We are going to hear more about different ways of working and new ways of doing things in the post-Covid world. Businesses will have to newskill and upskill their workforces. It’s going to be exciting and challenging and it will open up new opportunities. It also means investments in new technologies to digitalise products and services. Technology will have a major role to play for businesses seeking to adopt best ESG practice. Technology will be the fuel that enables the positive impact.”
Looking to the future, O’Regan says companies won’t have a choice but to rebuild better. “It’s not just regulation or box ticking,” she points out. “There is an opportunity to significantly reduce costs and also to create new value. This is a watershed moment in history. The focus on sustainable development will be the key to competitiveness and sustained success for businesses as we look ahead to the decade to deliver.”
Discover more about Accenture’s research on Delivering on the promise of sustainability
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