Earth week – a timely reminder of life in B.C. and P.C. worlds - Black Sun Global

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Earth week – a timely reminder of life in B.C. and P.C. worlds

We will soon look at a time Before COVID-19 (B.C.), where other key stakeholder issues such as climate change were rising to the top of policy makers and board agendas, versus Post COVID-19 (P.C.) when the pandemic will have subsided but global temperatures continue to rise. As companies navigate through one crisis, the next is already looming on the horizon – the climate era.

It feels like every week is International Pandemic week as we’re inundated with COVID-19 news, but for us, this week’s 50th anniversary of Earth Day (April 22nd) provided some time to reflect on broader issues that were affecting society in a B.C. world and will continue to shape society in a P.C. world. The organisers have extended Earth Day to the whole week, with the theme focused on climate action - delivering one of the world's largest ever online climate conferences.

Why should climate issues remain a key focus for companies?

While recent evidence shows the coronavirus crisis could trigger some positive outcomes, including the largest ever annual fall in CO2 emissions with a 5.5% decline compared to 2019, this still falls short of the annual 7.6% reduction needed to limit global warming to 1.5C by the end of the century.

There are several differences between the COVID-19 and climate crises, with climate issues arising largely over longer horizons. Both issues have the potential to have significant impact on people and markets – although it can be said the impacts of climate change are harder to quantify and may feel less tangible at the moment for companies. A report published by IPCC shows the risks from some vector-borne diseases, such as malaria and dengue fever, are projected to increase with global warming. Furthermore, a recent report from the Economist Intelligence Unit highlighted the potential impacts on markets, showing the value at risk as a result of climate change to manageable assets by 2100 could be up to $43 trillion.

Although companies’ focus right now may be dealing with the COVID-19 crisis, there are five key reasons companies should not lose sight of climate issues and step up their ambitions to actions:  

1. Pressures on governments to strengthen commitments and incorporate climate policies into fiscal stimulus packages

To ensure the global economy recovers, governments will play an important role in providing the conditions for companies to rebuild their businesses. There are increasing pressures on governments to ensure these recovery policies incorporate climate issues, including the EU who have said Green finance will be 'integral' to Europe's pandemic recovery, and the Climate Change Commission who will push the UK government to deliver climate-resilient coronavirus fiscal policies. Furthermore, a delayed COP261 could give more time for ambitious commitments to be tabled by countries. Changes in policies such as carbon pricing could lead to significant impacts on companies, so it is important that companies assess and communicate the potential impacts to their key stakeholders.  

1Read Mark Carney’s call to action around COP26 here

2. Climate change remains a key focus for investors

As companies tackle the economic fallout of COVID-19, to reinforce their expectations, eight investment groups, including BNP Paribas Asset Management, DWS and Comgest Asset Management, have said that tackling global warming must continue to be a priority for public companies. In addition, to support investors, the FCA are currently consulting on a new rule for premium listed companies to state whether they comply with the recommendations of the Financial Stability Board’s Taskforce on Climate-related Financial Disclosures (TCFD) and to explain any non-compliance.

3. Speed at which companies can change their business models

The speed at which some organisations have changed their business models in the crisis means they could be well positioned to take advantage of the opportunities in the transition to a low-carbon economy. In light of this, companies will need to consider whether they have the capacity to adapt or lose out to sector peers.

4. Strengthened employee voice and activism

While employees have always been key stakeholders, the crisis has shown how dependent companies are on their people and means now more than ever it is vital that companies communicate on key issues or potentially face public calls to take action, such as the group led criticism from Amazon employees.

5. Accelerated shifts in consumer behaviours

While the nature of working, commuting and shopping has been shifting over the years, the travel restrictions and social distancing measures have accelerated the shift to more digital shopping, more people working from home, using less fuel and slower living. To keep up with shifting trends, companies will need to understand and communicate how they are responding and adapting.

 

How will Black Sun be getting involved?

  • Contribute to the review of ‘what good disclosure looks like’ by continuing to track trends in FTSE100 reporting against the TCFD
  • Encourage all of our clients to move towards a full set of TCFD disclosures, helping them on their journey by sharing knowledge and best practice through our engaging events
  • Continue to raise awareness and understanding through our own communications and ongoing engagement with corporates, investors, regulators and other key stakeholders

For further information on how we can help you, please contact our Insights team

 

Black Sun is a stakeholder communications company. We help businesses to communicate authentically how they deliver value to inspire, engage and influence their important stakeholders. We believe that inspiring strategic communications can spark positive change and drive long-term, sustainable performance. We want to work with companies who want to build better businesses through better communications.