Sustainability: Navigating Corporate Risk

With unfulfilling commitments concluding in Copenhagen and follow-up conversations expected to continue into the immediate future, the world has become increasing aware of the impacts of global emissions have on climate change.  Despite varying views and beliefs, the long-term outcome of these discussions will almost certainly change the face business.

The rapid growth in global environmental awareness is not likely to bump the two primary objectives atop most corporate agendas.  Profitability and shareholder return still remain the ultimate drivers of business action; however, the growing understanding of business sustainability risk might be adding a new perspective for senior management.

Now more than ever many organizations are evaluating the cost and benefits of sustainable business changes.  By managing and planning a company’s operations to reduce environmental and social impacts, companies not only mitigate future risk but position their organization to capture opportunity going forward.

Although the potential cost of carbon is the most recognized risk, increasing demand for water resources is also a growing business risk.  According to a McKinsey report, ‘Charting our Water Future’, the demand for water resources is a growing business risk, a major economic threat, and a challenge for the sustainability of communities.

To unprepared organizations, the business risks of carbon, water, and climate change disclosure takes many forms:

•    Potential increase in operating cost

•    Potential increase in supply costs

•    Potential disruptions to supply or loss of supplier relationships

•    Potential loss of revenue or market share

•    Potential to business reputation

•    Potential inability to secure investment dollars or capital

Sustainable business action is no longer a slogan, marketing campaign, or a feel-good business activity.  Companies are beginning to see the true business risks and value opportunities of implementing corporate sustainability into their core business processes.   For your company, sustainability may provide you with a different perspective of the future.