Sustainability – the resilient business risk
6 December 2016
Sustainability is the unsung hero of business risks – harnessed to capture opportunity, keep reputation intact and build business resilience.
Every year, the World Economic Forum surveys business leaders from across the globe to find out what’s keeping them up at night. They view risks from two perspectives – impact and likelihood – to explore concerns. This year the top five are water crises, failure to mitigate climate change, extreme weather events, food crises and profound social instability.
The top five risks for business leaders are all sustainability risks! So why is sustainability much maligned when it’s so clear that sustainability risks are business risks too?
Leading CEOs and the more switched-on firms see the connection. It’s not all about risks either – there is a flip side as sustainability risks can be opportunities for business too. Recognition is growing that sustainability issues can no longer be ignored.
And this is good news, as the Sustainable Development Goals (17 goals tackling major world issues that governments have agreed to deliver) will drive sustainable thinking to the heart of business and shift business impact on society and the environment to the top of the agenda.
Metrics are the key here – being able to justify decisions on empirical evidence. Where companies are investing in working out the value of what’s at risk, both in traditional financial terms and broader non-financial issues (such as natural and social capital), it’s starting to inform their decisions in a very different way.
Traditional financial metrics have been around for centuries (supporting the old school thinking on chasing profit at any expense) but social, economic and environmental metrics have been missing from management information for a long time, and it is this that is now making the difference.
It’s helping business leaders view sustainability issues in terminology they understand… money. It may be an ugly word, but business is here to make a profit. For many, the emphasis now is on how they make their profit, with less fixation on how much they make.
So why the resilient business risk? Sustainability professionals understand the importance of assessing and understanding business impact, patiently communicating upwards the issues that could damage reputation and the bottom line.
These aren’t issues about using eco lightbulbs and recycling rubbish (important as they are) but about water, resource scarcity, human rights, energy, safety, air quality, health, land use, distribution, storage and infrastructure – all things that improve operations and build resilience, maintaining business continuity without hurting reputation.
Find out more at www.pwc.com/businessincontext