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Introduction

The business case for net zero

Published on
September 9, 2021

Everyone is concerned. Everyone cares. Everyone wants to do the right thing. The ship has sailed - caring about climate as a company/organisation is no longer optional.


The evidence is overwhelmingly in support of environmentally responsible companies winning. This article dives into some of the facts of the benefits to:


  • Selling to consumers
  • Selling to enterprise
  • Staff retention and recruitment
  • Raising capital from investors


Selling to consumers

67% of consumers are very concerned about their personal carbon footprints [1], and not just for the sake of it: 60% of consumers are willing to change purchasing habits to reduce environmental impact. And this isn’t just talk - consumers are prepared to walk the walk: of those 60%, over half will pay a 35% premium for a sustainable product. [2]


Selling to Enterprise

Enterprises are under pressure to report and reduce their climate impact. It’s now more than a reporting requirement, in fact, by September 2021, businesses bidding for UK government contracts worth 5million and above, must disclose their emissions and their Carbon Reduction Plan (how they will get to net zero). Given the pressure on multinationals and enterprises to report and reduce their climate impact, 50% of multinationals are set to select their suppliers based upon carbon performance Carbon Trust, 3 whilst 66% of multinationals will pay more to purchase a product with low emissions [3]. These numbers will only increase.


The reasons are simple, enterprise needs to reduce their emissions to net zero by 2050 - and likely 2030. With a rising cost of carbon - this will not just be a regulatory cost, but a potentially life threatening change if they can’t reduce their impact. This starts with suppliers, and starts with their procurement teams incorporating environmental and particularly carbon emissions into their buying decisions in the short-term. 


Staff Retention and Recruitment

As if competition for talent wasn’t already difficult enough, 40% of your staff will look for a new job if you do not engage in sustainable business practices [4] , and even if they won’t necessarily leave, the proportion of your workforce that thinks the writing is on the wall is even higher: 61% of your staff believe: “Sustainability is no longer a nice to have for companies, it’s a need to have” [4].


Deloitte’s 2019 Millennial Survey found climate change and protecting the environment is their top concern [5] - whilst the conseravtive nature of older generations might make them less likely to jump ship, millennials and GenZ are hyper-concerned about their future.


Raising Capital from Investors

97% of institutional investors now assess environmental impact when making investment decisions [6]. Like it or not, if you are raising capital your ESG performance is being assessed.


And that's even at the smallest end of the capital allocation scale: in Germany, the 20 top venture capital funds now incorporate carbon neutrality in their term sheets - every new portfolio company must assess and offset their carbon impact. [7]

This shouldn’t be surprising, and it will soon be demanded of everyone. This is inevitable given the reporting requirements of larger enterprises and institutional funds will trickle down their supply chains. 

Larry Fink, Blackrock CEO:

Companies that address sustainability risks will attract investment more effectively, including higher-quality, more patient capital.[8] 


Profit matters. And that’s why you should act on climate. 

Having ethics pays dividends. 

A McKinsey analysis of over 2000 empirical studies on the impacts of ESG on Equity Returns, showed 61% of studies showed ESG gave a positive return, with just 8% a negative [9]. 

And this is just the beginning. Customers, employees, investors - they all care now more than ever before.

It may be the ethical thing to do. But it definitely is the right thing to do, through the ROI delivered by winning and retaining customers, employees and investors.


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Consequence. helps you by assessing, offsetting and reporting your impact.

Sources for reference.

  1. Source Deloitte, Deloitte Resources 2019 Study Energy management: Balancing climate, cost, and choice, 2019
  2. Source IBM, Meet the 2020 consumers driving change, 2020
  3. Source Cutting Carbon in the Value Chain (Dynamic Markets, September 2011)
  4. Source HP, HP Workforce Sustainability Survey Global Insights Report, 2019
  5. Source The Deloitte Global Millennial Survey 2019
  6. Source EY, Global Climate Change and Sustainability Services study, 2018
  7. Source Leaders for climate action, Project A Ventures, Earlybird, Northzone, GFC et al, Jan 2020
  8. Source Fink, Larry, Letter to CEOs: A Fundamental Reshaping of Finance, 2020
  9. Gunnar Friede et Al., “ESG and financial performance: aggregated evidence from more than 2000 empirical studies”, Journal of Sustainable Finance & Investment, October 2015, Volume 5, Number 4, Deutsche Asset & Wealth Management Investment; McKinsey analysis

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