As we wake up to the news of more companies being cramped due to their environmental footprint and non-compliance, one is left to wonder if the role of business is changing. In the last four decades there has been intense debate on the role of business, and it is only recently that we have seen a shift where more Kenyan companies are looking beyond making money and maximize profits for their shareholders. There is a clear move by companies to have a clear duty of care to all stakeholders. More companies are now talking of sustainability, which is concept that extends beyond compliance with legal mandates or even charitable donations and good deeds to embedding doing good into business strategy.
In 2016, Climate Change Act came into effect in Kenya with the need to help the country head toward its commitments as well as make a better world for future generation. The goal of the Act is to provide a regulatory framework for an enhanced response to climate change, and to provide mechanisms and measures to improve resilience and promote low carbon development. This is a precursor for environmental sustainability in Kenya and businesses ought to have evaluated the consequence of the Act to their ventures.
Environmental sustainability generally addresses how the needs of the present can be met without compromising the ability of future generations to meet their own needs with protection of natural resources and the environment.
While environmental sustainability appears a new concept, it really has roots in conservation, land management, and protection of natural resources which are age-old mandates. The key components that companies should be focusing on include minimising emissions,using more renewables and energy efficiency, efficient use of materials, water management, pollution and waste management.
There are many benefits that will accrue to companies if they take care of the environmental issues. Such benefits include building a better brand; more sales revenues due to the emanating brand creation and strengthening, costs reduction especially where a company is able to use materials efficiently including energy efficiency and use of renewable sources of energy.
Environmental sustainability will also go a long way in terms of managing a company’s risks as well as ensuing that it will have a social licence to operate by having good working relationships with its stakeholders.
But what does it take for a company to head toward an environmentally friendly future?
This will call for starting with a shared vision. The vision must be embodied by the top management identifying their level of commitment to the environmental sustainability journey. Whatever vision a company picks, it will be influenced by the business culture and stakeholders’ interest, the potential to strengthen brand, personal values of leadership, and considerations of moral or ethical positioning. Commitment to communication of the vision is also key to enable the company to get closer to environmental sustainability. Management will have to choose the material issues that the they will focus on when it comes to the environmental sustainability. Determining what is important helps in directing the implementation strategy as the business will focus on what is material in regard to the environmental footprint of that business. A company may find that it has very low greenhouse gas emissions but produces large amounts of toxic waste. In this case, emissions are not material, but the toxic waste is and hence requires more attention. Once the material issues are highlighted the next step will be to come up with the strategy to address the issues as well as the definition of the key performance indicators (KPIs), which is what the company will keep an eye on as it implements its environmental sustainability strategy. The results achieved need to be reported and this can be done using renowned reporting standards such as the Global Reporting Initiative (GRI) which will provide the guidelines for reporting.
While we have many doubting Thomas in the corporate world yet to be convinced that environmental sustainability delivers shareholder value, there is growing belief that companies that are successful in managing the environmental risks stand to outperform their peers in terms of financial returns in the long-term. Customers are already pushing companies toward environmental sustainability and therefore it becomes an important debate to have in board rooms as well as its consideration on the day to day operations of the business.
Whether a company implements environmental sustainability or not, it is clear that the agenda will increasingly move from voluntary to legally mandated initiatives, such as the Climate Change Act in Kenya and other sustainability reporting requirements set by regulators.
The critical inquiry for business is no longer if, but how and when to launch a meaningful environmental sustainability programme. The key question is how is your business prepared to embrace environmental sustainability?
The writer is CEO of Climate Innovation Center.