Why climate change can be a business opportunity

Fresh from a call with McKinsey at COP27, Richard shared his experience of creating persuasive arguments for change and how businesses can gain a competitive advantage through engaging with the climate agenda. Here are our top takeaways from the session and some invaluable insight into how you as a leader can use climate change as an opportunity for your business.

The facts speak for themselves

The Secretary General of the UN on day one of COP said, ‘We’re on the road to hell’. Richard was keen to avoid despair, but the situation is certainly stark. We need to keep global warming down to 1.5 degrees to avoid seeing more catastrophic events like floods and extreme heat. If we continue producing Carbon Dioxide at the current global rates, we have just 11 years till we reach 1.5 degrees.

But rather than focusing on the doom and feeling helpless, we need to embrace the opportunities. As Richard put it: “When I worked with the MoD I asked ‘What advantage can we take from the rapidly changing world?”

The commercial possibilities of climate transition are enormous and businesses that focus on it will see a huge benefit.

A holistic approach can bring rewards

Sustainable growth and economic success go hand in hand. Think of your sustainability strategy as enabling your company to do better, not about reducing emissions. It’s about making your business more economically viable and stronger.

Richard shared the example of Johnson & Johnson rethinking the production of their cotton buds to highlight how you can become more competitive by reviewing everything holistically through the lenses of climate change and sustainability:

• Johnson & Johnson cotton buds used to be a plastic shaft with two cotton buds on the end that were packaged in a cardboard container with a plastic lid.
• The first thing they did was to change the shaft to cardboard, there was no detriment and they sold more.
• They then changed the packaging to an all-cardboard box, making the whole product plastic free. This resulted in more sales and transportation efficiencies.

The lesson is to look to change everything you possibly can and you’ll end up with a better, cheaper product, and more sales.

Putting it into practice

So, what could this look like for your business? It starts with looking at every single thing you do through a sustainability or a climate change lens. Ask yourself if I had to forgo anything that was unsustainable does it work? If the answer is no, what would you do if you had to make it by law sustainable?

Consider looking at:

Product – is there any way you can make your product more sustainable and possibly cheaper to produce, which will appeal to a more discerning customer base, by using different materials, different packaging or different design?

Process – can you make your business and the way you operate greener? Think about becoming more energy self-sufficient, can you use solar, wind or mini-hydro to reduce your demands and your costs.

Manufacturing – if you’re involved in any manufacturing, are there any ways you can look at this to reduce the energy and costs associated? Can you make any products you sell greener – and therefore more profitable?

Recycling – look beyond the obvious paper and plastics and consider if there are more creative ways you can recycle. If you’re a water-intensive business, could you harvest the water off your building? A business Richard worked with halved their bill this way.

Supply chain – do you know where your supplies are coming from? Is your supply chain vulnerable to the whims of a foreign power? Could you find a more local source? Ask your suppliers about the materials they use and suggest they conduct an ongoing supply chain audit too. It could make things more efficient and cost-effective for them and you.

Communications – internally it’s likely many in your team care about climate change but aren’t sure what to do about it. Telling them about your goals and progress will give them pride in the business. Your current staff will be more likely to stay – and you’ll find it easier to attract high-quality recruits. It’s equally important to communicate your Net Zero and sustainability credentials with customers as they can be a real differentiator.

Invite your people into the process

As leaders, we can fall into the trap of hunkering down and developing important strategies alone. But getting your team involved from the outset will lead to better outcomes. Look to unleash the creative ideas and imaginations of your people to explore new ways of working that will benefit your business and the planet.

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