Sustainable business is good business

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

A new mindset is emerging in the business world, where company bosses are realising that sustainable business plans are not just good for the climate but for their firms too, writes Connie Hedegaard, EU commissioner for climate action, in a post-Davos commentary.

This commentary was sent to EURACTIV by Connie Hedegaard, the EU's commissioner for climate action.

"A new mindset is emerging among major businesses. That is one of the impressions I take away from the recently concluded World Economic Forum in Davos. Whether they call it green growth, conscious capitalism or shared value, more and more companies around the world are trying to define new and more sustainable ways of creating the growth we need in Europe – and in the rest of the world.

And it is truly amazing to see how many good ideas are already out there. Like for instance the business of a man I sat next to one evening, which had already provided 180,000 Indian homes with solar generated lighting. Today it costs a family in an Indian village 8-9 rupees per day to light up their home with kerosene lamps. By using solar solutions they can get the same energy for half of the price. A bank is helping to finance the investment. It's not a miracle. It's just a sustainable business model.

And that was what I heard time and again – the business models are there. Whether it is Nike's cradle-to-cradle model or Best Buy collecting old electronics and appliances because they are full of valuable materials. Or shipping giant Maersk, which has saved billions of dollars in fuel costs just by lowering sailing speeds and making a few other adjustments to its normal operations.

So that is another thing I take from Davos. The business cases are there. It pays off to be resource efficient. And it has dawned on big businesses that providing ever more people with more goods, food, heating, cooling and mobility can only be managed in a sustainable way if future growth is created in a smarter way than it was in the past.

But I also took a third thing from the World Economic Forum. Despite the nice words, good intentions and concrete action, it is clear that without the right policies we won't be able to make the transition into more climate-friendly and resource-efficient societies at the scope, scale and speed that is needed.

Scope and scale are vital. But speed will be our greatest challenge. Or as UN Secretary-General Ban Ki Moon put it: Time is our most scarce resource. It is simple: the more factories, buildings and power plants we build without making the necessary improvements, the longer we will lock the world onto a path of unsustainable growth.

That is why it actually matters that governments set targets and create the right incentive structures. That is not always the case today, for instance when we subsidise fossil fuels instead of encouraging the required behavioural changes.

Whether businesses are moving forward due to their focus on the bottom line or out of consideration for the climate does not matter to me. As long as they move, and move in the right direction. But while markets by nature are relatively short-sighted – because businesses must ensure constant returns to their shareholders – politicians have an obligation to consider the longer term implications and guide the market.

That is why this spring the European Commission is launching a 2050 low-carbon roadmap, an energy efficiency action plan and a white paper on transport, starting to plan for the decades ahead.

In the end, private businesses will be the ones delivering the solutions. Nevertheless, Davos confirmed my belief that without ambitious public policies it will be too little, too late."

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