Why us? The role of business in achieving sustainability

Martin Wolf, Chief Economic Commentator - Financial Times

In the coming decades, increases in greenhouse gas emissions will largely come from emerging and developing economies. However, this does not absolve high-income countries of any responsibility. Indeed, these nations have a moral and practical duty to act on climate change.

Martin Wolf, Chief Economics Commentator for the Financial Times, took to the stage at Sustainable Industry ’22 to explain why.

Dealing with climate change is the ultimate global collective action problem. No one business, sector of the economy or country, not even the superpowers, can solve this alone. Some are more important than others, but it will require a global effort to achieve the goal of a sustainable future.

The UK can certainly not solve the problem. It generates about 1% of global CO2 emissions directly and 2% if one accounts for the impact of its imports. Europe as a whole generates little more than 10%.

The reality is that we can only solve the climate problem together. That's why it's been so enormously difficult to achieve the progress we want. Global emissions, far from plummeting as needed, are at best stabilising and overall tending to rise.

It is very easy to despair but that is a luxury we cannot afford. We have to ask ourselves, what can we realistically do? I would argue that the UK and business have a very important role, both morally and practically.

The UK is the 13th largest CO2 emitter per head, but historically it is the fifth largest. As the birthplace of the Industrial Revolution, Great Britain has been emitting carbon dioxide and other greenhouse gases for 200-plus years.

If countries like the UK – rich, not growing very quickly – can't bring about a massive transformation of energy consumption patterns, and so of emissions, then it's very difficult to expect that the rest of the world will do so. Then we are consigning the future of humanity and all species to a very uncomfortable, possibly catastrophic, destiny.

Furthermore, the UK has relatively advanced technology and is therefore in a position to show how net zero emissions might be achieved. The UK’s growth in energy consumption isn’t very fast, and can certainly be reduced given access to new technology, and the country isn’t expected to see rapid economic growth. As such, the UK should be able to do something dramatic in terms of emissions reduction.

Indeed, the UK is committed to eliminating its net emissions by 2050. A target that can, I believe, be achieved through changes in policy and the pattern of production and consumption in society. 

So, we can do it. And by doing it, we can be an example of success that persuades the rest of the world to adopt both the new technologies and means of production and consumption.

What role does business play?

The role of business is a fundamental question. After all, businesses are the drivers of economic activity and technological progress. As such, they must play a central part in this transformation as honestly and enthusiastically as they can. Indeed, without business activity of the most determined kind, climate change will not be solved.

We can expect and demand that business contributes to the solution over three dimensions:

Driving innovation

Companies, old and new, are the principal drivers of practical innovation in our economy. The innovations made and introduced by businesses are going to be the road to sustainability.

Every business can review:

• what it is producing

• how it is organised

• how assets and equipment are structured

• what it buys and the impact of those decisions

• how customers use its products and services

• what it can do to transform the sustainability of its operations

In the process, businesses will likely find that changes implemented will actually be very profitable. New products will be produced that will have a ready market. More efficient, particularly more energy-efficient, ways of doing things will be discovered. So, this is a path not only of necessity – morally and practically, but it should also be a path of profitability.

Leading by example

Competition leads to new and effective ways of achieving success and progress being followed, partly because of what the market demands and partly because it will be a matter of business survival.

The example shown by business and the competitive pressure generated by successful companies will be immensely important for achieving sustainability overall.  Honesty and transparency

The claims businesses make about what they do and their impact on the environment and society must be honest, transparent and clear. There has to be no greenwashing. Because if that happens, not only are we making no real progress, but it will create cynicism in society. A belief that this is all just another fraud upon the public. This disillusionment is bound to make the entire effort to achieve sustainability unsuccessful. 

Tackling climate change requires the whole of society, a global effort. Businesses are an influential part of society and so can play a decisive role in encouraging citizens and governments to adopt the changes and policies needed to solve the sustainability problem.

Business cannot solve the problem alone, but without business, the problem will not be solved.