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Companies can’t afford not to be sustainable

Going green is the best thing companies can do to boost their reputation

By David Trevitt, Digital Transformation Advisor, Huawei Ireland

To avoid reputational damage, organizations must embed their climate response in their business strategy, says David Trevitt, a digital transformation advisor at Huawei in Ireland. 

Climate response is an ethical issue that is becoming an increasingly important part of reputation management for many enterprises.
A recent GSMA Intelligence survey across 16 countries found that around 80% of people now rank climate change as the number one global challenge, above inflation, economic stability, war, and geopolitical conflict. This view remains at the forefront when considering the next five years.

The same survey found that, on average, 60% of people consider climate or sustainability when buying a product, while 45% say they are willing to pay a premium for carbon-neutral certified products and services. 

There is a clear correlation between green purchasing and those countries most exposed to extreme weather conditions induced by climate change. The highest correlations are seen in the Philippines, Brazil, Türkiye, Pakistan, and Indonesia—fast-growing emerging economies with direct exposure to warming and extreme weather events. 

The trend is likely to increase as more people experience the effects of extreme weather. No country will remain unaffected. More consumers will vote with their wallets.

Similarly, 66% of survey respondents rated climate action as very or extremely important in their choice of employer. How far does this go? Between 30% and 40% of people in Europe say they would take a pay cut to work for a company with a net-zero commitment. In countries on the front lines of climate change, the figure exceeds 50%.

When selecting a mobile phone operator, the attributes most highly prioritized by consumers today are privacy and personal data protection, price, network coverage, brand, and device range. Environmental sustainability is still a second-level criterion for most consumers, but this is expected to become a higher priority as the impacts of climate change become more widespread and severe.

Some 50% of consumers say they are willing to change their behaviors in response to climate change, although the extent of this varies depending on the level of personal sacrifice involved. For example, a smaller number are willing to fly or drive less compared to those willing to use an electricity supplier or mobile phone operator that uses 100% renewable energy.

The fact that more than 50% of people say they are willing to pay a premium to offset the carbon impact of a purchase or support certified carbon-neutral products or services. This indicates that consumers are more willing to spend discretionary income than to give something up. 

From an industry perspective, there is a latent “green premium” available if product design and marketing can incorporate sustainability criteria, such as carbon-neutral mobile tariffs, before regulation requires product adherence to strict environmental standards.

Telecoms operators selling 5G and IoT to enterprise verticals offer a dual-value proposition: productivity gains and higher power efficiency, which lowers their customers’ carbon footprint. Such a combination can offer significant reputational benefits.

Sustainable procurement will only grow in importance. According to a GSMA Intelligence survey, some 75% of companies across six industries claim to have sustainable procurement policies in place. While there is some variation on the specifics of such policies, the percentage of enterprises auditing more than 75% of their suppliers for compliance to these policies is negligible.

Establishing sustainable procurement practices takes time, but it will eventually become necessary because of Scope 3 reporting and regulatory compliance. (Scope 3 emissions include those generated by a company’s suppliers.)

When it comes to investing, sustainability is no longer considered a niche. Increasingly, the investment management industry has begun incorporating ESG key performance indicators into company ratings and broker research. Evidence suggests that companies with a higher ESG rating have achieved a lower cost of capital.

In the long run, governments and societies will need to make difficult choices, but much of this comes down to political will and regulation, not technology. The timeline for emissions-related regulations will vary by country and industry, but it has already started in the 89 countries that have adopted net-zero commitments by the end of 2022, representing 86% of global emissions.  

Any company on a 2050 net-zero timeline will have to cut CO2 emissions by 50% in each successive decade. This is good for business.

Learn more:

Transform Talks: Going green needn’t cost the earth

Transform Talks: Consumers would pay more for green tech, study finds

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