A more aware society claim further clarity and environmental responsibility from businesses.
How could we cope with rising demands and lower commodity availability? One plausible answer is to do more and better with what you have. Second, a company should assess if it could reduce the use of rare or high impact commodities: sometimes, producers pack a chocolate bar with several layers of paper and plastics, and that practice is charming but environmentally unsustainable. If a company is less dependant on commodities and energy inputs, it will then become less fragile. Of course, if you use less, you need less, and contraction in supply will affect activities to a lower extent.
Being input efficient will be more critical ahead of a scarcity driven future. Shifting to being input efficient improves the so-called revenue resilience, making companies more immune to pricing shocks.
What do firms do to assess the environmental impact of their value chain? Innovation is the solution, but CEOs should not conceive and organise on a brief-term, quarterly based timeframe. Therefore, executives shall look at improving environmental policies as a fundamental, medium-term purpose.
How much can we still do to reduce waste in packaging? Introducing a more sustainable panel of elements along with a logical, quantitative decrease would be a plausible near term solution. However, we should review the epitome of consumption, and this is a pre-competitive duty.
Pre-competitive cooperation relies on the assumption that contenders could jointly manage pre-product differentiation phases, hence sharing the financial burden. By doing so, reducing waste would become financially safe and somehow a pattern for different players striving for the same consumers: that would give momentum to fair, sustainable competition.
Current ROI metrics do not hold the impact of environmental initiatives. That said, brand resilience is a non-tangible parameter to bear in mind while assessing the ROI of environmental initiatives. The 2020 Harvard Business School’s Impact-Weighted Accounts Initiative (IWAI) measured 1800 companies in terms of environmental costs. Unsurprisingly, some companies (Lufthansa and American Airlines to name few) would experience a tremendous loss if accountants considered their ecological repercussions and the lacking relief initiatives they enacted.
Environmental effects are not only a matter of pollution, and such issue does merge with social awareness. Indeed, salary policies have an impact, notably in social terms, and high environmental impact companies tend to be unappealing to investors these days (IWAI, 2020). Therefore, an implicit revolution driving companies towards a more dynamic approach to the outside environment is a crucial parameter to judge their non-financial worthiness.
Accountability is a product of transparency. As transparency is a new parameter for the sake of corporate price assessment, there will be an emphasis on keeping no or little secret. Danone, the french food processing giant, is a groundbreaking example: it has kept environmental performance in due consideration while disclosing its group earning per share. The public has praised it.
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