Why Should Businesses Care About Sustainability? Because Investors and Customers Do
by Lara Birkes, HPE’s Chief Sustainability Officer and Vice President, Living Progress
As world leaders gather in New York City next week for the 71st session of the United Nations General Assembly, I am reminded what a difference a year makes. Last year, at their 70th session, the UNGA released a bold set of 17 Sustainable Development Goals (SDGs) to advance social, environmental and economic progress by 2030. Then in December, 195 country leaders gathered in Paris to adopt the first-ever universal, legally binding global climate deal. Both actions provide essential guideposts to help create a more sustainable world.
But they are just that—guideposts. Success hinges on rapid, wide-sweeping implementation, and this is where it gets tricky because governments can’t do this alone. Businesses must step up to push transformative change, and some companies, like Unilever, Ikea, Nike and Hewlett Packard Enterprise (HPE) are leading the charge. Yet a missing link in driving systemic sustainable change among businesses has been pressure from the investment community and customers. That tide is shifting.
Last week, S&P Dow Jones Indices (S&P DJI), one of the world’s leading index providers, and RobecoSAM, the investment specialist focused exclusively on Sustainability Investing (SI), announced the results of the annual Dow Jones Sustainability Indices (DJSI). I’m proud to say HPE is included on the DJSI Global Index for the fifth consecutive year (four previous years as Hewlett-Packard Company), and for the first time HPE was named an Industry Leader for the Computers, Peripherals and Office Electronics Industry. HPE is one of only 24 companies worldwide to receive Industry Leader honors.
The DJSI World is the gold standard for corporate stewardship. The Corporate Sustainability Assessment (CSA) methodology used for the DJSI Indices addresses upcoming trends so every year the assessment bar is raised. Environmental Social, and Governance (ESG) integration is becoming more mainstream with 3,400 companies invited to participate in this year’s CSA. That’s attracting the attention of investors.
According to the United Nations Principles for Responsible Investment (UN PRI, April 2016), 1,500 investors representing over $60 trillion in assets under management have committed to integrating sustainability into their investment decisions.
Earlier this year, RobecoSAM announced a partnership with Bloomberg in order to share results of their annual CSA-benchmark with the global investment community. This enables investors to directly compare not only financial performance but a company’s ESG results against industry peers.
In addition, Michael Bloomberg is chairing a Task Force on Climate-Related Financial Disclosures that will publisha series of voluntary guidelines for companies to help them create more standardized information about their exposure to climate change. The key audience for the information: investors, credit rating agencies and insurers.
And it’s not just investors demanding more disclosure—we’re seeing a rise in customer demand for sustainability as a purchasing driver too. In meeting with customers, I’m hearing firsthand how sustainability topics like mitigating risk to the supply chain, driving more efficient IT, and product takeback and recycling programs are essential in weighing purchasing decisions.
Research by CDP affirms the growing importance of sustainability in customer’s decision-making process. On Oct. 6 at the Bloomberg Sustainable Business Summit, Paul Dickinson, Executive Chairman of CDP, Antonio Neri, HPE Executive Vice President and General Manager, Enterprise Group, and Thomas Hicks, Deputy Under Secretary of the U.S. Navy, will be discussing this research and the paradigm shift that’s underway in how companies look at sustainability and total cost of ownership.
I am encouraged by the progress our global leaders have made this past year in setting a course for a better future—and I am even more encouraged by the demand the market is beginning to place on companies to up their game on sustainability. As investors and customers require greater transparency, action and accountability, companies will either step up or be passed over.
