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Framing natural capital and climate change in a business context

At the Parallel Forum meeting in February 2015, Dr Nicolette Bartlett from the Cambridge Institute for Sustainability Leadership facilitated a discussion about ways to frame research questions about natural resources, sustainability and climate change in a business context.

The private sector is made up of a multitude of actors, all with different goals and values. Within it, there are many sectors, companies and individuals all very different. The language of someone working in procurement is likely to be very different to that of someone working in the sustainability office, even within the same company.

One of the most effective ways that CISL engages with business and natural capital is by looking at impacts and dependencies through the lens of a single commodity supply chain. This grounds the discussion in a tangible product and can be effective in highlighting, particularly, the risks, vulnerabilities and costs associated with degraded natural capital.

Language

There is a drive within engineering to move from ‘sustainability’ to ‘resilience’ - I would argue that this is not moving outside engineering too, although when I asked Rockstrom about it, he said that resilience is a much narrower term than sustainability as it specifically refers to a system's capacity to change and respond, rather than sustainability which inherently takes a long-term view of that system - working with him now, what do you think?. However, resilience still suffers from problem of meaning different things to different people (e.g. engineering resilience vs ecological resilience - this needs expanding to explain what you mean). But, does resilience deal so well with efficiency (i.e. does it build in more redundancy than is necessary - I have an inherent bias against brackets as I think they interrupt the flow of text but that non withstanding, I'd explain what you mean by this)? If so, how can this be dealt with under current economic models.

Private sector have used changes in terminology to gain traction. For instance, rather than referring to “energy efficiency”, Velus Windows are now selling by referring to “warm and healthy homes”. Jon, does this lead onto a question like - Can researchers learn from the way that companies frame sustainability-related issues when they are communicating the results of their own research or to convey the need to take action?

Businesses should care

If natural capital is truly important in providing material benefits to a company, then they surely would be interested. So if there is a good evidence base that sustainable rubber production is linked to higher profits, then businesses will act..no?

BUT:

  1. Companies may simply invest elsewhere (i.e. hedging their bets/diversifying could increase their resilience and financial sustainability, but won’t contribute to improving their environmental sustainability/performance).
  2. The timescales for loss of benefits may be too far off. Short-termism can be a problem. Businesses are worried about acute risks - can you give a timescale? – slower or longer-term risks do not have such traction. Accounting has an important role here. Accountancy has driven efficiency decisions, but if timeframe is <1year, then this will effect what efficiency measures can be invested in.
  3. So long as businesses are doing as well as - or better than? - competitors, then there is little incentive to act.

What motivates businesses to (e.g. - what do you mean? take an action such as?) join a certification scheme?

A multitude of reasons, including:

  1. Individuals within a business that genuinely care
  2. The history/longevity of the company can affect sustainability planning
  3. Ownership and structure
  4. Shareholders
  5. Pressure or encouragement/support from? NGOs – especially for brand image
  6. Leadership - from the top or within the sector?
  7. Financing – responsible financing may become a more important factor as lenders increasingly require evidence of good natural capital management. Financing may also be a mechanism by which consensus at management level can be translated to action at ground level with business units.

It isn’t always just about profit maximisation and to suggest that is naïve and can offend/alienate some business people.

Greenwashing

I would define what greenwashing is first. How much do companies care about natural capital vs. actually just implementing because worried about image. Does this matter if greenwashing is actually resulting in a positive impact?

Hydrocarbon industry

Perhaps giving this as an example of an industry which does not have to invest, rather than titling it 'the hydrocarbon industry' would make these points more broadly applicable? Does not really need to invest in brand image around natural capital because:

  1. Hydrocarbons are so integral to our economies and lives
  2. Brand image has little to do with the choice that people make. Largely it is to do with price.
  3. This, then, drives the culture within businesses.

Roundtable for Sustainable Palm Oil example - an example of what?

Consumer demand is not meeting supply – only 50% of product was sold at higher premium. This links to:

  1. Whether price premiums actually obstruct the mainstreaming of more sustainable methods that could bring whole industry along (example of Better Cotton Initiative, which absorbs the higher costs of production in order to maximise demand for BCI cotton)?
  2. Whether companies, who are clearly good at manipulating consumer demand, should be doing more to encourage change in consumer behaviour towards demanding higher sustainability? Currently companies are not good at recognising this and proactively changing demand.

More thoughts on demand

Demand is crucial to the solution (e.g. of meat consumption and climate change). However, this is not necessarily a problem for business. Needs to be reframed as an opportunity to do other things. How do we help businesses/individuals to find their role in the solution (rather than just confrontation).

Effecting change

We need solutions instead of just problems. If we know what needs to change, then: to be pedantic - who are you referring to when you say 'we'? Researchers?

  1. We need to identify what motivates business to change
  2. We need to provide alternatives

But it isn’t always win-win. Who is responsible when someone loses. How do we manage this. When there are going to be losers (e.g. decreased profits), companies are keen to engage on (at least) a level playing field so that their competitors face the same constraints.

Collaboration can also be a useful tool, sometimes private sector collaborations can drive policy change. However, competition law can make this difficult, particularly when dealing with quantities and prices (danger of creating a cartel).

Is change driven at the bottom or the top of a supply chain? Enhanced sustainability could be pushed up from the bottom or pulled up from the top. Most examples appear to be the latter. Linked to bottle-necks/power. Tend to be fewer retailers/commodity traders. Cooperatives may help if producers want to push change from the bottom, but much harder to mainstream.

What are the biggest drivers for businesses? - this could be wrapped into one of the sections above?

Arguably, companies are more interested in increasing revenue (new markets, new products) than increasing efficiency (which can also reduce costs), unless there are risks to having high costs or unless the company has limited resources (e.g. during financial crises etc).

When Jon can to the Parallel Forum, he was a Research Associate at the Department of Geography and at the Cambridge Institute for Sustainability Leadership (CISL). He is now a Luc Hoffman Institute Research Fellow at the Stockholm Resilience Centre, based at the University of York.

Find out more about his work