Sustainability in business has been moving along at a steady pace for several decades. Yet the urgency of the climate crisis and social inequalities are driving new generations of people to demand more from companies both large and small.
The State of Green Business report from GreenBiz looks at the biggest trends over the last five years for the largest 500 companies in the US and the largest 1,200 globally. Because major companies and small to mid-size businesses differ greatly in their financial capital and economic influence, we have left out trends that may not apply to our members (such as million-dollar investments in ocean-based carbon sequestration). However, these industry trends are often a result of small businesses taking the lead on the most radical initiatives to improve supply chains in both social and environmental responsibility.
Small and mid-size companies are the movers, shakers, and risk-takers in the green economy. Several of the trends listed below are what we have seen Green America business members doing since the 1980s. Some large companies are making important progress as sustainability becomes more broadly understood to support the long-term success of the economy, society, and environment. However, more is needed, as the report notes, “most corporate commitments and achievements are insufficient to meet the moment, let alone the future.”
Here are the major forecasted industry trends for green business in 2021.
The ‘S’ in ESG Gains Currency
Environmental goals are easier to measure than social goals—the data to determine how much water is saved by innovating processes is more straightforward than the qualitative assessment of employee happiness. At least, that has been the case forwarded by the biggest companies. Unfortunately, this has historically meant social goals do not enough attention out of the United Nation’s Environmental, Social, and Governance criteria. During the pandemic, systemic issues in US society gained newfound awareness and company stakeholders have been forced to consider how businesses treat people.
Good social performance leads to improved business performance. Conscious companies will need to examine their social goals and strive—or continue to strive—for improvement and comprehensive reporting.
Community Investments Pay Dividends
Unsurprising to green businesses, investing in community is a strategy that benefits people and the planet. The corporate world is starting to recognize that long-term investments in resilience and support for local communities bolster their supply chains and better the lives of their workers. The Alter Eco Foundation—the charitable arm of chocolatier and longtime Green America business member Alter Eco—is working directly with cacao farmers in Central and South America to transition them to a form of regenerative agriculture called dynamic agroforestry. This investment works in twofold; simultaneously preparing their company and their farmers for the future of the agriculture industry as well as combating climate change through improved soil health.
Investing in community can look like building resilience in your supply chain, managing company investments to be socially and environmentally conscious with SRI advisors, or partnering with grassroots organizations on local projects. This looks different for every company—but investing in community is investing in the long-term health of your organization.
Industrial Decarbonization Picks Up Steam
Industrial processes produce the materials needed to manufacture every product in the economy but turning those raw materials into chemicals are responsible for a third of greenhouse gas emissions globally. Onsite combustion and heat processing has received the least attention when it comes to greening the industrial industry. Currently, most heating processes are powered by natural gas. Giant companies are decarbonizing, however; Apple announced last year its goal for carbon neutrality throughout its supply chain. While decarbonizing the industrial industry is no easy feat, major investments would pose significant benefits across sectors and spillover for smaller businesses.
The ease of decarbonizing supply chains varies depending on how complicated your supply chain is and what materials your company uses. Carbon offsets are the simplest form of neutralizing carbon emissions currently, but innovating supply chains to end emissions at the source will pay off in the long-term.
Nature Takes Root on the Balance Sheet
The urgency of the climate crisis has garnered public attention over the last decade, and thus, companies have focused on reducing emissions, decarbonizing, and renewable energy. However, if the focus remains narrow, all other patterns of consumption will stay the same, and we will continue to see extinctions and biodiversity loss. To adequately understand a company’s nature-related risks, the Task Force on Nature-related Financial Disclosures will be launched in 2021 to translate nature-related risks into financial flows. The goal is to elevate nature-positive activities on company balance sheets. The report notes Business For Nature, a global coalition of organizations and networks working with businesses to reverse the loss of nature, and Planet Tracker, a think tank aligning capital markets within planetary boundaries, as two key players to watch.
Sustainable Mobility Drives the Newest Perk
Employees can drive change in companies that care about staff engagement. Transportation and compensation for the daily commute are trends that the GreenBiz report notes. Companies are offering sustainable mobility perks, such as financial incentives for purchasing bikes, e-bikes, and EVs. Carpooling startup Scoop offers companies a way to help employees strategically carpool with coworkers and neighbors. Clif Bar, a Green America business member, jumped on this trend in 2006 with its Cool Commute initiative and now hundreds of its employees take advantage of cash incentives to purchase bikes and EVs to eliminate fossil fuel vehicles from daily commutes.
Offering employees perks or discounts on carpooling and bike shares is one way to interpret “sustainable mobility.” In the time of COVID, working from home already reduces transport-related emissions. Whether or not your employees return to the office, adapting a work culture of telecommuting can also be a sustainable perk.
As forecasted trends, these predictions may not hold firm—that much was true for 2020. Regardless of which trends come and go, environmental sustainability and social responsibility are here to stay.
