External Forces Are Pushing Business Toward Adoption
The external pressures prompting the adoption of sustainability-driven management — pressures the embracers are already noting and acting on — are increasing. First, public policy is having an effect, as governments continue to work toward carbon reduction and other targets. While much legislation remains at a national or local level, the global nature of business means local rules can be far-reaching. In Europe, for example, legislation requiring electronics producers to recycle their products at the end of their lives does not only affect European companies. Any business wanting to sell into this market must be compliant.
Second, institutional investors and pension funds are starting to look at their investments through a sustainability lens. The Carbon Disclosure Project, which pushes companies to disclose their climate change-related risks, now represents investors with some $64 trillion under management. And access to finance could also be a consideration in the future. Some banks are introducing sustainability-related loans, and even private equity firms are starting to consider the sustainability risks and opportunities in potential acquisitions. Meanwhile, as requests for capital come under increasing scrutiny, sustainability is becoming a factor in lending decisions.