Business sustainability - are we ready to act now, at scale?

Climate change disruption across the economy is creating powerful moments and momentum for businesses to reinvent their organisational strategy like never before.

In recent times, the full force of stakeholders – from investors and consumers to governments - pushing for significant environmental, social and governance action has begun to make a real impact.

We are now seeing businesses in every geography around the world sit up, take notice and begin to take action. Some with action or clear plans, others with intent and pledges.

However, large scale transformation is urgently needed, across multiple points in multiple parts of the economy.

Recognising the flow-on effects of sustainable business transformation.

With businesses today operating in a much broader value chain than ever before, and more globally connected in their value chains than ever before, the implications of our actions – the flow-on effects – are far reaching.

Some of these actions will be small and easy, like for example, a business reducing single-use plastics in the workplace. But a million small actions isn’t enough to create the impact and the change we need. It will also be a million big, difficult actions; taking carbon out of the energy system, which includes not just a transition to renewable power but also a change in how we consume energy. In the agriculture and food system, dietary shifts will move protein demand from emissions-intensive meat to lower-emissions foods like poultry and more vegetarian/vegan consumers.

To achieve these significant changes will require a channelling and focus of efforts in the same direction. Huge flows of capital will need to be unlocked along with new technologies implemented at scale and backed by continuous investment.

At EY we believe this creates a new economy, the flow-on economy. Where a win for people and the planet flows onto business and the economy and vice-versa, always in lock-step.

However, flow-on economics are bigger than just giving more than you take. In this new flow-on economy, expertise, technology and knowledge are shared wide and deep to accelerate progress for all humanity. It’s an economy built on dynamic new partnerships across competitive enterprise, academic and political lines.

By harnessing this new energy of collaboration, change is accelerated and momentum is exponential through millions of different actions taken by millions of businesses and billions of people around the world.

Sustainability at EY

In recognition of the growing focus on ESG and sustainability, EY Oceania has established its own Sustainability Strategy centred around EY purpose of Building a Better Working World through Accelerating Impact. In order to create positive impact, we have brought together: EY people, who are EY greatest asset; EY clients, where we can have the greatest impact; and our communities that give us our social licence to operate, all whilst ensuring we have our own house in order related to our environmental footprint.

The next step in the journey is to establish and deliver a range of strategic initiatives under these four pillars. The good news is we have already begun, with our bold carbon ambition, our work on inclusive capitalism and our incredible EY Ripples program. But we aren’t stopping here. There is much to do and engaging with our stakeholders on all of these strategic initiatives will be our priority.

The EY Net Zero Centre

The EY Net Zero Centre is a new initiative supporting clients to create impact in their decarbonisation agendas. The Centre helps governments and companies navigate the complex and evolving landscape of net zero challenges to transition and improve capacity to create long-term value.

With over two decades of experience in climate change, sustainability strategy and energy transition, the EY Net Zero Centre is EY new client resource, designed to navigate the opportunities and challenges of a net zero economy and create a flow-on impact for the planet.

Climate change response and ESG are now pivotal drivers of sustainable business transformation

Rather than only responding with individual sustainability strategies, climate change strategies, and ESG strategies, there is now a recognition of the need to address the ESG and climate change implications to the business’ overarching organisational strategy.

This reframe means leaders need to be clear about where they want to be on their journey, and where their risk appetite lies. Do they want to be market leaders? Do they want to be fast followers? Or are they happy being risk mitigators? Based on this, what are the actions they will take, and what level of effort will they commit to their response?

It’s then about being very deliberate around this decision. If a business decides it wants to be a market leader, it needs to also recognise that this comes with required action.

Within this process, transparency is key. There needs to be recognition that the more open a business is, the more empowered stakeholders become to make up their own minds. The consequence of this will be an expectation of action. But if a business has genuinely committed to action, then transparency should naturally flow.

ESG, sustainability and climate change: an exciting road ahead

While we are creating great momentum and putting a far greater focus on ESG, sustainability and climate change, one major challenge remains: businesses taking action now, at scale.

We need to be honest about real action. It will be a significant challenge, requiring a lot of focus and investment. We need to get past merely identifying what we are already doing in support of our agendas. It's not enough.

Businesses need to really push themselves and to consider a different way to move forward. It should be questioned if a business has really challenged the organisational strategy in a way that will generate the impact and change needed.

With the significant scale of transformation, and pervasive disruption from ESG and climate change, a new wave of opportunity is being created. By engaging in sustainable business transformation strategy in our work with clients, EY reinforces the need to a use value chain lens - to look at the end-to-end value chain rather than just a business’s own operations. EY is excited to help the clients prepare for transformation by assessing risks and opportunities and maximising outcomes.