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Climate action- a business-only issue?

Climate action: a business-only issue?

“Apple promises to become fully carbon-neutral by 2030,” reads a recent news bulletin in The Guardian. Not only foreign, but also domestic businesses seem committed to change their course of environmental actions. According to the 4th Dutch National Sustainable Development Goals report, Dutch businesses and institutions are increasingly acting in a way that reduces their environmental as well as social footprints, while enlarging their positive impact on the environment. At Kantar, this is something we refer to as “The Era of the Public.”

One of the reasons for change could be that consumers care more and more about brands’ sustainability. According to the Netherlands report of Sustainable Brand Index , almost eight out of 10 Dutch consumers say their purchasing decisions are affected by sustainability – the highest proportion of all countries included in this study.

Even setting aside consumer preferences, brands themselves are increasingly including environmentalism among their core business values. Take the example of Apple’: Apple wants to be “the ripple in the pond that creates larger change.” Apple is convinced that climate action can accommodate for various positive outcomes, such as “innovative potential, job creation, and durable economic growth”. Apple’s competitor Microsoft, meanwhile, seems to be taking climate action even one step further by announcing a plan to become carbon-negative by 2030 (i.e., extracting more greenhouse gases than emitting), and to remove Microsoft’s historical carbon footprint since its foundation in 1975 by 2050.

However, not every brand is an Apple or a Microsoft. To what extent are brands able to act in an environmentally sustainable manner? And to what extent is it fair to see this as a business-only issue to tackle? Businesses do not operate solely on their own, after all, but within a macro-context shaped by national and international regulations. Given this, it’s worth examining best practices for business-government cooperation.

A question of opportunity rather than willingness?

Are most brands truly able to take environmentally sustainable actions? And if so, what are their motives? In a survey conducted by Kantar in spring 2019 among more than 800 small and medium-sized enterprises (SMEs), nine out of 10 companies state they have made at least a first step towards investing in sustainability. Most of the measures taken by these businesses are focused on saving energy, and are mostly funded by the SMEs’ own resources.

At present, the reported motive for these SMEs to act more sustainably is mostly financial. Reducing energy costs plays a role in motivating three out of four SMEs’ sustainability plans - and for half of all SMEs surveyed, it’s the most important motivator.

It should come as no surprise that the most important sustainability barrier for SMEs is also financial concerns. For somewhat more than one-third of the SMEs surveyed, inadequate financial resources is a roadblock to taking environmentally sustainable measures.

Dutch SMEs see a role for government in providing financial stimulus and knowledge resources for sustainability. One out of five SMEs report that the lack of attractive tax benefits and subsidies is a barrier to improving sustainability. Simultaneously, for three out of ten SMEs, complying with laws and regulations is a trigger to taking sustainable measures.

Interestingly, Dutch SMEs believe it is the government who is most responsible when it comes to making energy consumption more sustainable – though the business community’s responsibility comes second. If SMEs believe, then, that the government and businesses themselves are the two most responsible parties in making energy consumption more sustainable, public-private cooperation seems the most obvious way to take environmentally sustainable action.

Government as facilitator

When we speak of the government’s role in the macro-context around sustainability, we’re talking about a complex web of agreements and statements that include the United Nations Climate Convention (UN), the 1997 Kyoto Protocol, the UN Paris Climate Agreement, as well a number of potential global and EU agreements still being negotiated. Often, these agreements are then taken up by the national government and translated into a series of actionable goals. For example, the Dutch government has set a target of 49 percent less CO2 emissions by 2030 (as compared to an EU-level reduction target of 40 percent), and 95 percent less CO2 emissions in 2050 (compared to 1990 levels).

To achieve these goals, the Dutch government has entered into cross-national partnerships (Climate Agreements), facilitated cooperation between companies and organizations (Green Deals), and drawn up new rules and laws (e.g. Climate Laws and Environmental Management Acts). In addition, Dutch government expenditures on climate change mitigation by the state government increased from 900 million euros in 2007 to more than 1.1 billion euros in 2015.

To achieve its objectives, the Dutch government has focused heavily on cooperating with - and stimulating - the business community. One very impactful approach for public-private collaborations are the Netherlands’ so-called Green Deals. Since their introduction by the government in 2011, there have been 180 completed Green Deal initiatives. Via Green Deals, the Dutch government has aided businesses’ environmental sustainability initiatives by implementing complementary laws and regulations – and also by supporting innovative projects, and providing helpful information and coordination efforts.

The central theme of the Green Deals approach is cooperation. “Remove bottlenecks together” is the essence of the Green Deal strategy. This relatively new way of working provides a win-win situation. Not only does the government benefit, but so do businesses. By executing their environmentally sustainable ideas, businesses can grow into a better competitive position, and create larger export opportunities.

For example, 2015 saw the launch of a Green Deal for “Circular Buildings.” Various stakeholders within the private sector (including real estate agencies, financial institutions, architectural firms, and energy suppliers) and the public sector aimed to apply the principles of a circular economy to buildings. They have developed a so-called “circular passport” that pinpoints key indicators for circular buildings, such as the use of materials and products – and also advises how to deal with renovations and maintenance. Subsequently, they have also developed the “circular journey” model that describes the entire path to realize circular buildings, all while providing insights and tools for each step in this process.

Currently, a Green Deal in the East of the Netherlands is aiming to make the local heat supply more sustainable through cooperation between local governments, a Dutch industrial chemicals company, and energy suppliers. Their objective is to re-use energy by taking industrial surplus heat into district heating. This will save 2500 tons of CO2 emissions per year, which is equal to the energy consumption of 1,550 households.

With 232 established Green Deals and more than 1300 parties involved, the Netherlands has shown that it is not only possible, but also impactful, to join private and public forces. Which makes sense - climate action, after all, is nothing if not a collective issue.

Matthijs de Gier

Client Director, Public division

Kantar

Matthijs.de.Gier@kantar.com

Evelien Damhuis

Research Executive, Public Division

Kantar

Evelien.Damhuis@kantar.com