This past year saw significant advances in the world of sustainable business practices. CEOs and investors alike took a much greater interest in assessing the various environmental and social challenges we all face and planned important steps to pave the way for a greener future in 2015 and beyond.
Here are some of the key trends and actions taken by business in 2014:
Sustainability in Supply Chains
Large companies—including rivals in the global marketplace—joined forces to gain a better understanding of what constitutes a sustainable product. In an unprecedented example of collaboration, Target and Walmart co-hosted a Personal Care Products Sustainability Summit, inviting high-profile suppliers like Unilever and Proctor & Gamble to work on greater transparency about chemical components used in their products, with the goal of reducing the physical and chemical impact of these ingredients, while continuing to improve the supply chain.
In addition, Walmart and more than a dozen of its largest suppliers are working to improve the use of fertilizer and tilling practices in corn and soy farming, while General Mills and Kellogg have pledged new transparency about emissions across their entire supply chains.
Advanced technology is enabling businesses to “take action on supply chain sustainability,” notes Hugh Jones, Director, Business Advice at Carbon Trust. “This is helping them to hotspot areas of inefficiency, find new cost savings, and work collaboratively on mutually advantageous situations where both the business and its suppliers derive benefit.”
New Business Coalitions
Also joining forces in 2014 were diverse businesses—including Nestle, IKEA, Philips, Mars and Swiss Re—coming together through the leadership of The Climate Group and CDP to join RE100, an industry-wide initiative encouraging fellow big companies to commit to 100 percent renewable power.
Other coalitions published far-ranging sustainability impact reports in 2014. Among them was a group launched in September under the name We Mean Business, (which supports RE100). Their comprehensive study of the business value of investments in low-carbon technology and energy efficiency provides compelling data to support climate action. According to the report, many companies are achieving an average IRR (internal rate of return) of 27% on their low-carbon investments.
Cost Reductions in Renewable Energy
In 2014, key sources of renewable energy such as wind and solar saw a marked reduction in cost. In many cases, says Rob Threlkeld, Manager of Renewable Energy, Global Environmental Compliance & Sustainability at General Motors, in a recent GreenBiz article, “rates [are] roughly equivalent to—or even cheaper than—sourcing fossil fuel-based power.”
For example, a recent study by the investment banking firm Lazard noted that utility-scale solar energy has costs as low as 5.6 cents a kilowatt-hour, with wind as low as 1.4 cents a kilowatt-hour. Natural gas, by comparison, is 6.1 cents a kilowatt-hour (on the low end), with coal at 6.6 cents.
Biomimicry on the Rise
Biomimicry—the study of how flora and fauna contend with environmental challenges and adopting their applications to human design and processes—generated new levels of interest around the world.
Among the innovations spurred by biomimicry in 2014 is a new type of solar cell, growing out of a study of the eyes of garden-variety moths.
“Biomimicry really captures the imagination of designers, architects and entrepreneurs alike,” notes Rory Bakke, Chief Sustainability Officer at True Market Solutions. “As we look at various design solutions to business problems, we’re also learning about nature itself. It’s a way for businesses to benefit from natural solutions and for all of us to become more connected to our environment.”
Numbers are Fueling Change
Corporate sustainability reporting has grown more consistent and standardized over the past year, notes sustainable innovation expert Joss Tantram.
“[Reporting] is increasingly about core business, strategic context and strategic integration,” he says, adding that improvements in the quality of reporting are still needed and will require “many changes in the outside world in order for sustainability disclosure to be understood as equivalent or even greater in importance than financial information.”
Finally, 2015 promises to be a year of greater investment in green technology. Investment trends over the past few years point to corporate social responsibility as a key factor in investor behavior. According to Arabella Advisors, individual and institutional commitments (including college campuses, churches, cities, hospitals, etc.) to divest endowments from coal, natural gas and oil “more than doubled” to 180 since January 2014.
Perhaps the most significant divestment in academia took place at Stanford University, which pledged to no longer invest its $18.7 billion endowment in coal.
As James Murray, founding editor of BusinessGreen notes, “the likelihood that more big name investors will join the fossil fuel divestment trend suggests 2015 will see environmental considerations get an ever greater hearing among the investment community.”
The Outlook for 2015
Numerous other important sustainable business stories emerged in 2014 — Andrew Wilson, environmental strategist and author of The Big Pivot lists many of them in his excellent December Harvard Business Review article, along with trends to look for in 2015.
The most important thing is that, while we will continue to face enormous challenge, we are making progress in sustainability. Shifts in climate change acceptance and policy and the growing strength of the business case for sustainability only promises to fuel momentum.