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Today, all companies are directly or indirectly impacted by climate change, e.g., due to stricter legislation, potential supply chain disturbances from droughts or other extreme events, as well as increased customers’ expectations.
To define their strategy, companies should first analyse their current situation, i.e., identifying the exposure to climate change-related risks and quantifying their greenhouse gas (GHG) emissions. A comprehensive analysis (i.e., direct and indirect emissions from the supply chain or product use) is required to identify relevant levers of actions and anticipate future risks.
Based on this initial analysis, decarbonization strategies can be defined, with the support of international guidelines, such as the Science-Based Target initiative, to ensure that the company strategy is aligned with the global target (keeping a global temperature rise well below 2°C based on Paris Agreement) and rely on scientific assumptions.
Consumers contribute directly to climate change in their daily life, when driving their conventional cars (CO2 emissions from burning diesel or gasoline) and when heating their house (mostly by burning natural gas or oil). On average for Luxembourgish residents, these direct emissions represent around 4 tons of CO2 per year, i.e., more than a third of its total carbon footprint . So, consumers can concretely reduce GHG emissions by switching towards softer mobility choices, reduce their heat consumption (e.g., better insulation or smaller houses) and switching to greener heating sources (e.g., heat pump).
Consumers have other levers of action that can indirectly reduce GHG emissions, such as reducing their meat and dairy products consumption (significant emissions due to animal digestion, feed supply or manure management), avoid flying, rethink their needs before buying or favour second-hand options to minimize the purchase of new products.
Finally, consumers are also citizens and can engage in sustainability actions, e.g., via contributing to climate-related debates or conferences, support environmental NGOs or vote for credible and ambitious environmental programs.
Climate change likely hits harder those humans who do not have the means to protect themselves from its severe weather effects (flooding, heat waves), e.g., not having a proper housing, healthcare and insurance, etc. It will lay bare social inequalities and may increase social issues, both at local and global level. This effect is also strengthened by the deviation of public money to remediate climate change consequences instead of providing social welfare.
When it comes to lowering social issues and climate change, there can be trade-offs between them. For example, the switch to electric vehicles and renewable energy requires more precious rare earth elements, of which mining these in certain regions might be associated with poor labor conditions or worker rights (in particular Lithium and Cobalt). Care must be taken in using minerals from responsible and ethical suppliers, while efforts should be pursued to improve the minimum social and environmental requirements at global scale.
Similarly as for environmental impact, both consumers and companies can take action through their choices.
For consumers, it will mainly be through their consumption behaviour, i.e., whether they choose to buy and which products based on social issues linked with them, e.g. a high risk for child labour along their value chain. Yet, such choices can only be made when information or labels are available (e.g., Fair Trade), which unfortunately remain scarce.
Companies can take action by disseminating more theme related information and/or abiding to a Corporate Social Responsibility (CSR) business model, but also in adopting adequate practices and selecting materials/products that minimize social issues.
About a year ago, the EU published a proposal for a Corporate Sustainability Due Diligence Directive (CSDDD), and some member states, have already adopted national rules, to identify & prevent social issues alongside environmental ones. Companies could already start to follow these directives.
1. Analyse the current situation: Based on internal or external expertise, evaluate the environmental and social risks in your value chain (e.g., dependence on fossil resources, critical materials, critical regions) and your maturity level to tackle them.
2. Define a strategy aligned with state-of-the-art standards and guidelines: Upcoming directives, such as the corporate sustainability due diligence from the European Commission, should be considered to anticipate future legislative constraints.
3. Identify the levers of action for your operations: They can include the reduction of energy consumption, health and safety procedures or soft mobility incentives compatible with good working conditions.
4. Consider sustainability criteria for procurement and investment: Consider labelled products but check the criteria comprehensibility and their verification and control means. You can also create procurement criteria that your suppliers should comply with.
5. Rethink your business model: The sustainability of your products and services will increase the company resilience, e.g., by considering shorter transport to customers, energy efficiency of use, durability, reparability, consumer safety, impact on the local community…
About the blog:
There is an urgent need for rapid transition to global sustainability. Business and industry have enormous social and environmental impacts. "Why does it matter?" is a bi-monthly blog that aims to elucidate this important topic through the eyes of our experts.
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