
(Sergio Souza, Unsplash)
This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.
Author: Fred Krupp, President, Environmental Defense Fund
With the US administration turning its back on the Paris Climate Agreement, demands for corporate climate leadership are mounting. At a time when executives should be filling the leadership gap, too many CEOs continue to be trapped by short-term, profit-only thinking.
Positive return on investment (ROI) is one sign of a healthy business. But equating ROI with profits alone is dangerously outdated thinking. For business leaders, especially those based in the US, the stakes have changed and the pressure is on – from consumers, employees and shareholders alike – to build a broader understanding of ROI into your business models.
A recent Environmental Defense Fund study of 600 executives at companies with $500 million or more in earnings shows that the belief in balancing profits with environmental stewardship is strong. Stakeholder pressure is substantial. The technologies are readily available. But so far the investments are not. Many business leaders have a gap to fill between their talk and their walk.

First, congratulations to the almost two-thirds of executives who are stepping up. Over time, your businesses will enjoy a tremendous advantage over those who do not. Second, for the 33% who understand the need to invest in environmental innovation, yet aren’t doing so: we need to talk. The gap between belief and investment represents a critical opportunity for companies to double-down on sustainability commitments and lead on climate — as your consumers, employees and investors all expect.
Second, many businesses are already finding a fruitful balance between profits and the planet by capitalizing on the win-win that today’s technology can deliver. Amazon is addressing fleet emissions and freight expense by purchasing 100,000 electric trucks, a move also made, albeit at a smaller scale, by IKEA. AT&T is mitigating operational risks from climate change by using supercomputers to model extreme weather. And Walmart, which with partner IBM used blockchain to trace food safety and contain recalls, recently announced that it is piloting a system that uses blockchain to track shrimp supply chains.
Financing Sustainable Development
The world’s economies are already absorbing the costs of climate change and a “business as usual” approach that is obsolete. Both scientific evidence and the dislocation of people are highlighting the urgent need to create a sustainable, inclusive and climate-resilient future.
This will require no less than a transformation of our current economic model into one that generates long-term value by balancing natural, social, human and financial conditions. Cooperation between different stakeholders will be vital to developing the innovative strategies, partnerships and markets that will drive this transformation and allow us to raise the trillions of dollars in investments that are needed.
To tackle these challenges, Financing Sustainable Development is one of the four focus areas at the World Economic Forum’s 2019 Sustainable Development Impact summit. A range of sessions will spotlight the innovative financial models, pioneering solutions and scalable best practices that can mobilize capital for the the world’s sustainable development goals. It will focus on the conditions that both public and private institutions should create to enable large-scale financing of sustainable development. It will also explore the role that governments, corporations, investors, philanthropists and consumers could play to deliver new ways of financing sustainable development.
At a time when stakeholders are pressuring leaders to raise the bar on corporate climate leadership, executives cannot hide behind outdated notions of ROI. The same technology that is helping them compete financially can help drive a better future for the planet as well. It’s time for all business leaders to actively invest in environmental innovation. The future of your company—and the planet— depends on it.
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