“Companies that are putting climate change at the core of their boardroom are finding that their business is improving, and they are now seeing a return,” says Tom Mitchell, executive director of the International Institute for Environment and Development. “In this sense, there is not just a moral or justice argument for action, there now is fairly clear evidence that the businesses that are doing well on sustainability are the ones that are doing well in their own market performance.”
Mitchell’s message is clear – there are sound financial reasons to pursue a sustainability strategy alongside the moral and ethical arguments of doing so. As he recognises: “The power of money can guide action.”
Mitchell, who will be one of the keynote speakers at this year’s ACT ESG conference on 21 November, joined the IIED a year ago, having begun his career in disaster management, “looking at the impact of disasters on poor people in poor countries, asking the question: ‘How can we reduce the impact?’”
The IIED is a 52-year-old organisation that works at the interface between human development, the climate and the environment. “We are doing a lot of work on reshaping the financial system in order to offer better levels of resilience to the impacts of climate change, which include changing investment practices and acknowledging climate change as a material impact on investment choices,” Mitchell says. “IIED considers the E, the S and the G on the ground, with the communities that those investments are intended to benefit.”
... the businesses that are doing well on sustainability are the ones that are doing well in their own market performance
He works with businesses, investors, governments around the world, civil society and philanthropies to gathering useful insights into how the global financial system and the world of investing needs to go further than it is now. “ESG was once considered a tick-box exercise, but now has to become something that is very much part of the fabric of boardrooms, and the considerations of treasurers,” he says.
“The impacts of climate change are not being felt just in the poorest and most vulnerable countries,” he says. “We are now starting to see them in Europe, the US and on our own shores so that now everyone has a certain level of vulnerability – food disruption, transport disruption, financial disruption. It is now hitting our own pockets.”
Mitchell talks about the need for individuals to take responsibility for their own “carbon budgets”, but adds: “Big companies, investors and treasurers can make choices that will help us make the necessary changes.”
“A company treasurer with a lot of resources to invest can now do so with an economic case behind them, a responsibility and justice case behind them and can internalise that personally so that they can look their children in the eyes and say that they are doing the right thing. This sense of intergenerational justice can help motivate the boardroom.”
Mitchell urges treasurers to take one simple step – write to the president of COP28, the environmental conference that is taking place in the UAE between 30 November and 12 December, and urge them to support the phasing out of fossil fuels. “We need to signal the end [of fossil fuels]. It would be a really big message to the marketplace.”
The ACT ESG Conference 2023: a strategic treasurer’s toolkit takes place on Tuesday 21 November at the Waldorf Hotel, London. Click here to book your place.
Philip Smith is the editor of The Treasurer