At BDO’s Global RETHINK Festival 2020, an annual get together for the 90,000 plus employees and firms across 167 countries to share ideas and insights around helping clients, Marianne Rygvold Karlsen, Vincent Bernard and myself were invited to present a ‘Digital Agora’ on the value of sustainability. Agora, for those not in the know is a Greek term for ‘meeting place’.
We presented BDO’s new-to-market sustainability tools, which include the Sustainability Insight Tool, the Sustainable Cities Tool and the Energy Transition Diagnostic Tool. The tools have been designed for our clients to help them understand where they are on their journey to integrating sustainability practices within their organisation.
BDO has recognised the value of sustainability, both in terms of addressing UN Sustainable Development Goals but also in terms of the value that it can bring to a business. We’ve also recognised the important role and impact BDO can have in supporting our clients on their journey.
Integrating sustainability into an organisation’s DNA, can provide risk mitigation and governance measures to manage global economic, environmental and social ‘shocks’. Covid-19 has been a stark reminder of how fragile and exposed we are to events sometimes seen unthinkable.
THE VALUE OF SUSTAINABILITY
There is a variety of research and facts showing that sustainability represents value for businesses. Whilst nothing is conclusive, many believe it improves financial performance, builds customer loyalty and is attracting and engaging employees.
The UN Sustainability Development Goals (SDGs) are fast becoming the common world language to ensure a sustainable future, both in society and in business. They are also becoming an integrated part of how we do business and is helping to provide a pathway to align for the future.
Sustainability is increasingly becoming a licence to operate. A permission to grow.
But as with past revolutions – be it the industrial or the digital – there were winners and losers, so it will be imperative for all companies to respond to the global call for change.
Businesses will need to rethink their operations and purpose to align with new world parameters that are pricing in externalities that were once not considered.
THE SIZE OF THE BUSINESS OPPORTUNITY
The ‘sustainability’ transformation will ensue enormous opportunity across the world.
At the 2020 BDO Global Natural Resources Conference, the keynote presenter, Fraser Thompson from AlphaBeta said that the new sustainable approach could transform industries and create significant business opportunities. They quantified that opportunity to be $US 3,565 billion in food, land and ocean use, $US 3,015 billion in infrastructure and the built environment and $US 3,530 billion in the energy and extractives socio-economic system, which amounts to over 10 Trillion dollars. This translates to huge job opportunities which AlphaBeta estimates to be approximately 395 million jobs across the three socio-economic systems in the next 10 to 15 years[1].
Recent government announcements across the globe which will likely progress the transformation towards the SDGs and/or reaching the Paris Agreement, include the EU allocating 30% of the EUR 2021-2027 budget to fight climate change and a new EU climate law which aims to transform political promises that the EU will become climate neutral by 2050 into a binding obligation[2]. In addition, the Chinese government recently announced a jaw-dropping plan to be net-zero by 2060 which was closely followed by South Korea, Japan and Britain all pledging to be net zero by 2050. Such commitments will have huge ramifications for trade and capital allocation, some of which is being felt immediately[3].
The SDGs represents a balance of both economic, environmental and social aspects. The fifth SDG, gender diversity and women’s equality, could add US$ 12 trillion to global growth by closing the gap. This would be the equivalent in size to the GDP of Japan, Germany and the United Kingdom combined[4].
Whilst this could be cast as just another theoretical number, in fact, we are seeing the market actually act on this. The largest bank in Norway recently terminated their business contract with one of the most respected law firms. The reason being was that they couldn’t document nor prove a positive change in gender equality amongst their equity partners.
A final example of how the tides are turning on lax business practices is with the announcement of Walmart, the world’s largest retailer who has set the goal to become a regenerative company with net zero emissions by 2040.
These ESG (environmental, social and governance) parameters are setting a new tone for all businesses going forward, meaning that all companies must pay attention and start to reflect on whether their business will pass the ‘ESG’ test.
WHERE TO NEXT?
Both businesses and public sector are essential in reaching the SDGs, and as a leader in our markets, BDO plans to help our clients in their approach to sustainability and the journey of value creation that aligning to the SDGs can create.
BDO has built a ‘toolbox’, that will evolve over time that will help businesses understand where they are on their journey to be a sustainability-ready company. It is intended to help educate, inform and unearth areas of opportunity.
Below is a brief summary of the three NEW BDO sustainability tools available to all companies to take.
TOOL ONE:
SUSTAINABILITY INSIGHT TOOL
The tool reveals the maturity of a company, regardsless of industry, product/services or geography, regarding their sustainability focus areas. It provides an assessment on sustainability readiness level guided by six categories proven to help drive SDG achievement. These categories cover all aspects to fully evaluate sustainability efforts against the most significant and strategic business goals.
The SI Tool addresses how the SDGs may impact their business, both in terms of value creation through internal measures, supplier requirements, development of products and services and in their operations and business models.
The web-based tool gathers client data, and when completed will generate a personalized client report, with automated digital advice on the company’s sustainability readiness level. This contains relevant benchmark data which can be reflected upon, measures that could be taken and tips on further support for sustainable development and value realisation.
At BDO we believe insights realises value. The tool provides custom insights on a company’s performance, how it acts and what plans they have for the future. With better knowledge on the challenges, a strategy can be developed around integrating sustainability into the core business.
TOOL TWO:
SMART & SUSTAINABLE CITIES TOOL
BDO Smart & Sustainable Cities initiative was launched 2 years ago with BDO firms already working with municipalities in Belgium, Canada, Netherlands, Norway and Switzerland.
The tool follows the philosophy that ‘smart/digital’ is a means of reaching many of the prescribed sustainable development goals.
The tool is a web-based survey that takes about 10 min and is structured around the SDGs, digital transformation, vision of the future and resources of the city. It is aimed at ‘city/municipality stakeholders’ to provide a vision for what a city’s ambition could be. The output is a personal report tailored to the context of the city.
The BDO ‘Smart & Sustainable Cities Tool’ is backed by a task-force of global subject matter experts who cover – strategy/master planning, SDGs, digital infrastructure, financing – including PPP (public-private-partnerships) and ESG (environmental, social, governance).
A recent case study of where the tool has been adopted is with a United Nations programme called U4SSC – United Four Smart & Sustainable Cities. BDO is assisting 21 municipalities measure progress towards the application of the SDGs.
TOOL THREE:
ENERGY TRANSITION DIAGNOSTIC TOOL
12 months ago, at the BDO Annual in Hamburg the Global Natural Resources Industry Group won the Dragon’s Den competition and promised to commit the winnings towards growing the renewables practice. It was then we began thinking about what we could achieve that could have the greatest impact.
The red thread that runs through our three sub-sectors of Oil &Gas, Mining and Renewables is Energy Transition. It is the mega-trend of our lifetime that will transform our economic systems. We felt that this needed to be addressed as energy is a concern for all companies.
The tool is a survey that takes approximately 10-15 mins to complete and is structured around 5 pillars. Awareness & Deployment of Alternative Energy; Opportunity Prospects for Energy Efficiency; Strategy & Commitment to Energy Transition; Monitoring and Reporting of Energy Use.
The output of this is a Personalised Benchmark Report that will provide direct feedback on where the participant lies on their journey to low-carbon in relation to their industry peers, or the overall cohort.
The tool is housed on a dedicated BDO Global ‘Energy in Transition’ website – alongside a page dedicated to all our thought-leadership, insights and services that can help raise awareness around the changing business environment and how this may affect our clients.
In short, we believe there are three key areas we see all companies being affected by the energy transition in the near future –
- The increase in ESG reporting demands by investors and stakeholders. This will have ramifications on how companies behave in the near future.
- The increasing need to report on climate-related risk – as stipulated by the Task Force for Climate Related Financial Disclosure. This is to promote the ethos that “what can be measured, can be managed”.
- And finally, the increased need to lower emissions across the supply the chain. With the introduction of carbon taxes and tariffs across the world, this is likely to disrupt many industries and companies.
AMBITION TO ACTION
It’s exciting to see that BDO is working to move from ambition to action by leveraging these new tools and the global network of 90k+ people across 167 countries.
Our global reach and diverse skill set puts us in a unique position to support our global client base in reaching and thriving in a sustainable world.
Sustainability is a business opportunity! Our toolbox will help unlock the value!