The issue of climate change has defined the sustainability agenda since the Kyoto Protocol 15 years ago. However, the lack of progress at a multilateral level - most recently at last year's Durban summit - together with reluctance to hike energy costs at a time of austerity, suggests we need to re-frame the debate if we are to address the challenge of maintaining a viable future for the planet.
We are moving away from the top-down solutions produced by global summits towards more organic, bottom-up approaches. Individuals and communities, businesses and governments need to find their own solutions that increase sustainability and, in an environment of increasingly scarce resources, deliver benefits by both reducing resource consumption and increasing energy efficiency.
This new direction for sustainability poses some important questions.
Does society care enough about sustainability to make the changes needed? Despite the fact that popular scepticism towards climate change is rising in the UK, at a practical level we are moving in the right direction. Consumers are responding positively to energy-saving opportunities through, for example, interest in solar panels. A recent survey we conducted suggested that 42 per cent of consumers would be interested in smart white goods that maximised usage of cheaper tariffs.
Can business leaders step up to the mark? I am optimistic. Executives are increasingly concerned about sustainability and climate change today (58 per cent), according to Ernst & Young research. Fifty-four per cent regarded the issue as an opportunity, versus 22 per cent who believed it was a threat. Sixty-eight per cent said their business was not taking full advantages of the opportunities offered by the green agenda.
Sustainability is a key driver for many organisations, with experts saying that the percentage of firms that are excellent at sustainability has risen to 21 per cent. There are clear practical business benefits to going green, both for business performance and national prosperity.
A commitment to sustainability can deliver increased operating efficiencies, enhanced brand perception and improved investor perception for businesses.
As carbon prices and the cost of resources continue to rise, early action by companies and governments reduces future liabilities and increases energy security.
One of the key questions for a global accountancy firm such as Ernst & Young is how corporate and public sector reporting and accounting should evolve to help to drive the sustainability agenda. Or, to rephrase the question, how can stakeholders be certain businesses and governments are as sustainable as they claim they are?
A recent Leeds University survey of 4,000 corporate social responsibility reports identified 'irrelevant data, unsubstantiated claims, gaps in data and inaccurate figures'. This is clearly not good enough.
Independent verification can increase reliability, ensuring that firms receive credit for their actions and are held to account with regard to their goals. Appropriate application of accounting principles and evaluation of potential future liabilities, which may not appear on the balance sheet, will support the drive to greater sustainability.
Challenges remain in creating globally agreed, relevant and transparent standards for the new sustainable economy. At Ernst & Young, we are committed to developing solutions that are both rigorous and imaginative.
Addressing sustainability now is even more relevant than before. It has the potential to drive corporate and national growth - a critical factor in a world where economies are stalling.
Thought Leadership credentials
- E&Y's Entrepreneur of The Year programmes in the UK and Ireland encourage entrepreneurs who are driving growth in employment.
- E&Y is working with the Private Equity Foundation to help improve the lives of young people and with the Social Business Trust to accelerate the growth of social enterprises.
- Recent administrations involving distressed businesses such as Focus DIY and TJ Hughes have saved hundreds of stores and thousands of jobs in the UK.