By Carol-Ann Brown, President of The Delphi Group
After less than a year steering the ship at Delphi, I feel fortunate to look ahead to exciting opportunities for our organization, our team members, our partners and clients, and for Canada. Let’s face it, the past two years have not been easy for most of us. In looking back to look forward, I find myself focusing on a handful of realizations that I’d like to share with you.
First off, let’s start with the hard part.
1. The new normal? It’s here. A recent Economist article proclaimed that “the era of predictable unpredictability is not going away…the new normal is already here.” The pandemic has affected a lot of things, and a lot of the changes will likely be long lasting. For example: how we travel, how we work, and how and what we purchase. It has also showcased the fragility in our global supply chains. If there is good to be found, it’s that many of these things have direct connections to getting to a net-zero economy. It’s not a bad thing to have proof positive that we can do things differently, and it’s a reminder that none of us should sit back and wait for change to happen to us. To quote the same Economist article, “The pandemic has shown how industries can be suddenly upended by technological shifts…Any boss who thinks their industry is immune to such wild dynamism is unlikely to last long.” I’ve found that accepting this new normal helps me maintain my optimism and challenges me to be better, every day.
If this is my overall context, my sustainability focus is:
2. Net zero is the story of 2022. If 2021 was the year of setting net-zero targets (which it was, and then some), 2022 will be about how we get there. Planning to execute needs a combination of science, courage, and business strategy. For starters? The Science Based Targets Initiative (SBTI) provides clear guidance on how to approach net-zero targets and a real plan. What strikes me the most is that what we do in the next five to 10 years is critical to getting to net zero by 2050. The mindset needed to manage our new global normal also applies to getting to net zero – what worked yesterday is not necessarily good enough for tomorrow. What kind of company do you want to be in 10 years? The world is changing. To stay relevant, we all need to keep evolving ahead of our competitors, and ahead of where our clients and consumers are.
And on consumers:
3. Underestimate consumers’ influence at your peril. Consumers are changing the face of sustainability- and climate-based opportunities. Five years ago, no one was betting on plant-based protein…and yet the number of people purchasing and investing in meat alternatives has skyrocketed. There are several reasons for this, including health and wellness, as well as concerns about climate change. I fully expect this kind of consumer trend to continue across a range of products and services, including food, transport, fashion, and material goods. Voting with our wallets is going to play a big role in shaping what the future looks like.
If we are going to respond to, and anticipate consumer demands AND focus our business strategies to achieve net-zero, a critical tool has got to be innovation:
4. We are in the decade of innovation, get on board. Cleantech has been my bread and butter for over a decade. But, with net zero in our sights, we need to take a broader view of clean innovation. To be successful, we need a proliferation of not only hard and soft tech, but also business models, policy instruments, and partnerships. We need to transform all the ways in which we operate at the organizational and system levels if we’re going to build a net-zero economy. And as Canadians, we need to take some more risks and be the first buyers of new homegrown solutions, with an eye to deployment. Yes, we need more innovation and solutions, and at the same time we need to adopt those most proven and deploy them at scale to help bring costs and emissions down.
Of course, this requires money and investment.
5. Show me the money? Show us your ESG. Access to financing is increasingly going to be tied to how you perform against sustainability and climate metrics. A good barometer of this? The Glasgow Financial Net Zero Alliance includes financial institutions representing $130 trillion in assets and is committed to accelerating the transition to net-zero. BlackRock’s Larry Fink says transparency is an important element of delivering long-term, durable returns. Mark Carney, former head of the Bank of Canada and Bank of England, has also set in motion initiatives such as the Task Force on Climate Related Financial Disclosures (TCFD) to shine a light on exposure to climate risk (in all its forms). It won’t be long before this risk assessment becomes a basic stress test for most if not all organizations, and determines your access to financing. An increasing range of financial instruments provides preferential terms to those who meet their sustainability targets. For example, Maple Leaf Foods is one of the first Canadian entities to receive a sustainability-linked loan from BMO. Expect more of this in the future.
Money is key and so are markets:
6. What’s old is new again: Trading systems and offsets are back. When I started working with Climate Change Central back in 2005, we were talking about a pan-Canadian greenhouse gas trading system. The Canadian Clean Fuel Regulation, with the latest draft expected in Spring 2022, will be the closest we have gotten to date to creating one in Canada. It’s going to test our long-held assumptions that a national market-based system is an efficient way to get to a lower-carbon economy. It will provide flexibility to those being regulated and incentivize innovation and ingenuity: if you have a good idea and a good offset project, the world is your oyster (assuming you can meet the criteria). If it works, we reduce emissions and are better off economically.
My advice? Pay attention. It’s no coincidence that Bloomberg came out with a global forecast on offsets. This is going to be a telling year for carbon markets.
While a big part of sustainability for us focuses on the climate imperative, we never lose sight of other environmental priorities, of the need to increase circularity in our economy, and most importantly, social sustainability.
7. Let’s get personal. We are only as good as our people – as the saying goes, culture eats strategy for lunch. By now we’re all familiar with the challenges of the Great Resignation and managing a virtual workforce, and we know it’s always been important to pay attention to your team. Covid has taught us to re-center our employees in everything we do. It’s been a hugely transformative year – some would say a wake-up call for many of us – with respect to justice, equity, diversity, and inclusion (JEDI). These aren’t just words to live by, they are principles that should guide us and how we engage with our people, as well as with customers and clients, and with our communities. For us, that meant taking the time in 2021 to do an internal assessment of our JEDI practices. This year, we will work on how to improve them. Watch this space.
This is a great time to think about the impact you have in the world. Do you need and want to have an even bigger positive impact? We are on the brink of some tectonic shifts across all aspects of society and the economy. The leaders and visionaries among us will not only be part of that transformation, but will help to shape it.
Carol-Ann Brown is President of The Delphi Group. To learn more about The Delphi Group’s services in the areas of net zero, corporate sustainability, cleantech and innovation, and green and circular economy, contact us.