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State of Green Business 2017

When we set out to create the first State of Green Business report in 2007, our goal was simple: to step back once a year from the headlines and conferences to assess how, and how much, companies were integrating sustainability into business strategy and operations. Today, as we launch the 10th annual edition of State of Green Business, our goal remains unwavering, those questions still driving our inquiry.


INTRODUCTION


As we wrote in the introduction of that premiere edition:

Amid the cacophony of developments there is progress, but it’s not always obvious or straightforward. And the progress itself can be illusory. Which led us to ask: What’s really going on? Does all of this amount to a sea change in business, or merely a midcourse correction? And, most importantly: Is it actually making a difference to the environment?

Today, as we launch the 10th annual edition of State of Green Business, our goal remains unwavering, those questions still driving our inquiry.

Beginning in 2013, we’ve published this report in partnership with Trucost, now a division of S&P Dow Jones Indices, which provides sustainability data and insight for companies, investors and others. The Trucost partnership allowed us to expand this report to provide a global view on sustainable business, from basic emissions to leadership attributes, such as how many stock exchanges around the world require listed companies to disclose environmental data, or the amount of money being divested from fossil fuel company stocks.

Together, these and more than two dozen other metrics help paint a portrait of the evolving sustainable business landscape — how much activity is taking place, and how much more there is to do.

The first half of each annual report offers 10 trends we believe sustainability executives should be tracking. With the publication of this 10th annual report, we have offered 100 trends in total over the years. We’re proud to have spotted several of these long before they became well known within the sustainable business world, let alone to the larger world of commerce and consumers.

Given the uncertainty of the times, we believe that tracking and measuring corporate sustainability will be increasingly important. Sustainability is under attack in some circles, notably in the United States, where a new administration is poised to halt the progress made over the past quarter century, and perhaps to reverse some of it. By measuring the aggregate performance of U.S. companies — in this case, the companies listed in the S&P 500 — we will be able to assess how much impact the vicissitudes of politics are having in the real world.

Such challenges notwithstanding, sustainable business continues to be exciting and inspiring to watch, as corporate leaders continue to push the barriers of what’s possible, including transforming themselves into net-positive and regenerative enterprises.

That’s the promise of sustainable business that we’re pleased to track and illuminate through our editorial, events and research offerings every day at GreenBiz Group, and which is the basis for the pages that follow.


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It’s hard to imagine a time more hopeful and horrifying for sustainable business.

On the one hand are great achievements and milestones. The Paris Agreement on climate change was ratified in 2016, faster than any United Nations pact in history, a powerful affirmation of the importance the nations of the world attach to combating climate change. Companies continued to ratchet up their commitments and achievements on renewable energy, greenhouse gas emissions, sustainable supply chains, water and land stewardship, the circular economy and other aspects of a sustainable enterprise. Technology continued its inexorable march, accelerating solutions in energy, buildings, transportation, food and just about everywhere else.

And yet.
The indicators continue to be troubling. Global atmospheric concentrations of carbon dioxide are unprecedented compared with the past 800,000 years, according to the U.S. Environmental Protection Agency, even after accounting for natural fluctuations. Global temperatures continue to rise, and the 10 warmest years on record worldwide have occurred since 1998. Other metrics — on coastal flooding, heat-related deaths, wildfires, polar sea ice, biodiversity and more — continue to go in the wrong direction.

The cost to companies and economies continues to rise, too. Air pollution will cause 6 million to 9 million premature deaths annually and cost 1 percent of global GDP by 2060, according to a report last year from the Organization for Economic Cooperation and Development. Meanwhile, more than 650 million people are living without access to an “improved” source of drinking water, according to The State of the World’s Water 2016. Diarrheal diseases caused by unsafe water and poor sanitation are themselves the second biggest child killer — 315,000 young lives extinguished annually worldwide.

In most regions of the world, market consequences from climate change are projected to be net-negative, stated another OECD report. The macroeconomic costs from selected market impacts alone amount to between 1 and 3.3 percent of annual Gross Domestic Product by 2060. That year may sound a ways off, but it’s roughly the same time interval as the one between the end of the Vietnam War, in 1975, and today.

And that doesn’t factor in the economic consequences of the loss of natural capital, from crop pollination and pest control to biodiversity and flood protection, which companies rely on both directly and indirectly. All of which could further roil markets and the companies that operate therein.

The Paris Agreement provided hope that nearly 200 nations would work in concert toward mitigating many of those impacts. But the 2016 U.S. presidential election — and, to a lesser degree, the U.K.’s vote last year to leave the European Union — muddied the waters, promising to slow progress, perhaps significantly. As this report is being published, barely two weeks into the administration of President Donald Trump, there is much about future climate action and environmental protection that is unsettled and unsettling.

Companies and markets dislike uncertainty, of course, so the coming year or two may see head-snapping policy shifts as the public and private sector grapple with two seemingly unstoppable forces: the political momentum of an increasingly nationalist and protectionist world, and the wrath of a changing climate on a civilization ill-prepared to cope. Which force will dominate is anyone’s guess.

And yet.
Corporate innovation, boosted by technology’s rampant pace, is enabling radical new levels of efficiency in materials, energy, water and other resources. The Internet of Things — the interconnected world of tens of billions of objects that can talk to one another, and to us, and make real-time optimization decisions — is enabling buildings, vehicles, power grids, factories and many other things to do far more with fewer resources. Corporate clean power continues to ramp up, with prices ever dropping and efficiency steadily growing. Cities and regions are accelerating their quest to become greener and more resilient, luring corporations to relocate amid transit hubs and culture centers. All of which provide a powerful bulwark against those seeking to slow or reverse progress in sustainability.

And the leading edge of companies are embracing “net-positive” strategies, where buildings, factories and supply chains create more beneficial impacts than negative ones. Interface, the Atlanta-based carpet company and a trendsetter in sustainable business, unleashed a new set of visionary goals last year, which included creating factories that function like the ecosystem they replace, providing such things as water storage and purification, carbon sequestration, nitrogen cycling, temperature cooling and wildlife habitat. The carpet company is starting this audacious journey with a single factory in Australia.

Net-positive buildings are beginning to sprout — a trend that seemed merely fanciful just a few short years ago. Today, the notion of buildings and campuses that generate more power than they use, or sequester more carbon than they emit, is within reach. Meanwhile, netpositive companies are on the near-term horizon.

The trend is as remarkable as it is inescapable: companies shifting from inadvertently negative impacts to deliberately positive ones.

Net-net, will the positives outweigh the negatives — in factories, economies, politics and all the rest — and do so at the scale and speed needed to address the planet’s greatest challenges? How much will proactive businesses counteract heel-dragging governments? Will market forces or ideologues rule the day?

These are among the questions to which we’ll seek answers during 2017, and likely beyond.



To download the full report, please click here.

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