The key to building organizational credibility

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July 7, 2023 - Organizations face increasing challenges as they navigate the ramifications of climate change and unprecedented disruptions in global supply chains. It’s a critical time for organizations to reframe their approaches, unlock new opportunities, and help mitigate future disruptions through new business models rooted in the drive toward sustainability.

Reframing a challenge into an opportunity

Increasing temperatures, droughts, flooding, and other climate impacts have slowed down operations and increased costs for organizations around the globe. The National Centers for Environmental Information highlights that from 1980 to 2023, the total cost of weather and natural disasters exceeds $2.510 trillion.

Further to this, many early-stage businesses are still establishing formalized practices relating to continuity management and climate-risk-related events, worsening widespread disruption. For organizations that place innovation and new business models at the center of their strategy, understanding their impacts and role in the energy transition represents a massive transformational opportunity.

Adapting to climate risks

To better understand climate-related risks and opportunities, organizations need to conduct an impact analysis based on credible climate forecasting data to understand where infrastructure, operations, and suppliers may be exposed. Points throughout the value chain can then be prioritized based on their risk exposure, the timing and speed of climate risks, and the level of criticality.

Leaders can then engage business sites and suppliers to understand their awareness, management systems, and ability to adapt, gaining a more comprehensive view of vulnerability and how organizations are able to respond to disruptions. These steps are crucial to managing and reporting on climate-related risks to impacted stakeholders. It’s also important to begin developing and implementing carbon-reduction plans to manage transition risks as the world moves towards Net Zero.

Building credibility through sustainability

The potential pitfalls of ignoring climate risks are not limited to infrastructural issues. Investors, customers, and insurers increasingly view climate disruption as a material risk that requires a structured, scalable framework of practices to mitigate disruptions.

Institutional investors have begun factoring climate risks into their rating processes. Governments and leading organizations around the world are also rapidly adopting laws and reporting requirements around climate impacts. For example, the US Securities and Exchange Commission recently proposed pending reporting, which is aligned with the reporting framework developed by the Taskforce for Climate-Related Financial Disclosures, that will eventually be required for public companies to disclose their climate-related risks.

Organizations are best served by seeing these changes as a unique chance to strengthen credibility with their stakeholders. Companies that can offer examples of sustainability success will be better positioned for growth and investors seeking opportunities that contribute to the clean energy transition. Developing the systems and skills to support these new expectations requires near-term commitment, focus, and investment, which will support long-term, durable resilience and financial gains.

Sustainability represents a huge transformational opportunity for organizations. Those that put innovation and new business models at the heart of their approach will be well placed to unlock the future benefits of this opportunity and drive change across their organizations and value chains.

This article was originally published in Triple Pundit on November 17, 2022 under the title Building Organizational Credibility Through Sustainability. The content has been modified and condensed for this blog. Refer to the full article for Ryan’s complete insights on this topic. For more on sustainability topics that should be at the top of your organization’s list, visit BSI’s Experts Corner.