by Lionesses of Africa Operations Department
"If we're lucky, we may become refugees.”
— Philip Davis, the Prime Minister of the Bahamas
At the time of writing, COP26 is into its last days and sadly it is not looking good for any meaningful results. The current feeling is that (non-binding) commitments so far given are driving us to an increase of 2.6 degrees, significantly higher than the 1.5 required to keep the globe relatively stable. The above quote tragically says it all. It is from Philip Davis, the Prime Minister of the Bahamas, one of the many countries on the battle front of Climate Change, as he arrived home disappointed but sadly not surprised by the lack of courage in his fellow leaders. "I invited them to be brave, to be courageous and act…” But as he added: “They don't seem to have any teeth to them.” (here)
Echoing our comments made in our recent articles about agreements being meaningless if they are non-binding, the Prime Minister explained that among his fears is the non-binding nature of the pledges made at COP26, but with more lobbyists from the Fossil Fuel industry at COP26 than delegates from even the largest country (here), what should we have expected?
We highlighted (here) two weeks ago, Christopher Napoli saying of such COP meetings that “structural imperfections are symptoms of a deeper problem of collective action.” It seems that he is being proved right - where “…states will only choose to abate pollution if the short-term net benefit of abatement is positive from a national perspective.” Short term pain for long term gain is always tough but almost impossible for many of our ‘leaders' it seems.
In 1992, nations agreed at the Rio Earth Summit to tackle Climate Change. Yet here we are in 2021 and it appears that there will be no mention of Fossil Fuels (the biggest problem) in the final COP26 ‘agreement’ when we all (well most of us anyway!) admit we are staring down the barrel of extinction.…and in case you wondered - that’s why they pay lobbyists the big bucks!
So when there is such an issue and politicians can’t seem to agree even what time of the day it is, who are we going to call? Sadly it is not that easy, there is no Ghost Busting Team ready and standing by - we have to do this ourselves. Last weekend in our article (here) we quoted Melanie saying: “…the ability to make the transition to greener business and lives lies with us” - but how to do this and where to start?
In July, the EU flexed its huge muscles (here), bringing in: “…a new Carbon Border Adjustment Mechanism which will put a carbon price on imports…so that ambitious climate action in Europe does not lead to ‘carbon leakage’.” Such ‘leakage’ is when costs rising in the west through employment, regulation or taxes result in companies simply moving their production abroad to a cheaper or less regulated country. That destroys the whole point of Carbon controlling efforts obviously! So this import tax (er, sorry - ‘Carbon Border Adjustment Mechanism’) stops all cement manufacturers moving overnight to China or all Steel manufacturing to Australia where Coal is plentiful and still welcomed. But this also means that if you are serious about your own carbon footprint, it may well encourage customers from the EU to now turn to your business, rather than some supplier who take this less seriously. Even although this won’t come in for a few years, this is an opportunity for such Lionesses if we prepare!
Other opportunities are coming too following the Shell court case we reported on two weeks ago (here) that took the COP21 responsibility signed by governments and placed it firmly into the laps of large multi national corporates such as Shell and most importantly also their suppliers and customers. On the back of this we have already noticed an increase in interest from major corporates in the Carbon Footprint and also in the ESG efforts of those in their supply chains.
Many suppliers are now receiving questionnaires relating to their ESG work from these major global names. Armed with the replies the multi-nationals can not only control their future liabilities, but also nail their flags firmly to the ESG pole ahead of any move to separate the good from the bad in any investment league tables. This is great news for the environment, for working conditions and all the other parts that make up ESG.
So how does that impact us? If you supply any big western name you may have already had such a questionnaire, but fear not, what the big companies do, so it waters down. Their suppliers will now start to consider their own supply chain, their’s, and so on. We have to be prepared, this is coming and coming fast. This preparedness will involve routine data collection and so the sooner you start and gain history, the better.
So what are the main ESG priorities that many of these companies look at? We would strongly suggest you look first at your customers’ websites - ESG is becoming so central that your large customers will have all their information there. ESG as we know, stands for Environmental, Social, and Governance, but in reality companies who take this seriously (and all will or will be forced to do so soon) will generally cover 5 broad categories being Economic, Governance, Social, Environmental and Supply chain (yes, we agree ‘EGSES’ doesn’t sound quite so snappy as ESG!).
One major western company (turnover in the US$ Billions) we looked at has the following as their main priorities:
Human capital management: Diversity within the Board, Executive and Employees / Employee Engagement / Compensation and benefits / Health and wellness / Talent attraction and development /Succession planning.
Supply chain management: Vendor code of conduct / Supplier diversity /Supplier ESG issues.
Data privacy and security: Customer, employee and business partner data protection and privacy / Security of information systems.
Product quality and safety: Quality assurance systems / Compliance with / Regulatory requirements / Product recalls / Integrity of distribution system
Environmental emissions and impact: Climate change and energy use / Efficient transport and logistics / Operations facilities management
Ethics and compliance: Compliance with local and international law, including anti-bribery; anti-corruption laws; anti-child labor and anti-forced labour / Whistleblower mechanisms.
Start thinking about your reports in these areas and collect the data ready for the questions that will come. You want to borrow from your local bank? Well they have borrowed from a larger bank, that has borrowed from an international bank that has borrowed from a major DFI if this chart from the review of the UK’s CDC investments (here) is anything to go by:
What is important is that all of those finance houses in that food chain (and it is a food chain because each will be taking out fees), will have to start (if they don’t already) to report back to the bigger fish in more detail what they are investing in, why and how. Appearing in front of your Banker with a portfolio of reports on your footprint covering the above list as much as possible, can therefore only help your cause.
If you read that report you will also note that there are gaps in knowledge that must and will be closed by all DFI’s (CDC we are sure are not alone), so expect reporting requirements to tighten across the board.
So speak to your large customers especially if you are supplying a large retail group or a large multi national. Tell them you are preparing a portfolio of reports on your ESG footprint. We can guarantee that they will a) be very willing to work with you, assist you and maybe even train you in best practices, and b) be very impressed that someone in their supply chain is proactive, taking leadership and thinking of this. All of which will push you up their internal league table of favoured suppliers.
As Melanie (who is passionate about buying green and buying local) recently wrote in one of her GML Blogs (here) (our highlights):
“Are you sourcing sustainably?
Do you practice green procurement? If you are a small business and want to ensure you are sustainable and environmentally friendly in your business practices, then it starts with where you source your raw materials for your products and services. By making conscious decisions to source your goods and services from local suppliers, you are not only making a direct contribution to your local economy, but you are also cutting down on transportation. That’s good for the environment, and good for your business, plus you are supporting other local business owners to grow through your purchasing decisions. But you need to ensure you are asking the right questions when trying to source goods and services locally. For example, does your supplier adhere to your shared ethical, social, and environmental expectations in the production of the materials and services you want to buy? Is your supplier Fairtrade, are they selling materials and services that have been created by people who are being paid fair and livable wages? Are the materials you source and buy made with recyclable, renewable, and/or biodegradable materials that have a minimal impact on the environment, and do not contain harmful or ozone-depleting substances? It’s possible to source sustainably for your business, you just have to ask the right questions before you buy.”
True of local businesses, true of huge multi-nationals. We have highlighted the parts that all businesses will be forced to consider, even those who purchase across national boundaries. They will not be forced by politicians, but by bigger businesses and huge banks who will be looking with ever increasing vigour at their entire supply or customer chains.
As our rather exhausted Prime Minister Philip Davis added to his (we hope not prophetic) words in our title about potentially becoming refugees ‘if lucky’: “If [we]’re not lucky, [we]’ll be swallowed up into rising sea levels or wiped away by more and more intense storms.”
We simply have to find a third way for those on the frontline. We must.
It is not enough anymore to do good (as so many Lionesses automatically do daily in their lives and their businesses), you now have to be seen to be doing good. That requires data collection as this leadership pushes and forces others to collect data by shining a light on the good while exposing the bad, in turn increasing the chances of all doing good for this planet and people we all have a responsibility for - a responsibility that can only be met with ‘collective action’.
If ‘collective action’ has to be forced through increased requirements by larger businesses and banks, then so be it. But let no one say the Lionesses were not ready and not prepared, and certainly let no one say the Lionesses were not prepared to lead! Inspirational leadership is what is required and as so often the case with Lionesses across the globe, Inspirational Leadership is what we shall give.
Stay safe.