A host of EU nations have revised their 2030 sustainability goals to be even more ambitious. Great news, sure. What does this mean for businesses and talent, though?
Whilst there are huge opportunities to provide and develop solutions, there are also challenges in transition.
These moves come following a request from The European Commission asked each member state to submit an updated strategy for 2030, to align with the Fit-for-55 and REPowerEU energy packages.
Two notable examples include Italy and Portugal. The Italians have increased their targeted green energy use from 55% to 65%. This means that nearly two thirds of their energy will be renewably-sourced.
Portugal, meanwhile, has more than doubled its goals for solar and hydrogen capacity. This sits in line with their wider commitments to decommission natural gas-fired power plants by 2040 and possibly become carbon neutral by 2045.
The pressure on governments to bring about these changes is high. The media and public scrutiny on the efficacy of any purported changes is intense. This leads to a situation where real, meaningful change is being forced at pace.
This has led to strict measures being passed onto businesses. The EU has passed into law directives that would:
- Require large businesses to carry out due diligence to identify impacts on human rights and the environment
- Enforce those businesses to report publicly on the measures they have taken
- Fine businesses who do not meet their commitments
Whilst many agree that change is necessary, what does this mean for businesses? What are the opportunities and the threats during this transition and what does it mean for the jobs market?
The Impact on Businesses
‘Evolve or die’ comes to mind, doesn’t it? A touch dramatic perhaps. Instead, we can see a chance to develop new skills, grow news industries and face the future together.
The opportunities are well-publicised. Businesses that can effectively showcase their green credentials can distinctively set themselves apart in the market. This not only provides a clear competitive edge economically, but also aids in attracting talent. Indeed, a growing number of people are now holding sustainability high on their priority list when looking for new roles.
Sustainability measures often offer additional perks such as cost reductions due to energy efficiencies, optimised supply chains and reduced waste costs.
It goes without saying that the businesses who are riding the wave of energy-efficient, sustainable solutions are benefitting from the new market opportunities that their innovations create.
Finally, there is significant investor appeal in this area. The importance of environmental, social and governance (ESG) factors can’t be understated. Businesses that prioritize sustainability are more likely to attract investment, as sustainable practices are seen as indicators of long-term viability and resilience.
Conversely, there are also very real and present dangers for businesses.
With governments implementing stricter regulations, compliance becomes a challenge. Meeting standards can come with high associated costs as restructuring is often necessary. These changes can also have various knock-on effects with disruptions to supply chains, for example, presenting a threat to operations and to the organization as a whole (temporarily at least).
A key threat is to the reputation of a business. Global sustainability is, of course, a hot topic for both the public and the media. As businesses grapple with the demands placed upon them, failure to change at break-neck speed is very often met with aggressive, public condemnation.
There’s often a limited understanding of the time required to enact changes. This lack of awareness, coupled with the pace at which news travels today, can leave businesses facing negative publicity and potential loss of customers before they have even had the chance to respond.
How does a business transform in these demanding circumstances? Business Units must maintain profitability whilst embracing sustainability.
In short, you have to get ahead of the game with clear communication and defined objectives.
Tell people (the public, staff, investors, etc.) what you are doing, why you are doing it and how long you expect it to take.
The process to get there involves internal audits, stakeholder management and strategic collaboration with experts in the field. This last point is critical as it lends credibility to any changes a business implements.
Partnerships are proving effective already. For example, the automotive industry is making use of the SAP Industry Network. This allows businesses of all sizes to “Overcome the challenges of disconnected, fragmented business processes by leveraging data from an industry network to predict business risks and make better, faster decisions.”
Among the benefits of this data sharing solution are increased levels of digitisation, optimised processes and actionable solutions to help reduce carbon footprints.
Other collaborative solutions include Product-as-a-Service models (PaaS). This is based on the idea that products can have multiple life cycles. A step away from linear economies, where products are offered in subscription models that are offered with services attached. Physical products would go through a recycling process at the appropriate times, but the customer is retained with updated products and services as time goes by.
For example, Philips rents lightbulbs to some airports. This allows some interesting benefits, including:
- Raw materials can be recycled at the end of the product life cycle
- Cost savings to be offered to the client
- Maintenance to be covered by the provider
- Greater customer loyalty fostered as a result
These are just a few examples. There are many businesses introducing a range of solutions, including:
- Shared economy models
- Decentralised energy production models
- Sustainability as a Service
- Bio-based models
- Carbon Capture and Storage Businesses
Once introduced, sustainability measures should then be delivered and maintained via clear and direct actions and communications. Training, reporting and progress monitoring will all contribute to this goal.
The Jobs Market
The global shift to greater sustainability presents huge opportunity. New markets and the new jobs that go with them are all very exciting places to be. What about those experienced heads from other industries whose services are now under threat?
This transition presents an opportunity for workers in outdated sectors, such as fossil fuels or high-polluting industries, to transition into sustainable sectors. However, reskilling and upskilling programs will be crucial to equip workers with the necessary skills for these new roles. Governments, educational institutions, and businesses should collaborate to provide training programs and support workers in navigating this transition.
Whilst upskilling may be necessary in many areas, that is not to say that there isn’t a huge bank of transferrable knowledge available. Many skills from outdated sectors can be valuable in the new sustainable economy. For example, workers with expertise in engineering, project management, operations, logistics and finance can find opportunities in renewable energy projects and sustainable infrastructure development.
Equally, leaders in these sectors can pivot into a ‘new’ industry that seems set to effectively occupy the space they were once in. That knowledge and expertise is a highly valuable resource and potentially transformative to startups.
This sort of knowledge transfer will represent a positive collaboration between the old and the new, bridging experience gaps and accelerating the transition by leveraging the expertise from different industries.
Ultimately, governments may set these lofty goals, but they play a central role in their actual success as well. By providing reskilling programs, recognizing transferable skills, promoting entrepreneurship and fostering collaboration, governments can ensure an inclusive, equitable and aligned transition.
The story has only just begun. Where it will take us is as exciting as it is challenging. With continued concerning news reports on the environment, making a success of these commitments is increasingly crucial to us all.