Opinion – Why? Economês in good Portuguese: Green economic recovery and the role of companies

The recently published Stockholm +50 report presents clear evidence that we are experiencing a systemic crisis: planetary and humanitarian. According to the report, since 1972, only 10% of the hundreds of sustainable development goals have been achieved or made any progress.

In the same vein, the 2019 Intergovernmental Panel on Climate Change (IPCC) special report shows that recent trends in emissions and the level of international ambition indicated by nationally determined contributions (NDC) within the Paris Agreement are not consistent with the plan. to limit global warming to less than 2°C. At this time, the average annual global temperature is about 1°C warmer than pre-industrial levels.

This increase in temperature has caused extreme phenomena in different parts of the planet, such as reduced productivity in agriculture, rising sea levels, loss of biodiversity, changes in rainfall patterns and water availability; and increase in floods and floods in urban centers. The socioeconomic impacts related to hunger, poverty, increased inequality, poor health, among many others, are devastating. More than a million people living in coastal regions were forced to leave their homes due to rising sea levels and storm surges. A World Bank study estimates that around 17 million climate migrants will leave Latin America by 2050 to flee extreme weather events.

Associated with the planetary and humanitarian crises, the economic crisis installed in the world after Covid-19 only reinforced the certainty that the economic recovery could not be based on “business-as-usual” and fossil fuels.

Green economic recovery has been considered the only possible solution to reverse changes in climate and ecosystems, as well as negative impacts on people’s health and well-being. The big challenge is not related to knowledge, technology, policies or aspirations. We know what needs to be done, but we need to act.

In this context, organizations can be seen as causes and solutions in the search for sustainability in the economic recovery. Urgency requires action, but how to act? Several companies, especially small and medium-sized ones, have been “skating” in defining the process of integrating sustainability into their strategy.

In the organizational context, a good starting point is the development of a systemic diagnosis of the environmental, social and economic impacts generated by the company throughout its value chain. A systemic diagnosis also considers the different perceptions of stakeholders and the surrounding reality. After all, no company does well consistently and perennially in a country that is doing poorly. It is also necessary to assess regulations, industry standards and best practices. Then, develop a risk and opportunity analysis and integrate sustainability strategies into business strategies.

But what are sustainability-oriented strategies? They are the choices of companies that aim to create shared value considering the long term and ecological, social and economic factors —internal and external. Integrating sustainability issues into business strategy is nothing new. In a recent article on the topic, we found that this began to happen as global competition increased in the 1990s, when capitalism was being redefined as capable of meeting the needs of the world. Sustainability also came to be seen as a strategy compatible with resource efficiency, image and value creation. In the 2000s, it was already said that environmental and social problems would be the main motivators for organizational innovations.

There are countless possibilities, but in aggregate it is possible to identify four major groups of strategies that generate shared value: strategies to combat pollution, strategies for managing the life cycle of products and services, strategies for green innovation and sustainability vision strategies. The assumption is that these strategies are considered together, functioning as a portfolio. This sustainable value creation model was developed by professors Stuart Hart and Mark Milstein in 2003 and has inspired both academics and managers to advance the sustainability agenda. According to the model’s proponents, such strategies and practices have the potential to reduce costs and risks, improve the company’s reputation and legitimacy, accelerate innovation, diversification and repositioning, as well as crystallize growth paths and trajectories. In short, all “pay-offs” of vital importance for the creation and distribution of value to the various organizational stakeholders.

There’s no question: as economies reorganize, we must ensure that companies develop long-term strategies that are greener, more resilient and more inclusive. Therefore, decision makers must recognize their essential role in this agenda, after all, decisions are made by individuals. Therefore, the importance of developing skills oriented to sustainability. But that is a topic for another text.