by Peter Keers

Companies are now seeing opportunities not only to positively address climate change and sustainability for the community-at-large but also for the benefit of their organizations.

In its 2020 annual letter to clients, BlackRock Funds made a stunning announcement:

“Because sustainable investment options have the potential to offer clients better outcomes, we are making sustainability integral to the way BlackRock manages risk, constructs portfolios, designs products, and engages with companies. We believe that sustainability should be our new standard for investing.”

It’s stunning because, with over $6 trillion in assets under management, BlackRock is the world’s largest money manager. This pronouncement, along with high-profile discussions about climate change at the Davos World Economic Forum meeting mark a tipping point in the global conversation about climate change and sustainability.

For some time, stakeholders – including investors, consumers, and employees – have gained a heightened awareness of these issues. They have been asking pointed questions about how companies plan to respond to not only the risks to the organization but also the risks to the world-at-large.

Previously, companies had perceived the cost of addressing climate change and sustainability as too high. However, according to a study released by Boston Consulting Group, the costs of reducing carbon emissions, for example, are on a downward trend while the negative economic effects of climate change are increasing.

Although some companies may see a short-term cost increases as they start on the road to carbon-neutrality, the long-term risks of inaction more than justify the expense today.

As a part of an evolution toward a carbon-neutral business model, companies must devise communication strategies about climate change and sustainability as soon as possible.

These are some steps to consider:

Assess Risks and Opportunities

Assessing the risks to the company resulting from climate change and sustainability issues must be a top priority. A 2018 survey among nearly 7,000 companies found many were already evaluating the risks, but too often, the scope of the assessments did not encompass important areas like supply chains and customers.

Where there are risks, there are also opportunities. For example, sustainability efforts can not only yield positive results in fighting climate change but also can provide an upside for organizations that market high-demand products as low emission vehicles.

Understand Stakeholder Impact

Driving the risk and opportunities assessment to the next level means determining the unique effects on each stakeholder group. All stakeholders are affected by these issues but not in the same ways. Fine-tuning analyses to fit each group will reveal essential nuances that must be understood to support tailored communication strategies for each.

Design a Multi-Tiered Communication Strategy

With the needs of each stakeholder group in mind, a matrix of customized communications strategies should be woven together to present a cohesive message that

• Emphasizes greater transparency and disclosure
• Articulates the risks to the company posed by climate change
• Short and long-term actions planned to reduce the company’s negative carbon impact.

Companies with a realistic view of the risks posed by global climate change must act now to help not only the world-at-large but also promote their own long-term success and prosperity.