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The importance of D&I in the journey to Net Zero

When we think of sustainability for our companies, we frequently head straight to setting and meeting Net Zero targets. But if industry leaders want to stand a realistic chance of achieving a challenging target, we must consider the word sustainability in a much wider context.

The Intergovernmental Panel on Climate Change (IPCC) report published in March shows the gravity of the problems already affecting greater loss of life, livelihoods, the displacement of people and far more so than originally thought. The report’s clear benchmarking gave no place to hide the impact of decisions we take now on the future of society including the impact on our economy. The pace of change has to pick up speed with policy measures and climate finance to bridge the gap for the most vulnerable and a responsibility on all leaders to make sustainability central to their planning. We can already see that in the short term world of politics, commitments are wavering.

Achieving Net Zero in the timeframes being set by governments and doing so in a sustainable way, is urgent. But it requires a much more nuanced and integrated approach by leaders.

What should we mean by sustainability?

Sustainability is absolutely about reaching Net Zero target by reducing carbon emissions and how we will realistically achieve that target needs to be part of a successful business plan. That can only happen by changing how we work. Not easy for any of us but certainly in huge parts of the world that are bearing the brunt of the actions from elsewhere.

Woven through a net zero target is our organisations’ sustainability. The decisions we take might serve us well for today, but are we considering the future generation of employees, investors, shareholders and others. Are we considering our profits by applying ethical decisions to address the impact on the diverse needs of people today whilst also looking to the future.

In talking to corporations and charities on setting and meeting ESG targets, no matter what your business’s makeup, it’s undeniable that even something as seemingly straightforward as striking the balance between remote and in-person meetings can be a tricky one.

Whilst digital is not without its carbon footprint, reducing travel to meetings can seem the most natural move to reduce carbon emissions. But is it the right decision? We know from the pandemic that digital works well for some but not for everyone and there is a growing body of evidence that parts of society were negatively impacted which has increased inequality. So, making a decision on an issue such as meetings, requires us to think differently about the method and pace of reducing carbon emissions alongside the impact on the diversity of people’s needs. Can we in tandem reduce inequality, and if we don’t what impact will our decisions have on the sustainability of our organisation?

It’s worth pointing out here that one solution I often hear when talking about net zero is “offsetting”. That is seen by many as a sensible and necessary solution and even though the “celebrity take a private jet and plant trees” idea has fortunately evolved, there remains insufficient evidence that carbon offsetting is an effective means of achieving permanent carbon reductions. It is incumbent on all of us not to take our eye off the ball of the key goal to reduce our carbon emissions.

When I’m speaking on this subject, I am often told it feels so overwhelming and is a problem that will rely on big changes by governments and the global corporations and industries. Certainly, progress from the complex geo- political decisions that surround the annual COP meetings is absolutely crucial. But we must not forget that taking smaller steps within our control is part of the way society can support sustainable change. Being honest about the challenges and in turn the cost is important and there is certainly no place when tackling climate change for “greenwashing”.

In my own organisation, the Institute of Physics (IOP), we have a role to advocate for sustainable investment into climate research and innovation. I’m currently doing that to establish a new UK Africa research partnership fund. But as an organisation we are also focussed on our own small steps on its path to net zero. Changing utilities’ providers has made a dent in IOP’s own carbon emissions.

So where does this leave those of us on Boards and in leadership roles? We are being required by shareholders to have the data and other information we need to make business decisions for our organisations that take into account ethics and the needs of our people. What is available to help and how has the world moved on in its expectations of transparency and regulatory reporting as a growing part of corporate governance.

How setting ESG led targets can help

Environment, Social, Governance (ESG) is most commonly used in the private sector. There are a number of ESG frameworks and there has been some controversy on reporting accuracy particularly in the USA. However where ESG has been helpful is allowing a stronger and more direct link to be made between those three elements. The “S” part of ESG has been brought into sharper focus and that has been important as the world emerges from the global pandemic, a greater public focus on inequality particularly within the Black community, and vocal climate campaign groups emerging. No matter what our business purpose and model, we are all employers and we know that the job market is highly competitive and there are choices. People are willing to shop around and commitment to sustainability is part of their shopping list.

This is highlighted in some research I commissioned at IOP to understand more about the motivations of the future generation of our employees, physicist members and supporters. Undergraduates from all UK universities offering a physics degree were surveyed and feedback showed that when ranking their expectations of graduate employers, ‘Sustainability and ethics’ received an average score of 6.1 out of eight – more important than ‘status and prestige’ and ‘high starting salary’ which were scored 4.4 and 5.5, respectively. What does this mean for adapting our business model to a changing world?

If you look at the IPSOS survey in September 2020, 86% of people wanted to see a more equitable and sustainable world after the pandemic.

The Business Imperative for Social Justice Today in June 2020 showed that 80% of consumers say companies need to recognise their role in systemic racial inequality.

There is plenty of good evidence – such as McKinsey – showing that diversity and inclusion leads to high performing teams and innovation. Boards and CEOs are seeing the lines between business and society blurring and having a direct impact on growth and profit.

An ESG framework within your own organisation can help. IOP is a not-for-profit. We haven’t used an “off the shelf” model, but we are developing, testing and refining overarching qualitative principles that can act as a prompt and guide for responsible decision making in a way that is robust, transparent and appropriate to our organisation and regulators.

Even as the framework takes shape, it has already helped to shift our internal thinking and decision making. We have chosen to assess our Scope 3 emissions – so we are including those created by our supply chain rather than directly by our own activities and facilities. This adds a layer of complexity, but we think it is right to understand the impact of our supply chain and inform our choices. This is prompting us to ensure that suppliers are not only compliant with relevant legislation such as modern slavery - but have robust people policies such as no zero-hour contracts and paying above the living wage.

ESG is also supporting us to move to an investment policy which recognises the wider range of ethical considerations we must consider.

Another element familiar to many of us working in diversity and inclusion is managing small data sets in our workforce. ESG frameworks that I oversee have prompted IOP to start developing trusted methods of analysis and presentation that allow all voices to be heard whilst building trust with minority groups in society about how their data is managed.

What I see in organisations is a stronger link being made between diversity and successful sustainability, and that socially and environmentally we must make that a growing part of our responsibility as leaders. Talking is not enough on its own and changes can seem small. But the combination of the two can be a powerful contributor to the global challenge of lessening the impact and adapting to the changing climate.

Don’t let complexity stop you in your tracks. Start small and keep it going. It will make a difference. As one scientist said, we have to learn to live on the planet, not off it.

Rachel Youngman has worked as a consultant for charities, government departments, and NGOs. With a background in social justice, she enables companies to meet ESG targets by implementing sustainable strategies with diversity and inclusion at their core.


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