rethink sustainability

    Ethical leadership for companies: guiding the green transition

    Ethical leadership for companies: guiding the green transition

    Article published on rethinkeverything.ilsole24ore.com in partnership with Il Sole 24 Ore

    Profit must now come hand-in-hand with responsibility. That does not just mean responsibility towards shareholders, but to all other stakeholders: employees, suppliers, customers, communities, the climate, ecosystems and the planet. Supporting companies in this transition is the mission of Italian enterprise NATIVA. It defines itself as “a regenerative design firm that supports companies in a radical business evolution, accelerating their transition towards regenerative economic models”1.

    Founded in 2012 by entrepreneurs Eric Ezechieli and Paolo Di Cesare, NATIVA works with firms spanning all sizes and sectors. Its clients include Intesa Sanpaolo, OVS, Danone and Scarpa, and its wide-ranging projects create concrete and substantial changes to the way corporations work.

    Read also: Being a sustainable company means being a responsible company

    Modifying internal governance processes, involving stakeholders in corporate decision-making and increasing transparency are just three examples. Others include improving resilience in the face of climate change; working to steadily reduce the use of fossil fuels in favour of renewables; involving all parts of the supply chain in sustainability objectives; applying circular economy principles at the product design stage; converting waste into resources; and making use of innovative financial instruments that can sustain such development. It goes beyond just compliance and legal requirements.

    In 2022, it launched the CO2alizione initiative with Italy’s Sustainable Development Foundation to support corporate transitions towards climate neutrality. Around 90 Italian companies have already signed up to change their articles of association

    NATIVA has been a benefit corporation since 20162. This legal status is reserved for firms that have the explicit aim of creating value for society and the environment, in addition to making a profit. Its work has included helping financial firms such as credit institutions and asset management companies create offerings centred around environmental, social and governance considerations. It also assists other companies in accessing these products: it contributed to the issuance of over EUR 334 million in sustainability-linked bonds in 20223.

    Guiding companies towards identifying sustainability objectives is one part of what NATIVA does. Empowering them with programmes to measure and improve their performance is another part. In 2022, it launched the CO2alizione initiative with Italy’s Sustainable Development Foundation to support corporate transitions towards climate neutrality. Around 90 Italian companies have already signed up to change their articles of association4.

    “Conversions” to corporate sustainability is what consumers are increasingly calling for. But this creates a risk of greenwashing. Ensuring companies’ climate claims stand up to scrutiny is paramount for NATIVA, and it sees a scientific approach as the way to do this. “Detailed measurements of a companies’ activities, both good and bad, help avoid false claims and begin a process of continuous improvement”

    “Conversions” to corporate sustainability is what consumers are increasingly calling for. But this creates a risk of greenwashing. Ensuring companies’ climate claims stand up to scrutiny is paramount for NATIVA, and it sees a scientific approach as the way to do this. “Detailed measurements of a companies’ activities, both good and bad, help avoid false claims and begin a process of continuous improvement. We must remain conscious that the transition towards sustainability will be a long one. There will be complex sectors that need more incentives and more help, as well as companies that will be further ahead and can set an example for others.”

     

    The importance of an equitable transition

    NATIVA’s work over the past decade is in line with global commitments to the environmental and social aspects of a green transition. Companies are being called upon to play a key role in these changes, and more and more of them are adopting measures to reduce their carbon emissions in the face of scarce resources, increasingly frequent natural disasters and consumer demands, according to an International Labour Organization (ILO) report from late 20225. The report identifies various factors driving companies towards a more sustainable environmental footprint, including new laws regulating transport emissions and sustainable resource use, green procurement standards, sustainable business models and remote working. The willingness of entrepreneurs and the expectations of workers are key elements in encouraging companies to change, the ILO adds.

    Read also: How can AI speed up the decarbonisation of business?

    Nine in every ten companies say they have taken action to support the green transition, according to a Eurobarometer survey carried out for the European Commission in 20216. There is variation within the continent – 99% of firms in Norway claim to have made changes, compared with 58% in Albania. But initiatives are widespread; most companies in middle- to low-income countries outside Europe are adopting measures to support the environmental transition, the ILO study shows. Large companies with better access to green technologies and more binding legal obligations are more likely to have adopted measures promoting the efficient use of resources and to be offering eco-friendly products and services. Many micro, small and medium-sized enterprises are working on ways to save energy, and to more efficiently manage waste and resource use.

    There are still obstacles to be tackled. Multinational companies face uncertainty over governments’ climate policies, relatively limited availability of green technologies, as well as doubts around returns on investments. Small and medium-sized enterprises have issues with access to funding and skills, may lack information and expertise on innovation, and are seeing inconsistencies in the application of standards.

    Investors, other stakeholders and regulators increasingly expect companies to play a more responsible role in accelerating the transition, and an innovative new legal framework is providing ideas and tools to help them do this

    Transformational governance

    Investors, other stakeholders and regulators increasingly expect companies to play a more responsible role in accelerating the transition, and an innovative new legal framework is providing ideas and tools to help them do this. The Transformational Governance initiative launched by the UN’s Global Compact creates a non-binding agreement to encourage companies worldwide to adopt sustainable policies. It already has around 17,000 signatories.

    The business world is being called upon to promote genuine ethical leadership built around truly sustainable choices. Doing so will create trust between private institutions and the public sector, as well as between private institutions and civil society

    The business world is being called upon to promote genuine ethical leadership built around truly sustainable choices. Doing so will create trust between private institutions and the public sector, as well as between private institutions and civil society. It will also bring about the change the planet needs. Sustainable governance secured in place by corporate management tools will provide the basis for concrete changes in a company’s direction. We at Lombard Odier firmly believe that sustainability is profoundly changing the risk-reward profile of investments in financial markets. We believe that the global economy is moving towards a model that is circular, lean, inclusive and clean: the CLIC® economy.

    It will be a significant change affecting multiple sectors, including energy, materials, agriculture, food and land use. Our philosophy is rethink everything®. Companies that know how to meet the challenge, to ride the transition like a wave, will also be capable of evolving their own business.

    We specialise in identifying companies that are creating sustainability solutions for the future; those that have the right vision to adapt to the new CLIC® economy. Guiding them along a path of sustainable investment will generate growth that does not put the planet at risk.

     

    NATIVA | Embrace Radicality and Evolution Will Flow (nativalab.com)
    Nativa — Società Benefit (Benefit Corporation), a legal status for the companies of the future (nativalab.com)
    2022_Annual_report.pdf (intesasanpaolo.com)
    Home — CO2alizione
    wcms_874026.pdf (ilo.org)
    Écologiser les lieux de travail: Les entreprises ont un rôle clé à jouer dans la transition verte (ilo.org)

    Important information

    This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

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