2019 was a pivotal year as global leaders began to recognize environmental challenges as more worrying than economic downturns. Environmental risks dominated the WEF 2020 Global Risks report released in January 2020 occupying the top five sports in terms of risk likelihood and claiming three of the top five spots in terms of risk impact

Top five global risks in terms of likelihood:

1. Extreme weather

2. Climate action failure

3. Natural disasters

4. Biodiversity loss

5. Human-made environmental disasters

Top five risks in terms of Impact

1. Climate action failures

2. Biodiversity loss

3. Extreme weather

The WEF identifies the risk perceptions of global decision-makers annually within five categories – economic, geopolitical, societal, and technological, and this year marked for the first time that environmental dominated a top-five list.

To counter the bleak outlook presented large MNCs began offering big bold plans to achieve a net positive impact on the environment, meaning they will give back to nature more than take each year. Multi-disciplinary collaborations – a theme we highlighted in last year’s report are expanding in scope and ambition, recognizing that systems transformation is needed to solve our gravest environmental difficulties. Meanwhile, companies and organizations reorient innovation efforts to leverage natural systems, thus creating a growing class of efficient and effective “environmental technologies”

Issue #1

Climate change – The UN’s Intergovernmental Panel on Climate Change (IPCC) issued two reports last year – Climate Change and Land and Special Report on the Ocean and Cryosphere in a changing climate. The UN highlighted that fast and aggressive actions are required right now to mitigate climate change risks. In 2018, the UN Environment program reported that to keep global warming within 1.5 C reductions in global greenhouse gas emissions will have to reach 7.6% annually from 2020 to 2030. But global climate control talks in Madrid 2019 failed to set a unified path for government action going forward prompting several business leaders to accept the responsibility for driving the change themselves.

Issue#2

Biodiversity Loss and Ecosystem Preservation

In May 2019, The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem services delivered a report on a three-year UN-backed research project showing that biodiversity loss poses a threat as harmful to human well-being as climate change, though the problem has been under-recognized until quite recently. The report argued that transformative changes are needed on a massive scale to avoid catastrophic losses in the essential ecosystem services provided by natural systems – e.g sequestering carbon, purifying and storing water, filtering pollutants, and providing wildlife habitat. The study revealed that nearly 1 million species are currently threatened with extinction and we are now losing species 1000 times faster than ever before – a scale and pace much greater than anticipated.

Governments, companies, and NGOs have already stepped up their responses. The UN identified 2020 as a critical year for nations to set an agenda of “make or break” actions in the decade to come. “ Some countries including Japan and China have announced net-zero goals. Companies are making their pledges. “Regeneration” of natural systems and “net positive” initiatives are replacing “sustainability” in the CSR plans of many MNCs and the search is on for the means to achieve such lofty goals. As with climate change, the challenge is monumental: to transform the business into a force for preserving, and even generating healthy natural ecosystems.

Issue#3 Plastic Waste

Worldwide production of plastic has reached 300 million tons yearly- equal to the weight of the world’s entire population. Of particular concern is the high proportion of single-use plastic – including 5 trillion plastic bags annually- and the fact that plastic use by volume increased faster in the 2000s than during the previous four decades. UNEP reports that, of the 8.3 billion tons of plastics created since the 1950S, roughly 79% have ended up in a landfill or the natural environment, 12% have been incinerated and only 9% have been recycled. The bulk of disposed plastics – 8 million tons annually- wind up in the world’s oceans. If this rate continues the oceans will contain more plastics than fish by 2050.

Technological advances have greatly increased our access to high-quality data on the scope and scale of microplastics entering the oceans and atmosphere. Those data show that microscopic plastics now exist virtually everywhere, including the food we eat and the water we drink. However, investigations of single-use plastics have moved beyond defining the problem and into finding solutions. More governments are limiting or banning their use and businesses are following suit.

Due to the gravity, scope, and scale of these critical challenges to our environment, companies are rethinking and recalibrating their approach to corporate responsibility and citizens are increasing their engagement. Some of the advances made include:

#1 Companies commit to Net-positivity

Several large scales high profile western MNCs have pledged to replenish more natural resources than they use. For example, Starbucks promised in January 2020 to become resource-positive- storing more carbon and providing more clean water than they use while eliminating waste. In the latest report- The Decade to deliver published by the United Nations Global Compact UN Secretary-general emphasized the need to mobilize the private sector to fight climate change, eradicate poverty and fulfill SDGs by 2030.

Some of the leading organizations are working with their partners upstream and downstream and working together in the search for net positive outcomes. Moreover, they recognize that success hinges on the support of government policies to level the competitive playing field with traditional companies that still adhere to harmful environmental practices. A growing number of companies are engaged in policy conversations about the need to raise taxes and end subsidies for carbon- and resource-intensive businesses. They want to see more support and funding for green innovation and transition to a clean and inclusive economy.

#2 Circular economy gets practical

The CE concepts work on three key principles a) prioritize renewable inputs, b) maximize product use and design for durability, and c) recover by-products and waste. Though elegant in design and promising in terms of recaptured economic value from waste streams, the model has proven difficult to execute. Recently however more effort has gone into making this conceptual model highly practical.

#3 More solutions grounded in nature and science

Nature-based solutions (NBS) tackle socio-environmental challenges by cultivating, restoring, and or managing natural systems. The European Commission seeks NBS initiatives to more diverse, natural, and natural features and processes into cities, landscapes, and seascapes through locally adopted resource-efficient and systemic interventions. These solutions often prove to be lower in cost and more effective than technology-based human developed solutions. Tree planting is a popular NBS used by companies and countries globally to offset carbon emissions.

#4 Finance deepens the conversation on climate risk and opportunity

Traditionally the companies have focussed on financial risks, technology risks, or reputational risks but going forward they must focus on chronic and acute risks of the physical changes in the environment. The greatest business risks identified are water stress, heat waves, and wildfires linked to increasing global temperatures. Peter Bakker, President of the World Business Council for Sustainable Development (WBCSD) sees the recent changes in financial reporting is critical for the ongoing viability of the capitalist system. He advocates a triangular solution 1) Every company must use science-based targets for climate and biodiversity 2) companies must follow TCFD guidelines to integrate climate risk in governance management and disclosure and 3) the financial system must develop standardized ESG indicators that are comparable across companies and industries.

#5 Millennials Engage

Motivated by the growing reports of a radically transformed future world today GenY and Gen Z are voicing their concerns and making their choices about jobs and purchases in ways that clearly distinguish them from the elder generations. One dramatic sign of the power of today’s youth is teenage Greta. Slowly more governments are showing signs that youth voices matter and are building more diverse and inclusive workplaces.