PARIS: Senior government and corporate leaders revealed their smart strategies for low carbon growth at the Business & Climate Summit, a principle event of Climate Week Paris which was organized by The Climate Group, during which Nestle said its green activity is "simply good business" sense that is attractive to investors.
Introducing the session on low carbon policy, Paul Simpson, CEO, CDP, asked the companies gathered how they are specifically engaging with climate action. Colin Melvin, CEO, Hermes Equity Ownership Services, said a critical area for the global responsible asset managers is "longer term perspective", as the company recognizes the future risks of climate impacts and subsequently the value of their clients' investments in the long run.
José Lopez, Executive Vice President, Nestle has experienced first-hand how the financial sector is looking to the longer term, through the ways it has begun engaging with his company. He said the company's "number one investors" are asking about the results of Nestle's environmental commitments and looking beyond IRR, earnings and dividends, because "they have options out there, so they go for companies that care about the future and that contribute to society as well." In order to attract investment and create value for shareholders, he said: “We have to find way to create value for society at the same time."
For a company like Nestle to make a positive environmental impact, Jose Lopez said it is "relatively simple", listing the following instructions: set targets, align objectives, allocate capex - of which he said Nestle uses a shadow price for environmental impact on carbon and water.
LOW CARBON PATHWAYS
Another way big businesses can reach their low carbon goals is investing heavily in energy, according to Rudolf Staudigl, President & CEO, Wacker Chemie, who proclaimed: "I’d like to stress that the solution to the problem we're all talking about is renewable energy, energy storage and energy savings." Referencing the falling cost of solar energy in particular, he defined a compelling economic case for the clean technology: "Output in terms of solar panels for energy per dollar spend has been increased significantly."
Shifting the conversation to the cost-effective elements of a 'circular economy' - which is one where we recycle more than we produce to slow down consumption of raw materials - Jean-Louis Chaussade, CEO, Suez Environment, explained “the cost is much less than what you need to produce virgin new materials", but suggested the fastest way to transition to this more sustainable economy is with a price on carbon. If we don’t, he warned, "we won’t have the long-term signal companies need in order to make new investments in new systems."
Louise Metivier, Assistant Deputy Minister for Climate Change, Canada certainly understands the pressures of producing bold policies. Canada submitted its INDC last week of a 30% emissions reduction target to below 2005 levels by 2030, which she said is, "very ambitious for us". She said Canada is currently at its lowest recorded level of emissions per unit of GDP, and 80% of its electricity is non-emitting, with a dominant 63% portion from hydroelectricity.
The Canadian Minister said the government will go about hitting its INDC target mainly through a sector-by-sector regulatory approach, starting with the biggest sector – transportation. Asking businesses to share emission standard performance by law, "sends short term and longer term signals to businesses to generate innovation to meet the standards".
RETURN ON INVESTMENT
But it isn't just policy which pushes businesses to act, as Nestle's Executive Vice President José Lopez is keenly aware. With investors looking for companies able to give a sense of long term commitment that also aligns with “where society is going”, beyond financial sector incentives, the Nestle boss said low carbon activity is "simply good business" sense. He affirmed it is more efficient and "you can do more with less", creating a "less obvious way to drive up return on investment".
Nestle is one of many leading businesses that have set out their commitment to 100% renewable power as part of RE100, a global campaign of The Climate Group and CDP that encourages companies to use power exclusively from renewable energy sources.
Speaking at the launch of the campaign earlier this year, Claus Conzelmann, Vice President and Head of Safety, Health & Environmental Sustainability, Nestlé Group, said in a statement: “RE100 is fully aligned with Nestlé’s explicit commitments, which reflect our respect for the society in which we operate, respect for the environment, and respect for future generations.”
By Clare Saxon Ghauri