Today sees the start of the Business Climate Summit in Paris. Paul Polman CEO of Unilever and chairman of the World Business Council for Sustainable Development offers his perspective on the challenge.
Business must take a role in this crucial year of climate talks – it’s not only a moral argument, but a way to drive growth.
Over 250 years ago, a British entrepreneur called Richard Arkwright built the first automated textile machine and, in doing so, started the industrial revolution. It was an age built on coal and, over the years, further fuelled by oil and gas. It has transformed our lives and landscapes, lifting billions out of poverty and making many fortunes.
But the burning of fossil fuels has not only changed the way we live and work, it has also changed our planet, so we must now change once again the way we do business.
The cost of not doing so is too high – if we go on as we are, we jeopardise national and global security and economic prosperity.
Over the past decade, in the US, the cost of extreme weather including Hurricane Sandy and the droughts in California and Texas, has topped $300 billion. In Sao Paulo, which produces a third of Brazil’s GDP and relies on hydropower for 80% of its electricity, has seen the worst drought for 80 years. The UN estimates that losses from natural disasters since 2000, increasingly linked to planetary warming, have been $2.5 trillion. We estimate Unilever alone is incurring costs linked to the effects of climate change of around €300m a year.
The good news is, with this change comes opportunity. It represents a chance to transform business, save costs, reduce risks and fuel innovation.
The report, Better Growth, Better Climate published last year by the Global Commission on the Economy and Climate shows that economic growth and action on climate change do not have to be in conflict; quite the reverse. The growth of cities combined with the rapid adoption of clean energy represents a multi-trillion dollar business opportunity.
We are finding similar opportunities in our own business. Reducing our environmental impacts has helped us avoid factory costs of over €400 million since 2008. We see our brands with a sustainable purpose accounting for half the company’s growth in 2014 and growing at twice the rate of our other brands – consumers are voting with their wallets.
And it helps us secure supply. Over 55% of Unilever’s agricultural raw materials are now sustainably sourced, more than half way to our 2020 target of 100%. To achieve this, we have been working with smallholder farmers to help them increase their yields; we’ve trained 800,000 so far. This improves their livelihoods but also future-proofs our business in a volatile world.
We are showing that it is possible to grow a business while reducing environmental impacts and increasing positive social benefits.
And what I find heartening is that those who get it most are the young. Not just the hundreds of thousands who joined the People’s Climate March in New York and in cities around the world but the young entrepreneurs I meet, who see how innovation can create better lives for millions of people.
In just seven months’ time, leaders from over 190 countries will meet in Paris to sign a climate agreement. There is still a steep hill to climb. Just as the factories that first installed Arkwright’s mechanised looms were attacked by some – there will be cynics and detractors, with vested interests or held back by an alarming apathy.
But business is stepping up to the opportunity. More and more are calling for a higher ambition from governments. Over 1,000 organizations signed the World Bank Carbon Pricing Statement, calling for governments to implement a carbon price. Members of the B-Team – including Sir Richard Branson and me – have called for a target of Net Zero Emissions by 2050, a tough goal but one that is necessary to minimise the risks to the world and maximise the opportunities for business.
So on the day of the Business & Climate Summit in Paris where we will meet to continue this momentum, the case for action has never been clearer and I am optimistic.
I hope that when the world looks back on 2015 many years from now, just as we look back on Richard Arkwright’s great invention, they may see this year as the tipping point which started the second great industrial revolution – the year in which governments, business leaders and civil society came together to lay the foundations for a better world.
Paul Polman is chief executive of Unilever. You can find him on Twitter.
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