In this recurring post, I highlight some of the best thought-leadership articles and reports that cross my desk. I note why they rise to the top of the pile and are worth reading (or skimming), even if they focus on functions or industries outside your areas of interest. Among the criteria I use to make the selections are freshness and provocativeness of insights and timeliness, analytical rigor, depth of prescriptions, and overall readability.
As episodes of extreme weather manifest themselves around the world, professional-services firms are doubling down on their climate change and sustainability offerings, both in terms of client service and thought leadership. Their timing couldn’t be better, given the recent disturbing conclusions of the UN Intergovernmental Panel on Climate Change.
Firms such as BCG, Deloitte, and McKinsey expanded their client-service capabilities with the introduction of the BCG Center for Climate and Sustainability, World Climate, and McKinsey Sustainability, respectively. Firms have also published a staggering amount of content on climate change and sustainability since January, exceeded only by their thought leadership on pandemic-related issues such as hybrid working arrangements. They have addressed topics ranging from how individual business sectors can decarbonize to the use of hydrogen as a fuel to reduce carbon emissions to how countries can move to carbon neutrality.
Below, I highlight some of the strongest work from professional-services firms on climate change and sustainability, with the understanding that there were many other high-quality pieces worth reading.
Back to top
The biodiversity crisis is a
business crisis”
BCG
BCG has mounted a strong publishing effort this year on climate change and sustainability. One thought-provoking effort was this piece on business’s stake in biodiversity.
It shows how business contributes to biodiversity loss and what it can do to become “biodiversity-positive.” The authors outline a four-stage approach that would require transformation of the four value chains that account for 90 percent of biodiversity loss: food, infrastructure and mobility, energy, and fashion.
“As ecosystems decline, business faces significant risks, including higher raw material costs and a backlash from consumers and investors. But the crisis also creates real opportunity. Companies that act to support biodiversity
can develop powerful new offerings and business models, improve the attractiveness of existing offerings, and lower operating costs.”
Global energy and
natural resources
report 2021:
Navigating the
energy transition
Bain
Bain’s competitors must have been left shaking their
heads when they checked out this staggering 11-article compilation. Topics range from how energy and
natural-resources companies can reinvent themselves in a world facing climate change (the volume’s main piece) to other sustainability challenges to working with ESG investors. Not all the articles directly address the energy transition—some speak to how energy and natural-resources companies can improve their operations.
But the impression this package leaves is that Bain has
a sophisticated understanding of the industry and the challenges it faces in dealing with the energy transition.
“The next five years are going to be critical for the industries that supply energy and natural resources to the world’s economies. In that short span, while they keep their current businesses running, most will begin reinventing themselves as businesses that also move the world closer to a lower-carbon, sustainable future. Some investors are betting against them, shifting money from these incumbents to new companies that have less baggage and appear to be more innovative and more capable of solving the world’s most important issues. But it would be a mistake to count the incumbents out.”
Leading in a
low-carbon future:
A ‘system of systems’
approach to
climate change”
Deloitte
Deloitte published several strong articles in recent months, including one on the importance of trust in corporate climate-change initiates and another on sustainable manufacturing. This one stands out.
Don’t be put off by the confusing “system of systems” terminology. The authors intend the piece to show how addressing climate change will require many players acting
in concert, rather than one organization focused narrowly
on its own operations. The article appendix, “A snapshot of
low-carbon systems” and “Enabling accelerators,” may be
of particular interest to companies, governments, and
other stakeholders.
“The transition to a low-carbon economy demands the synchronized transformation of multiple, interdependent systems. An electrified vehicle fleet significantly addresses climate change only if it is charged with clean, renewable electricity and manufactured with circular, low-waste processes using sustainably extracted raw materials. It is only by adopting a more comprehensive view of the emerging
low-carbon economy that we can begin visualizing the
critical connection points and contingencies, in turn allowing organizations to work collaboratively to remove barriers,
reach critical tipping points, and accelerate adoption of some of the most impactful climate solutions. Isolated initiatives
miss the essential synergies in this transition.”
Climate-related
risks have financial
statement impacts
KPMG
This compilation of articles took a different approach than most other pieces on climate change. The contributions address how climate-change risks may affect corporate financial statements. Getting out in front of an issue is an important
part of thought leadership, and the authors do that well here.
One could imagine these pieces spurring conversations with chief financial officers of many companies. The authors
discuss topics ranging from the potential impact on inventories to whether a company will be able to continue as a going concern.
“Climate-related risks may have a significant impact on a company’s ability to continue as a going concern. For some, these risks may already trigger the immediate need for robust and company-specific disclosures. For others, the impact
may not be imminent but will need monitoring in view of the rapidly changing circumstances.”
How cities
can adapt to climate change
McKinsey
McKinsey has been exceptionally active this year in publishing on climate change and sustainability. In this report, cowritten with the C40 Cities Climate Leadership Group, the authors identify 15 high-potential actions that cities can take to address the impact of climate change. The first part of this outstanding report looks at systemic-resilience and hazard-specific actions, including straightforward approaches such as planting street trees, applying cool-surface treatments, and nature-based sustainable drainage methods. Part two explores how cities could carry out these ideas. The report benefits from many examples from cities around the world.
“Cities are complex, characterized by a wide variety of natural features, economic endowments, social conditions, institutions, and built environments. They also face different climate risks and have varying levels of vulnerability. Some adaptation options that are effective in most cities may not be feasible in others, given soil conditions, topography, elevation, power composition, age of buildings, and other factors. This complexity means that city leaders have a dizzying array of options for adaptation, making it difficult to set priorities and choose a course of action.”
“
“
The board’s role
in sustainable
leadership”
Russell Reynolds
The authors from this executive search firm examine
an important but overlooked angle in the sustainability discussion—what role the board of directors should play in guiding a company’s sustainability efforts. They propose a
10-step road map toward progress on sustainability, addressing issues such as embedding sustainability into all discussions with the CEO and executive team and changing compensation models to account for sustainability targets. In an appendix, the authors add a self-assessment tool to help board leaders determine where their board stands on its ability to promote sustainability throughout the company.
“As sustainability efforts gain momentum in society, and as expectations grow that corporations will play a central role
in making the world a better place, it is essential that board leaders know how to enable and drive sustainability within
the enterprise.”
“
