We all know mitigating the climate crisis is important… but it’s still weirdly easy to push any action to ‘tomorrow’ — especially if you’re a founder stuck in the daily chores of keeping a startup running.
But you and I both know you need the push to act today. Not only to save the planet (this big round thing we live on), but also to make sure your business will survive.
That’s why I spoke to Tom Raftery, SAP’s Global Vice President and its Futurist & Innovation Evangelist, who’s made it his mission to inspire organizations to reduce greenhouse gas emissions before it’s too late.
Raftery has suggestions for what you can do right this second, next few weeks, and before the end of this year. But first, let’s get into why exactly you’ve got to get started on your startup’s climate action — even if you’re fully digital.
Bunch of laws are coming, stay ahead of them
Raftery, who’s speaking at the upcoming TNW Conference 2021, is well aware of the financial pressures startups and bigger organizations face when it comes to decision-making. But if you apply logical thinking, you’ll see the cost of emissions is way higher than the money you may save in the short term.
First up, legal troubles. Raftery says a whole host of climate legislation is coming worldwide and points specifically to the EU’s goal to reduce net greenhouse gas emissions by at least 55% by 2030.
“I know 2030 sounds like a long way away, but it’s only about eight years. It’s as far away as 2013 is now,” Raftery warns and predicts the actual pressure will be felt much sooner.
“We’re going to get to 2025 when politicians around the EU will realize ‘uh oh, we’ve only got four or five years left and we’re nowhere near where we need to be.’ So there’s going to be a scramble.”
Bigger companies will have to start officially reporting on their sustainability in 2024, but Raftery believes it’s good for startups to begin preparing. Of course, the carbon footprint of individual startups is minuscule compared to larger corporations, but collectively startups make up almost 80% of the economy, making them a prime target for government climate policies.
So sooner or later, every single business will have to have rigorous reporting on its carbon footprint — no matter the field they’re in.
Oh, and it’ll also help with recruiting
“Startups don’t only need to act because there’s more of them, they also need to take action for recruitment and retention of employees,” says Raftery.
As any good (and maybe even bad?) business leader knows, it costs a lot to find, hire, and train a new employee. So if they leave within a year, you’re looking at a lot of sunk cost. But what exactly does this have to do with climate action?
“Having a good climate and sustainability story to tell makes people proud to work for you. And therefore, that helps with your recruitment and retention. It also helps attract customers,” says Raftery.
And by “having a story,” Raftery doesn’t mean you can just have your marketing department churn out some greenwashing phrases. No, a climate story is about being able to point out the specific actions you take and how it relates to your company’s mission.
So let’s get into what exactly you can do to create your authentic climate story.
Right this second: Contact your energy provider
“Switch to an energy provider that gives you 100% renewable energy,” says Raftery. “Changing your electricity to clean energy gets rid of a huge amount of emissions instantaneously. It really is the low-hanging fruit of climate action.”
It shouldn’t take more than a few minutes to find the most climate-friendly energy provider, but it’ll pay off for years to come as it’ll make the rest of your journey that much easier.
How? Well, once you’ve made your utilities are powered by clean energy, you should work towards electrifying all your energy consumption — whether it’s removing the gas stove in the office kitchen or updating your car fleet with EVs. This will make all future climate reporting easier as you’ll have a single central point of measurement.
Next few weeks: Change who’s responsible for your climate action
Raftery says reporting will only become more rigorous from now on, so it’ll affect companies’ bottom line even more. “This is why it needs to fall under the CFO’s organization.”
A company’s climate action will soon be reported the same way as financials are — through yearly or even quarterly ESG reports — so it’s only logical to make it the responsibility of your CFO.
The sooner you make the mental shift internally that climate action and sustainability do belong with the CFO, the better your chances become to grow.
“The investment community will be monitoring this,” explains Raftery. “People whose ESG reporting is deemed to be good will have easier and cheaper access to capital. Poor ESG reporting will be seen as a more risky investment proposition. So the cost of capital for them will be significantly higher — if they can get it at all — and that will also obviously impact their share price.”
Before the end of this year: Start reporting diligently
Once you’ve made it clear that climate action and sustainability reporting are the responsibilities of your CFO, it’s time to start producing actual ESG reports… or at least lay the groundwork if your team is small.
“For example, for any RFPs [request for propals] going out, mention that you want the emissions associated with those products and services included in the response. That will start putting people on notice,” says Raftery, who encourages businesses to work with their suppliers to make this shift.
He also adds that if you’re a startup servicing bigger corporations, you’ll have to be especially quick to adjust. It doesn’t matter if your startup isn’t big enough to fall under the EU’s reporting mandate, as your clients will ask for detailed emission reporting for their own ESG reports.
Use your agility to save the planet and flourish
The most immediate pressure for climate action and reporting will be on bigger corporations, but it never hurts to be prepared. It can take a couple of years for cumbersome corporates to redefine their processes and priorities, but you can avoid all that hassle by setting a climate-friendly agenda from day one.
The next time you think “I’d love to work on my startup’s climate action, I just don’t have the time,” remind yourself that the hammer of the law is coming down just a couple of years from now and your clients and employees care about the planet. So you might want to make it your priority.
If you’re intrigued to learn more, don’t miss Tom Raftery’s keynote at TNW Conference 2021 on September 30th and October 1st. There he’ll be joined by 150 other amazing experts who will share their latest insights from the world of business and tech.