At the Davos World Economic Forum (WEF) recently, there was much talk of sustainability, the United Nations Sustainable Development Goals (SDGs) and the issues that are central to Procurement with Purpose.
Some firms made new commitments, and perhaps the most publicised was Microsoft. The tech firm not only promised to be carbon neutral by 2030, but perhaps more remarkably, pledged that “by 2050 Microsoft will remove from the environment all the carbon the company has emitted either directly or by electrical consumption since it was founded in 1975.”
It is worth noting that for the 2030 target, Microsoft is explicitly including carbon that is used in the supply chain, as well as by the business directly, saying that they will cut emissions by half “both for our direct emissions and for our entire supply and value chain”. The remaining emissions will be offset through carbon removal programmes.
But this recognition of emissions related to suppliers - what are termed “scope 3 emissions” - is key, and it is well worth reading the full Microsoft article here to see how they describe the situation. As they say, “a company’s scope 3 emissions are often far larger than its scope 1 and 2 emissions put together”, and this is true of most organisations. Hence any firm claiming to be concerned about carbon emissions but without considering the “procurement with purpose” angle is only addressing part of the issue.
Whilst Microsoft provided some level of detail around their plans, others were not so clear, making broad statements of intent without much detail on the “how”. The New York Times reported Alison Martin, who leads the Europe, Middle East and Africa divisions of Zurich Insurance saying this of the Davos event: “It’s an increase in rhetoric, absolutely. Will we see a walking of the talking? The jury is out.”
There are also questions about structural issues which must be addressed if the world is to make real progress. For instance, how will the work that is needed to achieve the 2030 UN targets be financed? In a paper for the WEF, Charlotte Petri Gornitzka of Unicef and Gavin Wilson (Co-Chair, Global Future Council on Development Finance) identified a major funding gap that needs filling.
They claim that a “persistent $2.5 trillion annual financing gap stands in the way of the Sustainable Development Goals”. Bridging that gap requires removing the constraints to the supply of, and demand for, capital. Development banks must play their part, focusing on catalysing new sources of financing.
On that theme of capital, a new investment platform was launched at Davos looking to invest $500 million in businesses working to achieve the SDGs. It is targeting debt and equity investment in early stage businesses in "emerging and frontier" markets, to spur innovation and growth in regions where finance is not always easy to come by – so the platform will focus on supporting firms in agriculture, finance, energy, education and healthcare across Africa, Asia, Latin America, the Caribbean and Pacific regions.
There were also Davos announcements around tools to help organisations in their journey to greater sustainability. For example, Finextra reported that Refinitiv has joined forces with influential global bodies (including the WEF and UN) to create a “first-of-its-kind alliance to monitor sustainable finance through data”. This “Future of Sustainable Data Alliance” will help provide investors and asset managers with better data to help channel capital towards funding the SDGs (in a manner that works for the investors, as well as the planet, we assume).
Peter Smith / 12th February 2020