Across Latin America, companies have woken to the need for embedding sustainability into what they do. But, as the climate change clock keeps ticking, we’re seeing business leaders start to ask how to tackle this issue on a larger and more impactful scale, and we believe that this conversation is one that’s worth having.
The latest World Economic Outlook, published in October by the International Monetary Fund (IMF), shows that we’re at a pivotal moment in history. At the current rate, global temperatures will increase “well above the safe levels agreed to in The Paris Agreement, raising the risk of catastrophic damage for the planet”, it remarks and adds that the window for attaining net-zero emissions by 2050 is rapidly closing. The time for action is now.
Companies make and ship almost everything we buy, use, and throw away, and therefore play an outsized role in global emissions. In recent years, we’ve seen businesses around our region start to look seriously at sustainability, and the buy-in from employees and consumers alike has been encouraging.
However, we believe that unless companies make a decisive shift to tackling the key CO2 emissions elements in their business, the majority of their efforts will not make enough of a difference.
SUSTAINABLE PRACTICES BEYOND THE OFFICE
In recent years, we’ve seen how going green has become an integral part of day-to-day office life, as companies around the region have put in place policies from installing energy-saving light bulbs in buildings to promoting the use of alternatives to single-use plastic. The paperless office idea has taken root, and recycling containers are now in most professional workplaces. Meanwhile, a growing number of firms are pushing the use of sustainable building materials, such as recycled furniture and carpets made from recycled materials, in their offices. We’re also seeing companies start to demand greener manufacturing practices from their suppliers, too, while others have started to promote the safe disposal of the products they make.
These steps are obviously positive. Companies adopt green practices create positive brand associations among consumers and boost the morale of employees who believe in what their company is doing. But do they make a real difference?
LATIN AMERICAN COMPANIES WANT TO DO BETTER
Each year, the S&P Global Corporate Sustainability Assessment assesses sustainability practices across 124 actively participating companies from Latin America. For the third consecutive year, businesses in the region have increased their participation in the CSA, from 38% of those invited in 2018 to 46% in 2019, which proves a growing number are willing to address and improve their sustainability performance. In fact, the participation rate for Latin America is above the global participation rate, demonstrating that there’s a real trend underway for companies to do better.
The progress they’re making, however, is slow. The S&P assessment looks at a number of sustainability dimensions, but on the environment and climate strategy, Latin American companies are well below the global average, showing that although they’re actively seeking to cut down on emissions, there’s still more they could be doing.
From an emissions standpoint, Latin America is different from many other global regions, as the bulk of its greenhouse gas production is from land use and agriculture, rather than from energy. However, this is set to change quickly, as economic growth and its rising middle class are expected to drive up energy demand to at least 80% higher than present-day levels by 2040, according to the Inter-American Development Bank, leading to total emissions caused by power generation reaching approximately 2 billion metric tons of carbon dioxide equivalent (MTCO2e) per year.
In order to offset that, you would need to switch 76 billion incandescent lamps over to LEDs or recycle 680 million tons of waste. As a result, the small-scale initiatives being carried out in offices in an attempt to go green are just a drop in the ocean.
It’s clear that only by reducing energy emissions are companies going to be able to minimize their carbon footprint, and this is something more and more business leaders are beginning to think seriously about.
MAKING THE GRADE
Since many companies have already done as much as they can to reduce their overall energy usage, switching to renewable energy presents the best and most far-reaching way of cutting emissions without compromising on performance and adding significant cost reductions. While figuring out how to harness the power of renewable energy to achieve emissions reduction goals may seem like a daunting task, the good news is that business leaders don’t need to become experts in energy sourcing in order to do so.
At Atlas Renewable Energy, we’re starting to hear from a growing number of firms who are committed to making a real difference to their carbon footprint. It’s not just the usual suspects in the most-polluting industries, either: companies in every sector across Latin America, from retail and manufacturing to heavy industry and beyond, know they need to do more on sustainability. The region still has a long way to go, but we think the tide is turning, as more business leaders wake up to the need to take real action on corporate sustainability. Is your company ready to take the next step?