Legal Matters: Why the ‘people factor' will be key to corporate climate action
AS the curtain fell on COP26 last month, many were left speculating what the conference meant for them.
The Glasgow Climate Pact, while making advances in the phasing out of fossil fuels and the limiting of deforestation, perhaps fell short of what many had envisioned. Irrespective of what was agreed, the climate summit was a further reminder to not only political but business leaders of the urgent action needed if we are to meet our net-zero ambitions.
Northern Ireland is the only part of these islands without its own climate change legislation. Two alternative Climate Change Bills are passing through the Assembly, and despite negotiations between the two Bill sponsors to combine them, it seems both will progress simultaneously in what is an unprecedented situation. For many employers here, the absence of any legally mandated climate change target is concerning and, if no target is introduced soon, this will present significant challenges to corporate long-term planning.
In recent years, our research has shown that the reality of climate change awareness has permeated boardrooms across the globe. Mitigating emissions is now a priority issue which has both significant implications for companies’ business models and a vast impact on their stakeholders. From appointing climate change experts to their boards, to reskilling and retraining existing staff, business leaders around the world are recognising the policies and provisions they must implement to reduce their environmental impact.
The conversation around these issues has often focused on having the right policies, investment, and technologies. These are critical, of course, but what about the human element? After all, it is the people within organisations that are expected to play a decisive role in the ability to meet ambitious global targets. By incentivising employees to achieve the implementation of solutions, or by investing in their human capital, our business leaders can unlock the ideas, innovation, and skills that will likely be needed in the race to net-zero.
Coinciding with COP26, Eversheds Sutherland and KPMG recently published a report entitled ‘Climate Change & the People Factor’.
Guided by a survey of 1,095 C-suite leaders across some of the world’s leading companies, the report finds that workforce engagement will be critical to any corporate climate mitigation efforts. Performance objectives, individual or team KPIs, and renumeration incentives tied to decarbonisation goals, will all be critical if companies are to engage their wider workforce in reducing emissions.
Known as the 'People Factor’, this is a recognition that policies or targets themselves will not achieve results. For companies, though, this does not just include your employees. Understanding the broader community in which your business operates, recognising that there is an opportunity for cooperation among companies, training providers, and governments, will be key to ensuring not only global businesses but Northern Ireland businesses confront climate risk head-on. It is only through a strategic, joined-up approach, can we expect results.
Support among business leaders for the transition to a global, low-carbon economy has never been higher. But to transfer this goodwill into good results, and to bring about the climate action we seek, the People Factor must not be ignored.
Lisa Bryson is employment partner at Eversheds Sutherland