We can’t return to ‘business as usual’

Will the government perform yet another U-turn on sustainability? It’s looking likely, says Professor Ian Thomson, Director of the Centre for Responsible Business at the University of Birmingham Business School.

Whoever manages to hold onto the job as Prime Minister, it’s clear that the Conservative government they lead until the next general election sees sustainability and the ESG business agenda as a low priority.

Faced with the immediacy of the cost-of-living crisis, financial markets in turmoil and war in Ukraine, that might seem understandable. But the consequences of our damaged climate system and severely diminished ecosystems, combined with the threat of climate and biodiversity collapse, are no less immediate or potentially devastating to any kind of future prosperity for business, the economy, and the country.

Understanding the full range of factors driving these crises, rather than simplistic, politically expedient slogans, is critical to any meaningful government intervention.

The prioritising of growth and deregulation, with a threat of a return to the age of austerity, signals a lurch back to an unsustainable economic orthodoxy. A determination to expand fossil fuel extraction through more fracking and oil and gas drilling licenses, and to conduct a ‘bonfire’ of EU legacy regulations, including the bankers’ bonus cap, is aimed at repeating the ‘Big Bang’ of liberalised market-led growth in the 1980s, amplified by threats of cuts to public services.

But despite high-level recitations of the UK’s 2050 net-zero aspiration, there is considerable doubt, uncertainty, and contradictory evidence of any real commitment to ‘levelling up’ or a just transition to a sustainable UK, let alone support for sustainable business transformation.

Setting aside whether or not such an agenda will work, what the government is promoting is a ‘business as usual’ approach to the various unfolding crises, doubling down on past strategies that have already been proven failures when it comes to social and environmental sustainability. The direction of travel on issues like the climate crisis and equality over the past few decades has been to factor them into all aspects of policy. But now we seem to be returning to politicians treating them as ‘special cases’ or externalities to the central aim of economic growth. Indeed, in her recent Conservative Party conference speech, Truss talked about the ‘anti-growth coalition’ which seemed to demonise anyone who didn’t share this ideological ‘business as usual’ mindset.

But sustainability and growth aren’t mutually exclusive; in reality, they’re totally interdependent. Business and the economy are rooted in the wellbeing of society and resilient natural systems. As we’ve seen with Covid and catastrophic wildfires worldwide, when the health of either is threatened, all human activity – economic or otherwise – is badly affected.

The sustainability agenda also represents a huge growth sector for business and an opportunity for government, with trillions of dollars globally in public and private investment for cleaner, renewable energy sources and technologies to meet the increasing public need and demand for more sustainable products and services. It’s this opportunity that the green industrial revolution seeks to capitalise upon, which would ultimately have the effect of mainstreaming sustainability and ESG principles within government and business.

Unfortunately, faced with a dizzying rise in energy and other costs and the likelihood of a recession, there is a real risk that companies in the UK will be looking to roll back their investment in ESG initiatives in the short- and medium-term.

Like the government, they may also start to view sustainability as a ‘special case’, or a project separate from their main operations. A responsible government would be helping industry to stay the course during these turbulent times, not encouraging them to imitate their own short-term, growth-at-all-costs approach. As things stand, we could see the return of the outdated, greenwashing idea that a company that invests one per cent of its profits into sustainability makes them a responsible business, when we now know that to be truly responsible means making every pound generated beneficial to society and nature.

Ultimately, rowing back on ESG doesn’t make good business sense either. A recent YouGov poll commissioned by Birmingham Business School showed three-quarters of the public expect companies to have a net-zero strategy and almost half expect businesses to balance profits with social and environmental concerns.

So, society has moved on from this government’s regressive view and business needs to reflect these increasingly conscientious consumer sentiments if it wants to avoid reputational risks and remain competitive.

Moreover, although the public is ahead of business on sustainability, the YouGov poll shows business is also ahead of government, with almost a third of companies surveyed seeking to prioritise or balance profits with sustainability.

If the UK is to reach its net zero target by 2050 and contribute to global sustainability goals by 2030, then this double disconnect between public, business and government needs to be eliminated and all three be in alignment. Successive governments have promised it, the public expects it, the planet needs it, and business has to act on it.

Previous articleHelping creatives ‘walk the walk’
Next articlePrincipled investment: From empty ESG words to sustainable deeds