By Dr Irene Wisheu - Principal, Environmental Practice, Umalia.
When Teck withdrew from an Alberta oil sands project, President and CEO Don Lindsay wrote in his letter to the Federal government that “global capital markets are changing rapidly and investors and customers are increasingly looking for jurisdictions to have a framework in place that reconciles resource development and climate changeˮ. He further cited a lack of agreement around climate policy considerations. The considerations Lindsay referred to are certainly very complex; they involve reconciliation by Canadian governments between resource development, climate change and Indigenous rights. But there is none-the-less a take-home lesson at the small scale from this withdrawal.
Rapid change is driving stakeholders to demand clear messaging on sustainability.
Teck is not alone in expressing a need for clarity on sustainability messaging. BlackRock CEO Larry Fink made the point in his 2020 Letter to CEOs that “climate risk is investment riskˮ and that stakeholders therefore require improved disclosure on how companies are managing sustainability issues. Similarly, an increasing number of RFPs that are sent out make reference to sustainability in the offer.
Pressure to disclose and improve on sustainability issues is coming from other stakeholders as well. Consumers for example, respond negatively to a company that is poorly committed to environmental sustainability (see note 1). This dislike translates into lost sales, with 78% reporting that they will not buy a product if they do not like the company (see note 2). Employees likewise have changing expectations. For example, 50% of millenials want to work for organizations with ethical practices (see note 3).
Social values are transforming and more is now expected of businesses. Besides appealing to stakeholders, clear messaging from a company will also build a strong sense of collective purpose
This in turn, is felt by a majority of executives to lead to employee satisfaction (89%), higher quality products/services (81%) and increased customer loyalty (80%) (see note 4). Companies with a strong sense of purpose also report greater success than their counterparts with a poorly understood or communicated purpose in expanding geographically (66% versus 48%), being part of an acquisition/merger (57% versus 49%) or launching new products (56% versus 33%) (see note 5). Clearly articulated purpose can also drive companies to economic success, with purpose-led companies increasing revenues over their counterparts by a factor of four (682% versus 166% over an eleven year period) (see note 6).
The impact that the Teck withdrawal will have on Alberta’s economy may be debated for a long time to come, but their reasons for doing so can act as a business lesson to us all right now.
1. Choi, S. and A. Ng (2011), Environmental and Economic Dimensions of Sustainability and Price Effects on Consumer Responses,Journal of Business Ethics 104:269-282, Springer Link
2. Tonello, M. (2013),The Sustainability Business Case,Harvard Law School Forum on Corporate Governance, June 28
3. Deloitte (2014), Big demands and high expectations; The Deloitte Millennial Survey - Executive summary
4. Harvard (2015), The Business Case for Purpose,Harvard Business Review Analytic Services Report
6. Kotter, J.P. and J.L. Heskett (2011), Corporate Culture and Performance, Free Press, Reprint edition