Why Europe’s summer of extremes demands business leadership on climate.
A continent under strain
For the third consecutive year, Europe and the UK have endured a summer defined not by isolated hot spells but by sustained, record-breaking heat. The 2026 heatwaves began unusually early, arriving in late May with temperatures 10 to 15 degrees Celsius above seasonal norms across the UK, France, Spain, Germany and Ireland — shattering all-time records for spring warmth in the process. By June, the pattern had intensified: Copernicus, the EU’s climate monitoring service, confirmed that June 2026 was the hottest June ever recorded for western Europe and the second warmest globally, driven in part by record sea surface temperatures across the Atlantic and Mediterranean. This has been followed by the UK having the warmest July on record, with intraday records broken across the country.
This is not a one-off anomaly. It follows heatwaves in most of the last 5 years. The impact is significant, particularly in relation to health, challenges caused by wildfires and over-heating of systems and equipment not designed to operate in the temperatures, thereafter, creating resultant damage and disruption. The trend line is unmistakable, and business leaders can no longer treat extreme heat as a seasonal inconvenience. It is now a structural risk to health, infrastructure, supply chains and economic stability.
Human and environment toll
The health risks of extreme heat are well documented but frequently underestimated. Heat stress disproportionately affects older people, outdoor and manual workers, pregnant women, and those with pre-existing health conditions. Hospitals across Europe have again reported surges in heat-related admissions, and excess mortality figures.
Heat and drought have also fuelled a dangerous wildfire season. France, Spain and Greece have seen elevated wildfire activity linked directly to dry conditions and drought risk, echoing the catastrophic 2025 wildfire season in which more than 7,700 fires burned upwards of two million hectares across Europe, killed over 30 people, and forced more than 100,000 evacuations. The UK is not immune either — wildfires in Suffolk, Derbyshire, Yorkshire and the Scottish Highlands have devasted large areas impacting habitats and wildlife, not to mention many small fires all attributable to our overheating planet. Rivers running below average flow, cracked farmland, and stressed water supplies compound the picture: this is an environmental crisis playing out in real time, not a distant projection.
Business disruption is already here
For business leaders, the operational consequences are becoming impossible to ignore. Transport networks buckle under extreme heat — rail speed restrictions, buckling roads, and airport disruptions are now a predictable summer feature. Construction and logistics operations face legal and practical limits on outdoor work during extreme heat warnings. Energy demand spikes for cooling strain grids at the same time that low river levels can constrain hydropower and the cooling water needed for thermal and nuclear power generation. Retail footfall drops in some sectors while others struggle with spoiled stock and overwhelmed supply chains. Agricultural output is hit by drought stress, affecting food and beverage businesses further down the chain. And employers face a growing duty-of-care obligation: workforces are less productive, more prone to illness, and increasingly concerned about the conditions in which they are working.
Insurance costs are rising in step. Property damage from wildfires and flooding (heat-driven droughts are frequently followed by intense storms) is pushing up premiums and, in some regions, making certain assets uninsurable altogether. For any business with physical assets, international supply chains, or a workforce spending time outdoors, the era of treating climate risk as a peripheral CSR issue is over. It is now a core operational and financial risk that belongs on the same agenda as cybersecurity or geopolitical instability.
Why business leadership matters now
Governments and international bodies will continue to set policy frameworks, but businesses hold a unique and underused lever: influence over their own operations and, critically, over their supply chains. A single large organisation demanding lower-carbon materials, more efficient logistics, or verified emissions reporting from its suppliers can move markets far faster than regulation alone. Multiplied across an industry, that influence becomes transformative.
This is the moment for business leaders to act — not simply to protect their own operations from disruption, but because they are among the few actors with the scale and reach to bend the emissions curve in time to matter.
A practical call to action
Every business, regardless of size or sector, should be asking three questions this summer:
1. Are we building genuine sustainability into our operations? This means more than offsetting. It means energy efficiency, renewable energy, sustainable supply chains, resilient infrastructure planning, and adapting working practices to protect employees during extreme weather — heat action plans should sit alongside fire drills as a matter of routine preparedness.
2. Do we understand our carbon footprint? Accurate measurement across Scope 1 and 2 is the starting point, and thereafter Scope 3. You cannot manage what you do not measure, and increasingly, investors, regulators and customers will expect transparent reporting as standard rather than an optional extra.
3. Are we using our supply chain influence for good? Every business, whether a multinational or an SME, has suppliers and customers it can influence. Setting clear expectations, rewarding lower-carbon partners, and collaborating on shared decarbonisation goals can create ripple effects far beyond what any single organisation could achieve alone.
Conclusion:
The heatwaves scorching the UK and Europe this summer are not an aberration to be weathered and forgotten by autumn. They are a preview of the operating environment businesses will face with increasing frequency and severity.
Leaders who treat climate action as a genuine strategic priority — reducing emissions, building resilience, and exerting influence across their supply chains — will be better placed to protect their people, their operations and their bottom line.
Those who wait for the next record-breaking summer to force their hand will find the cost of inaction far higher than the cost of leadership today.
The time to act is not after the next heatwave. It is now.
For a long time, supply chain due diligence lived firmly in procurement or compliance — a technical, back-office task that rarely made it onto the board agenda. That’s no longer the case. Regulators, investors, lenders and customers now expect directors to show they genuinely understand — and are actively managing — the risks running through their extended supply chains. What used to be a checklist exercise has become a question of governance, director duty and enterprise risk management.
This isn’t a theoretical shift. Modern slavery laws, conflict minerals rules, deforestation regulation, and the EU’s evolving sustainability due diligence framework all set clear expectations for how companies identify, prevent, and report on risk — human rights, environmental, financial and ethical — not just inside their own four walls, but across suppliers, contractors, and business partners.
The regulatory landscape has moved fast, and it isn’t finished moving. Even with recent simplification efforts in some jurisdictions, the overall direction is toward more transparency and accountability, not less. Boards that treat due diligence as a box-ticking compliance task risk being caught flat-footed; boards that treat it as a genuine risk discipline put themselves ahead of the curve.
Why Supply Chain Due Diligence Matters to Directors
1. Legal and regulatory exposure Directors have duties to act with reasonable care, skill and diligence — and to have regard to the wider impact of the business. Missing material supply chain risks, whether that’s human rights abuses, sanctions breaches or environmental non-compliance, can expose the company, and in some cases individual directors, to legal, regulatory and reputational fallout.
2. Financial and operational resilience An unassessed supply chain is a fragile one. Suppliers with poor labour practices, weak financial controls, or environmental non-compliance are more likely to face a shutdown, a scandal, or a sudden inability to deliver. Proper due diligence surfaces these risks before they turn into expensive surprises.
3. Reputational protection Poor practice several tiers down the supply chain can still land squarely on your reputation. When a scandal breaks, stakeholders rarely draw a careful line between a company’s own conduct and that of its suppliers.
4. Investor, lender and customer confidence Institutional investors, banks and major customers increasingly fold supply chain due diligence into their own risk assessments. A robust process can translate directly into better access to capital, more favourable financing terms, and stronger commercial relationships.
5. Competitive advantage Companies that can clearly evidence credible, well-governed supply chains have an edge in tenders and partnership decisions — particularly with customers who have their own due diligence obligations to satisfy and need assurance their suppliers won’t introduce risk further up the chain.
A Governance Issue, Not Just an Operational One
Supply chain due diligence shouldn’t be treated as a one-off compliance project. It belongs on the board agenda as an ongoing discipline — reviewed, resourced and reported on in the same way as financial risk, cyber risk, or health and safety. Directors don’t need to run the assessments themselves, but they do need to be satisfied that a credible process exists, that it’s proportionate to the company’s risk profile, and that findings are actually acted on.
In-House or Independent Specialist?
Many boards ask whether supply chain due diligence can simply be handled internally. Up to a point, it can. But there’s a strong case for bringing in an independent specialist, especially once the work goes beyond basic supplier checks.
Objectivity and credibility However well-intentioned, an internal assessment can look like marking your own homework — fairly or not. Independent due diligence carries more weight with regulators, auditors and investors precisely because it isn’t shaped by internal commercial relationships or pressure to preserve supplier relations.
Specialist expertise and benchmarking Independent providers see supplier risk across many clients and sectors, giving them pattern recognition and benchmarking insight that’s hard for a team focused on a single company’s own suppliers to replicate. They know what “good” looks like — and what red flags tend to precede a serious failure.
Depth of resource and reach Thorough due diligence, especially across international, multi-tier supply chains, takes capacity, local knowledge and on-the-ground verification that most internal teams simply don’t have the bandwidth or geographic reach to deliver alongside their day job.
Defensibility If due diligence practices are ever challenged, a well-documented, independently conducted process is far easier to defend than an informal or self-assessed one — it shows the board sought an objective view rather than relying solely on internal assurances.
Staying current with a fast-moving regulatory landscape Regulation in this space keeps shifting. Specialist organisations track those changes as their core business, helping ensure a company’s approach doesn’t fall behind evolving legal requirements.
Freeing up internal resource Outsourcing the detailed assessment work lets internal teams focus on remediation, supplier relationship management, and embedding findings into procurement decisions — rather than getting consumed by the mechanics of data-gathering and verification.
The Bottom Line
Bringing in an independent partner to lead or validate this work gives directors a stronger evidence base for their decisions, better protection against legal and reputational risk, and greater confidence that the company’s supply chain — often its largest and least visible source of risk — is genuinely under control.
In short: robust supply chain due diligence protects the company. Independent due diligence protects the board’s ability to demonstrate it did the right thing.
Want to talk through how ESG Benchmark can support your board’s supply chain due diligence? Contact Us – ESG Benchmark to arrange a call.
It’s not often we have good news about the climate crisis but new data from China suggests 2025 was their first full year to show a decline in emissions. The reported drop is estimated to be around 0.3%. In the final quarter of 2025, their emissions fell 1% year-on-year.
This is positive, because while 0.3% may not sound much, considering China is the largest industrial power and largest emitter of carbon dioxide, reductions are significant; especially now emissions have been flat or falling for nearly two years, suggesting they may have reached a turning point. Their national investment in solar and wind is helping turn the tide.
Closer to our shores, there are also positive signs, a consortium of European nations has agreed to collaborate to create the largest Offshore wind farm which will have cross connects to multiple countries ensuring that the energy capacity can be fully utilised. Also, the UK has approved 157 new solar farms across the country as the drive for more renewables continues. Building future renewable energy capacity is key to the transition to net zero.
While some politicians deny climate change and seek to create noise to have people look the other way, the practical reality is that the worlds largest economy and the vast majority of the world’s largest companies are taking positive action to reduce their emissions.
What these politicians don’t mention is that the rules of most of the major stock exchanges expect positive climate action and appropriate risk management to reduce emissions and investor risk. Therefore, global companies are already implementing strategies to make positive change. For example, the largest global technology companies are compelling their supply chains to decarbonise and move to renewable energies by 2030. One of our clients with a global presence has recently succeeded in reducing emissions intensity by over 20% over 5 years, while continuing to grow their business. Since the Paris Agreement in 2015, climate risk has been a corporate priority. Despite strategies agreed since taking time to implement and deliver, the tide is turning and results are coming through, as is evident in China.
The next challenge is closer to home. With the UK struggling with extreme levels of rain, snow and flooding linked to climate change, we need businesses of all size across the UK to implement some changes to reduce energy consumption and their emissions, this would make a positive difference.
For any business the starting point is understanding where their emissions are now and then looking at the benefits changes can bring. If all reduced by 1% year on year, like China, it would move us in the right direction and momentum would build.
Towards the end of each year, taking into account all the available data and statements Climate Action Tracker update their projections for global temperature rises. On first glance, it does not look good. The optimistic scenario of a 1.9°C rise in temperature versus the agreed Paris target of 1.5°C is not ideal and creates significant risks and unpredictability to climate patterns and society as a whole.
When reviewing this data against previous years, it becomes clear in all scenarios except Policies & Action the median projected temperature all rise by 0.1°C. However, in real world Policies and Action we see this fall from 2.7° to 2.6°.
While 2.6° is significantly higher than the aim to limit warming to a 1.5°C rise, this small reduction is an indication that real action is beginning to have an impact.
The sign it is having an effect is supported by other data and a recent LinkedIn post by Bill Gates (Microsoft Co-founder) highlighted “In 2014, the world was on track to emit 50 billion tons of CO₂ by 2040. Now, that projection is down to 30 billion. We still have a long way to go, but innovation is helping us close the gap.”
The difference is not due to economic stagnation or de-industrialisation as energy demand continues to grow year on year. The difference is due to the changing energy mix and real world technological changes and improvements, where we see renewables such as solar and wind play a much larger part in global power generation (34.3% source Ember), combined with reduced consumption due to technological efficiency across many processes and areas.
Bill Gates’ message is simple: innovation bends the curve.
The 20 Gt CO₂ or 40% reduction is the impact of 10 years work. If the same positive action and innovation is harnessed to support further development combined with re-modelling and reinventing industrial and business processes, then there are clear signs that Policies and Action can keep driving down both CO₂ emissions and the projected temperature rise.
There is still a long way to go. However, this illustrates that if all organisations can contribute by finding a carbon reduction or energy saving, it will help shape better outcomes. We still need to adapt and develop resilience but we may also be able to reduce some of the risks.
The phrase ‘Sustainable Finance’ is becoming more frequently used, although often it is used to describes two differing aspects of sustainability. While there are overlaps, there are distinctly different applications: one relating to a category of lending products, the other to an approach towards regulated financial businesses.
For the wider business community, not operating in the regulated financial markets, sustainable finance is often used to describe the growing availability of funding and finance products related to sustainable initiatives. These being offered to provide finance for a “green” or sustainable investments which will help an organisation reduces its carbon footprint, its environmental impact or support a change in the business model to transition to a lower impact operational approach.
In many situations, the interest rates within these finance products are linked to some sustainability metrics, such as emissions reduction and when these metrics are achieved, this results in enhanced terms or reduced interest rate margins; thereby providing an incentive to the borrower to ensure the initiative and action being funded delivers, helping a transition to improved sustainability and lower emissions.
The range of such sustainable financial products offered by banks and financial entities will undoubtedly increase in the coming years as these organisations strive to find ways to reduce their scope 3 emissions; financed emissions – these being emissions arising from the banking services and finance facilities being provided to their customers.
For the main banking groups, most are currently focussed on reducing their internal Scope 1 and 2 emissions, and the emissions from suppliers through their purchased goods and services. All striving to ensure they are internally Net Zero by 2030, or well advanced in that respect. Thereafter, their focus will turn to their customers and encouraging them to lower their carbon footprint. In the future, a bank customer’s approach to emissions and sustainability will begin to impact whether they will be offered banking services, the products available and influence access to finance.
On the other hand, within the finance sector itself, sustainable finance is also a phrase being used by financial regulators across the British Isles, and by that I include, the UK, and the Crown Dependencies of Jersey, Guernsey and the Isle of Man. These regulators are seeking to shape the rules and regulations to ensure their respective licensed entities consider the impact of climate change and the need for greater sustainability in their business and operational models. These steps being in part to manage risk and encourage resilience within the sector.
In that respect, while these regulators may not be rolling out new rule sets or specific regulations, they are releasing road maps and guidance highlighting how these businesses need to apply existing rules to consider all aspects of sustainability. For license holders in all jurisdictions, this includes the need to consider the risks of climate change and nature related risks on their businesses and more widely on their customers.
One approach which regulated entities may consider is that of a Materiality assessment to help them consider both strategy and risk. Some businesses may wish to consider a Double Materiality assessment whereby the climate and nature risks are considered as one aspect and the financial risks more traditionally considered are another aspect of the assessment. Whatever approach is considered, it is clear regulators in all regions are expecting risk processes to consider and prepare for climate related risks as part of ensuring the finance sector is sustainable and that it has considered potential unexpected events and operational challenges. This will lead to enhanced risk frameworks, monitoring, controls and ultimately reporting to regulatory bodies.
For some regulated organisations, they will be looking at sustainable finance from both perspectives, having finance products in the market and needing to ensure they have considered the risks of climate change across their operations to ensure they have a sustainable business model.
For all the companies who rely upon the banking and finance sector, these sectors will help shape the transition to net zero and the earlier companies adopt and implement transition plans, the more time they will have for these to take effect and the greater opportunity to access finance in this emerging landscape.
With pressure mounting on organisations to move to net zero to maintain business relationships, similar requirements to reduce carbon emissions are also being applied to their supply chains.
ESG Benchmark alongside sister company, Asesoria Group have the combined competencies and skills to support businesses providing consultation and services relating to all aspects of sustainability, including emissions reporting, reduction planning, target setting and risk, such as Materiality assessments.
The following statement is issued by Iain Fairbairn on behalf of ESG Benchmark Group Limited.
27 June 2025, 11.00AM
ESG Benchmark Group is pleased to announce the acquisition of Asesoria Group Limited. Asesoria Group is an established management consultancy specialising in Governance, Sustainability and Leadership; offering these services to a range of FTSE listed corporates together with other private companies and public sector clients.
In completing the acquisition, Iain Fairbairn, Managing Director stated “while Asesoria will continue to operate independently this brings together two businesses whose focus is on sustainability and ESG. The core values and mission are to help organisations, irrespective of size, advance their sustainability and adopt responsible business practices; making a positive difference to society and the environment.”
Fairbairn further added “Together the businesses have a strong, experienced and knowledgeable team and the skill sets of the two teams complement each other very well. We believe this is key to future success particularly as clients increasingly require a broad spectrum of support ranging from governance, value chain due diligence, social value strategies, through carbon emissions calculations to stakeholder reporting. The strength of the team, and the specialists within the business will ensure we can deliver this.”
Melissa Kittermaster, CEO of Asesoria commented “This is an exciting new chapter for Asesoria Group. I believe ESG Benchmark and Asesoria have the same values and approach to sustainability and share our ambitions for continued growth. I believe this will enable Asesoria to offer a broader range of services to our clients, particularly around supply chain due diligence, sustainability governance and assurance services. I am looking forward to working with Iain and his team over the coming months to develop a long-term strategy that will benefit both organisations using our combined skills, knowledge and expertise”
Asesoria will continue to have London offices and this will be complimented with offices located in Bath for the expanded group.
Iain Fairbairn would like to thank the corporate team at RWK Goodman in Bath for their support during the process, which was performed with professionalism, efficiency and discretion.
Further Information:
ESG Benchmark Group offers a unique assessment and certification solution to benchmark the Environmental, Social and Governance processes and practices within organisations of all sizes. This independent objective review supports an organisation to assess their own standing or provides a structured due diligence process for value chain review.
To ensure the validity of the ESG Benchmark assessment process, we have partnered with Green Futures Solutions – an initiative powered by the University of Exeter’s world-leading climate science – to critically review the process and ensure we have a mechanism for continual improvement.
ESG Benchmark Group Limited also operates an Isle of Man subsidiary, ESG Benchmark (International) Limited to support its international and Crown Dependency clients.
Both ESG Benchmark Group and Asesoria Group are participants in the UN Global Compact, upholding and advocating the Ten Principles of the Global Compact. These principles are core to the ESG Benchmark process.
Anyone reading this knows that in recent weeks the UK has enjoyed particularly warm and dry weather considering the time of year. The most recent daytime temperatures across the country regularly being over 20° C; above seasonal norms.
Most people accept this unusual weather is related to global warming and while concerned, understandably we are all making the most of it.
Undoubtedly, people across the UK would like to see this trend continue, so we can enjoy the hot and dry summers more typically associated with the Mediterranean.
When it comes to climate change the focus is on warming and its impact, especially the annual rising temperatures. The Paris Climate Agreement focuses on limiting the rise to 1.5°C above pre-industrial levels. During 2024, in part due to specific weather pattern factors, the rise exceeded 1.5°C for the first time. Scientists expect 2025 to be one of the hottest years on record for air temperatures. This moves us ever closer to potential tipping points where we do not fully know what the effect will be in certain areas in the natural world; but the modelling is not encouraging.
Although warming is the issue, the real long-term risk for the UK and Northern Europe is that average temperatures might actually begin to cool.
Cooling may seem an unlikely discussion point when we are currently enjoying the early warm summer weather but the risk is real and growing.
Major tipping points will almost certainly affect the UK. The impact of rising temperatures on the melting Greenland icesheet and the Artic Sea ice risks thousands of gigatonnes of ice melting into the seas, impacting the temperature, salination and currents in the North Atlantic Ocean.
The UK climate is heavily influenced by the Gulf Stream which brings warm waters from the Caribbean to the shores of UK, Ireland and other parts of Northern Europe. It is a critical environmental factor which contributes to our climate.
In a scientific sense, the Gulf Stream is part of the Atlantic Meridional Overturning Circulation known as AMOC. This is a critical system of ocean currents that circulate water within the Atlantic Ocean, bringing warm water north and cold water south. In doing so, it moves massive amounts of heat, salt, and carbon dioxide around the globe as the figure below illustrates.
The data suggests the ice melt is accelerating and the North Atlantic is being impacted. There is so much concern that the UK Government recently invested £80m with a selection of leading climate science Centres of Excellence to develop monitoring systems, not a widely reported headline. The continued risk of ice melt also raises issues in relation to sea level rises.
As we get used to experiencing record summer temperatures, the question we have to ask is how we stabilise this.
A longer-term cooling climate would have serious commercial implications for some business sectors who are already committed to adaptation plans as the UK warms. Organisations who have considered the need for resilience have started to adapt their operational strategies, products and working environments.
Some business sectors, such as agriculture, have seen significant change as land-use models adapt to accommodate an overall warmer climate, for example:
Southern England has extensive areas of vineyards with climatic conditions more akin to France, producing top quality sparkling wines;
crops, such as maize, are now grown in farms in the north of England previously only seen in the south;
berry production is growing and expected to expand further.
Alongside crop development, solar farms are also proving a useful component in the agricultural mix either to reduce on-site energy costs or as an additional income stream.
If we see a gradual cooling, then the investments made in these areas may need to be reversed which presents financial pressures on farmers with strategies needing to be altered; the same would be true of other sectors.
In simple terms, if the ice sheet melt continues unchecked and AMOC is disrupted or weakened sufficiently, then the outcome for the UK and Northern Europe are potentially very serious.
Recent monitoring suggests that this process is already be underway.
For many scientists, an AMOC slowdown or shutdown is considered one of the most dangerous climate tipping points which could substantially cool Northern Europe.
The impact on business would be huge and current investment trends and assets being developed and created to support a warming UK, could become stranded with falling values if Northern Europe cooled; commercially a far from ideal scenario.
Whilst this is an uncomfortable and inconvenient fact, if we can limit temperature rise then we can hopefully mitigate or reduce the impact on the AMOC system.
Politicians do not want to discuss this in public as it is a complex issue. However, businesses need to be able to plan for the future.
We need collective action to accelerate the UK’s move toward Net Zero, not slow this process down. Net Zero presents challenges for large power infrastructure but if collective action across SMEs and Mid-Caps to reduce carbon footprints within business and supply chains, which reduce operational costs, then we can hopefully slow the rate of warming.
While the UK business cannot solve this global issue alone, we can lead and encourage others to hopefully make future planning easier. Now is the time for action; not in 2030 or 2050.
There is much discussion about the actions and policies of the Trump administration and its wider impact on equality, diversity and ESG related initiatives within businesses.
Some organisations are rushing to react to the rhetoric, to change programmes and reposition their actions as if they were wrong or flawed.
In my opinion, there is nothing wrong with programmes or policies which advocate for improved equality, diversity, inclusion and other factors which are incorporated within environmental social governance (ESG) in the workplace.
These are integral elements of The Ten Principles of the United Nations Global Compact. These principles have been drawn from UN Treaties; they are truly universal; they don’t expire and provide a foundation to ESG. This foundation is of particular value at times like this when short-termism is on the rise and well-respected norms of corporate sustainability are being challenged. Respect for human rights, for workers, for the environment and for the rule of law is always good business.
In truth, ESG is the foundation of any well managed and operated business which is seeking to succeed.
Every organisation needs good governance; and leadership who consider the risks to the business, its people and the environment, both in terms of the environment in which it operates but also the impact on the natural world.
In respect of people and the social aspect of ESG; a good employer has positive human resources policies, treats people with respect, equally and encourages people from all backgrounds to succeed. As many business examples demonstrate equality is about maximizing talent. Greater diversity is directly correlated with gains in operational effectiveness, improving innovation, strategy, decision-making as well as results and profits.
A good business also recognises its place in the community and treats its customers fairly; both core elements of ESG.
In an environmental sense, any business which ignores climate change and its own impact on the environment will fail to adapt or transition to net zero unless, of course, it is only planning for the short term. Either way, pretending climate change has no consequence, or it is not happening, will ultimately impact the performance and the future viability of the business.
ESG Benchmark’s assessment, determines whether a business is achieving the necessary ESG standards. Ensuring that when they do, they can demonstrate this with confidence to their stakeholders, just as they would their competence on Information Security, Quality Management or Cyber Security. All in all, giving customers peace of mind that their supplier has the right foundations in place to be able to serve their needs now and in the future.
As many will know in 2016 when the Paris Agreement was reached, the consensus was to set long term goals to substantially reduce global greenhouse gas emissions. The agreement was to hold global temperature increase to well below 2°C above pre-industrial levels and to pursue efforts to limit it to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.
In his new year message, UN Secretary General António Guterres advised us “we have just endured a decade of deadly heat. The top ten hottest years on record have happened in the last ten years, including 2024,” he further noted “this is climate breakdown — in real time. We must exit this road to ruin — and we have no time to lose.”
The fact is, there has been a collective failure to act decisively and effectively to slow climate change and to protect the natural world. Regrettably, all the indicators are pointing to the fact that 2024 will be the first calendar year when the global temperature has exceeded the 1.5°C above pre-industrial levels.
In November, Climate Action Tracker updated their warming projections, reflecting the various changes by governments to their national pledges and actions being implemented.
Due to the lack of positive action the “real world action” is currently heading us to somewhere towards 2.7°C above pre-industrial levels which places us in a natural environment unlike anything the human race has ever endured.
November 2024 was 1.62°C above the pre-industrial level and was the 16th month in a 17-month period for which the global-average surface air temperature exceeded 1.5°C above pre-industrial levels (Copernicus November 2024).
We have reached a critical tipping point and are already seeing signs that we are accelerating warming towards 2.0°C above pre-industrial levels and therefore, the risk to our environment, to business and to our everyday lives are growing by the day.
It is not all doom and gloom; there are many positives happening in the UK and internationally, but not at a fast enough pace. For example, the UKs transition to a renewable energy generation is moving forward steadily with wind, solar and hydro all providing an increased share of generation. The last coal fired power station has now closed. However, opportunities have been missed to enable us to be at a more advanced position.
Frustratingly, there has been a lack of leadership from politicians and as many have observed, too much talk and not enough sufficient action. Therefore, it will fall upon our society and businesses, large and small to drive the change to ensure we have an environment in which we can live comfortably and be in a position to manage risks.
Managing our natural environment and resource use is a key pillar within ESG. All organisations have a duty to consider the risks they face, identify the opportunities to change and actively reduce their impact on the environment.
It’s a misconception to think that due to its size, your business cannot influence matters. When you review your supply chain and the products or services being purchased, the extent and reach into our globally connected world is often surprising and therefore, we all can influence to advocate for better practices on the environment and the ability to promote change.
Impact reviews often highlight the need for collaboration with both suppliers and distributors to achieve sustainable change and this can be in everyone’s interest to ensure the future viability of a market segment or opportunity. Collaboration has the potential to contribute to global efforts to slow the warming impact of climate change.
If 2024 is to be a milestone for the wrong reasons, the time for positive steps is now.
The next 5 years are critical and whilst businesses often immediately focus on the sales or promotional plan at the start of a new year, in 2025, the focus needs to be an impact review on environmental factors, looking for changes which support sustainability. Enabling businesses to shape the strategy ensuring they have a sustainable business and market which will still be flourishing in 2030.
In today’s rapidly evolving business landscape, Environmental, Social, and Governance (ESG) principles are becoming increasingly important. For Small and Medium Enterprises (SMEs), understanding and implementing these principles can lead to significant benefits. We want to explore the core pillars of ESG, their relevance to SMEs, and how adopting these practices can drive growth, sustainability, and profitability.
ESG stands for Environmental, Social, and Governance. These three pillars encompass a broad range of factors that businesses must consider to operate responsibly and sustainably.
Environmental: This pillar focuses on the natural world, assessing how a business impacts the environment. It includes considerations like carbon footprint, waste management, and resource usage.
Social: This pillar pertains to the people within and surrounding a business. It involves treating employees, customers, suppliers, and the wider community ethically and fairly.
Governance: This pillar is about how a business is managed. It covers leadership practices, internal policies, risk management, and overall corporate governance.
Each of these pillars is interdependent, meaning that a holistic approach to ESG is crucial for a well-rounded and effective strategy.
Why ESG Matters for SMEs
1. Driving Economic Growth
SMEs are the backbone of the UK economy, acting as the primary drivers of growth. If the UK is to achieve its ambitious net-zero targets, SMEs must play a pivotal role. While government policies and large corporations are crucial, the real difference will be made by the SMEs that implement sustainable practices and innovate for a greener future.
2. Staying Ahead of Regulations
More regulations can help smaller businesses get ready for upcoming ESG changes. Right now, ESG regulations mainly affect large and regulated organisations, but soon they will apply to smaller businesses, too. If small and medium-sized enterprises start using ESG practices now, they’ll be ahead of the game – and avoid the stress and extra cost of rushing to meet the new rules later. We’re confident that SMEs can handle these changes on their own and be sustainable without needing strict laws.
3. Financial Performance and Investor Attraction
Numerous studies have shown that SMEs integrating ESG into their core values tend to perform better financially. Businesses that adopt these practices often see improved profitability and operational efficiency. Additionally, companies with strong ESG credentials are more attractive to investors looking for sustainable and ethical investment opportunities.
The Importance of Net Zero
Net zero refers to achieving a balance between the carbon emitted into the atmosphere and the carbon removed from it. The Paris Climate Agreement has legally bound countries to work towards net-zero emissions. For SMEs, this means taking steps to reduce their carbon footprint, which is not only beneficial for the environment but also for business sustainability.
Climate change affects everyone, from business owners to employees and future generations. By contributing to net zero, SMEs are playing their part in mitigating climate change impacts, ensuring a healthier planet for future generations, and aligning with global sustainability goals.
Overcoming Perceptions of ESG
Some SMEs might view ESG as irrelevant or as another layer of bureaucracy. However, the reality is that ESG practices can have a profoundly positive impact on a business. ESG is about more than just compliance; it’s about creating value through ethical practices.
Adopting ESG principles can lead to:
Improved Business Performance: Studies by Ernst & Young and PwC have demonstrated that businesses with strong ESG frameworks often outperform their peers. They achieve better financial results, improved efficiency, and stronger market positioning.
Enhanced Employee Retention and Attraction: Companies committed to ESG principles are seen as more attractive workplaces. This leads to higher employee satisfaction, lower turnover rates, and the ability to attract top talent.
Increased Customer Loyalty: Consumers are becoming more conscious of sustainability and ethical practices. Businesses that prioritise ESG can attract and retain customers who value these principles.
Inviting Conversations on ESG Benchmarking
For SMEs, the journey towards ESG excellence begins with understanding where they currently stand and identifying areas for improvement. Benchmarking is a crucial step in this process, helping businesses measure their ESG performance against industry standards and peers.
We invite all SMEs to engage in a conversation about ESG benchmarking. By doing so, you can gain valuable insights into your current practices, discover opportunities for growth, and develop strategies to enhance your sustainability efforts.
Reach out to us today to start your ESG journey. Together, we can build a more sustainable, ethical, and prosperous future for all.
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