There’s no doubt that the concept of sustainability, whether viewed from a business or personal perspective, takes in a broad span of issues. This can be seen perhaps most easily in the United Nations’ 17 Sustainable Development Goals, which aim to train the world’s focus on our greatest shared challenges, ranging from poverty and inequalities to pollution and corruption.
This framework of goals can be a useful tool to start making sense of sustainability at a high level, but clearly not everyone can – or should – be trying to tackle all of these challenges.
In deciding which issues to prioritise at Handelsbanken, we examined a long list of possibilities through a prism of so-called “materiality” ie what we are best placed to materially impact. This involved asking three overall questions.
- How relevant is the given issue to our type of organisation and its footprint?
- How much could the issue resonate with - and thus our impacts be amplified by - Handelsbanken’s driving values, (decentralised) way of working, and existing relationships?
- And finally, how do we gauge the overall opportunity to create positive societal impact, and what could be the wider benefits for our customers, the risks we carry as a bank, and our wider reputation as a responsible business?
After all, there’s no point jumping on a train bound for nowhere you know, simply because it’s packed with other passengers. You need to decide your own destination and how to get there, based on the meaningful differences you can make.
In our case, this process led us to identify 12 environmental, social and governance (ESG) issues where we want to generate particular impact over the years ahead, working with our customers, communities and wider stakeholders. You can read about these focuses and our overall view on sustainability on our dedicated Sustainability Hub.
Now, having observed the importance of materiality, there is one train everyone can and needs to jump aboard, since the destination concerns all of us and future generations, and the long journey carries both big risks and big opportunities. I’m referring, of course, to tackling climate change.
The UK is committed in law to achieve net zero greenhouse gas emissions by 2050. Recognising the urgency of the situation, and the need to take a lead where we can, we have set our own goal to reach net zero at least a decade earlier.
This means not only driving emissions out of our own operations and working with our suppliers on theirs. But, crucially, it also means supporting our customers to identify and eliminate their emissions in line with the Paris Agreement’s Opens in a new window 1.5 degree pathway.
The overwhelming evidence is that a 1.5 degrees Celsius increase above pre-industrial temperatures is a critical threshold; below this we can still hope for the world’s climate to remain stable and to some extent manageable. We have already reportedly reached 1.1 degrees, and global emissions have yet to peak.
Handelsbanken has committed to achieving net-zero by 2040 – a full decade ahead of many others. Ambitious though our ‘by 2040’ goal may seem in this context, we are hardly going it alone. Many of our corporate customers have made or will be considering their own net-zero commitments, with some already well advanced on their journeys.
Furthermore, this and future governments will have no choice but to ratchet up requirements on households, public and private sectors to decarbonise. Itsr own climate advisers say that emissions should be slashed by 78% if the path to net-zero is to be anything like smooth. That’s why policymakers are focused on driving action throughout the decade we are already in. We see early examples in relation to minimum EPC standards for buildings, and the ban on internal combustion engine sales.
The process of decarbonising our economy, these days often referred to as “climate change mitigation”, began many years ago with the shift towards a renewables-led energy system. And this greening of the grid - to be complete by 2035 - will certainly enable households and organisations to slash emissions from the energy they buy in. However, just as central to bending the curve towards zero are two other areas: making our buildings and appliances much more energy efficient, and adopting low- or no-carbon replacement technologies such as heat pumps and electric vehicles. These and similar changes should also lead to lower energy bills and a more comfortable work or home environment.
Of course as consumers or business owners, we can also affect the wider pace of decarbonisation through changes in our everyday behaviour and the purchases we make - and again these choices will often bring with them wider environmental and social benefits.
Despite the enormous changes our economy and lifestyles will undergo over the coming decades, we still need to adapt to climate change itself, much of which is already inevitable. In the UK, we are already experiencing an increased frequency and severity of heat waves, drought, storm weather and flooding, which will only intensify. Naturally this has a range of knock-on impacts, not least on the biodiversity we rely on variously for our way of life, on the ground beneath our feet and our buildings, the resilience of our infrastructure, and the range of events against which we need to protect ourselves, both physically and financially.
For all of these reasons, if you haven’t yet started to think about what climate change means for you, in terms of risks, responsibilities or new possibilities, this would be the most natural point of departure on your broader sustainability journey. And as ever, we’d be only too glad to sit down and discuss your situation, concerns and ideas. To find out more about what we’re doing on climate transition and sustainability, please visit handelsbanken.co.uk/sustainability.