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Business as usual is dead: A new business model is emerging

- Wits University

Philippe Joubert, a senior advisor and special envoy for energy and climate for the WBCSD believes we need to find a new way to do business.

Philippe Joubert, a senior advisor and special envoy for energy and climate for the WBCSD believes we need to find a new way to do business. 

Climate change is not only putting huge pressures on governments to adapt to, but it is also impacting on the way big business, globally, will operate in the near future. Big business, and any business for that matter, can no longer ignore the fact that the way they make and evaluate their profits has to change. 

“CEOs cannot ignore this anymore. It is no longer acceptable,” says Philippe Joubert, a French-Brazilian business executive, who is focused on building sustainability into the heart of business strategies to enable long-term growth. 

Joubert, a senior advisor and special envoy for energy and climate for the World Business Council for Sustainable Development (WBCSD), Chair of the Prince of Wales’s Corporate Leaders Group, and who is on the Advisory Board of the Cambridge Institute for Sustainability Leadership, presented a lecture at the Wits Professional Development Hub on Tuesday, 16 February. He believes there is an emergence of a new business model after the landmark agreement on climate change, which was reached at Paris COP21, and says companies have no alternative but to change the way they do business. 

Looking at the four drivers of business – regulation, risk, opportunities, and finance and insurance – Joubert says there is no way that the status quo can continue. 

“We have been benefitting from a free lunch from nature for far too long,” he says. 

Regulation 

On the regulation front, many countries are placing stricter sustainability regulations in place for companies to comply with. And where companies 10 years ago were able to ignore these regulations, companies like Exxon Mobil, who are being investigated for allegedly lying to the public and investors about how climate change risks might hurt the oil business and Volkswagen, who got caught in the Dieselgate scandal, found out the hard way that this is not allowed anymore. 

“VW’s market value has fallen by 30 billion and I am not sure that this is the end of it.” says Joubert. 

Risk 

Climate change also poses increased risks to companies as extreme weather events impact their operations. Many companies, like Coca-Cola and Nike, have changed their operations to move towards a zero percent impact on water use – not just because they want to conserve water, but because they believe water costs will become too expensive for their business. 

“South Africa is a water-stressed country, so you will have to deal with the consequences of this very soon,” says Joubert. 

In 2050, 70% of the world’s GDP will be produced in water-stressed areas. 

Opportunities 

Climate change will, however, also hold great opportunities for business, for example renewable energy has created huge business demand and a number of international corporations, like Coca-Cola Microsoft, Nestle, Nike, and Walmart, who have committed to renewable energy as their shareholders demand it. 

“When you put pressure on the research and development teams of a business, they will find a solution,” says Joubert. 

Finance 

When the guys with the deep pockets become nervous about where they invest their money, business is bound to change. 

“This is a good thing, because when big money gets nervous, it has a multiplying effect.” 

Banks and insurance companies are already shying away from investing (and insuring) carbon-intensive operations. Rating agencies are also keeping a closer eye on sustainability developments. 

“They don’t see mines in a water scarce area as a safe asset anymore.” 

Joubert says that companies need to – and will – change the way they evaluate and measure their profits. Hundreds of companies have already started placing a “shadow price” for carbon emissions and water usage, to reflect the possible cost of these factors on their future profits. 

“We have to measure what matters,” says Joubert. “We have to put a price on carbon emissions immediately, and make that price high enough to change behaviour. If you make a profit sending CO2 into the atmosphere because it is free of charge, misusing water or killing biodiversity, you are not making a true profit, you are just counterfeiting the money.”

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