Ethical leadership for companies: guiding the green transition

Article published on rethinkeverything.ilsole24ore.com in partnership with Il Sole 24 Ore

Profit must now come hand-in-hand with responsibility. That does not just mean responsibility towards shareholders, but to all other stakeholders. Employees, suppliers, customers, communities; the climate, ecosystems and the planet. Supporting companies in this transition is the mission of Italian enterprise NATIVA. It defines itself as “a regenerative design firm that supports companies in a radical business evolution, accelerating their transition towards regenerative economic models”¹.

Founded in 2012 by entrepreneurs Eric Ezechieli and Paolo Di Cesare, NATIVA works with firms spanning all sizes and sectors. Its clients include Intesa Sanpaolo, OVS, Danone and Scarpa, and its wide-ranging projects create concrete and substantial changes to the way corporations work.

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Modifying internal governance processes, involving stakeholders in corporate decision-making and increasing transparency are just three examples. Others include improving resilience in the face of climate change; working to steadily reduce the use of fossil fuels in favour of renewables; involving all parts of the supply chain in sustainability objectives; applying circular economy principles at the product design stage; converting waste into resources; and making use of innovative financial instruments that can sustain such development. It goes beyond just compliance and legal requirements.

NATIVA has been a benefit corporation since 2016². This legal status is reserved for firms that have the explicit aim of creating value for society and the environment, in addition to making a profit. Its work has included helping financial firms such as credit institutions and asset management companies create offerings centred around environmental, social and governance considerations. It also assists other companies in accessing these products: it contributed to the issuance of over EUR 334 million in sustainability-linked bonds in 2022³.

Guiding companies towards identifying sustainability objectives is one part of what NATIVA does. Empowering them with programmes to measure and improve their performance is another part. In 2022, it launched the CO2alizione initiative with Italy’s Sustainable Development Foundation to support corporate transitions towards climate neutrality. Around 90 Italian companies have already signed up to change their articles of association⁴.

“Conversions” to corporate sustainability is what consumers are increasingly calling for. But this creates a risk of greenwashing. Ensuring companies’ climate claims stand up to scrutiny is paramount for NATIVA, and it sees a scientific approach as the way to do this. “Detailed measurements of a companies’ activities, both good and bad, help avoid false claims and begin a process of continuous improvement. We must remain conscious that the transition towards sustainability will be a long one. There will be complex sectors that need more incentives and more help, as well as companies that will be further ahead and can set an example for others.”

The importance of an equitable transition

NATIVA’s work over the past decade is in line with global commitments to the environmental and social aspects of a green transition. Companies are being called upon to play a key role in these changes, and more and more of them are adopting measures to reduce their carbon emissions in the face of scarce resources, increasingly frequent natural disasters and consumer demands, according to an International Labour Organization (ILO) report from late 2022⁵. The report identifies various factors driving companies towards a more sustainable environmental footprint, including new laws regulating transport emissions and sustainable resource use, green procurement standards, sustainable business models and remote working. The willingness of entrepreneurs and the expectations of workers are key elements in encouraging companies to change, the ILO adds.

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Nine in every 10 companies say they have taken action to support the green transition, according to a Eurobarometer survey carried out for the European Commission in 2021⁶. There is variation within the continent – 99% of firms in Norway claim to have made changes, compared with 58% in Albania. But initiatives are widespread; most companies in middle- to low-income countries outside Europe are adopting measures to support the environmental transition, the ILO study shows. Large companies with better access to green technologies and more binding legal obligations are more likely to have adopted measures promoting the efficient use of resources and to be offering eco-friendly products and services. Many micro, small and medium-sized enterprises are working on ways to save energy, and to more efficiently manage waste and resource use.

There are still obstacles to be tackled. Multinational companies face uncertainty over governments’ climate policies, relatively limited availability of green technologies, as well as doubts around returns on investments. Small and medium-sized enterprises have issues with access to funding and skills, may lack information and expertise on innovation, and are seeing inconsistencies in the application of standards.