The word sustainability immediately brings our minds to renewable fuel sources, reducing carbon emissions, protecting environments and a way of keeping the delicate ecosystems of our planet in balance. Sustainability looks to protect our natural environment, human and ecological health while still ensuring that we are developing and not compromising the future.
In supporting the sustainable development goals journey, it is important for businesses to have sustainable business strategies that allow them to thrive and grow while simultaneously solving some of the world’s biggest challenges. Adoption of sustainable business practices can positively or negatively impact share value of an organization. The impact is particularly acute for business in the energy and petroleum sectors as these contribute directly to increasing, preserving or depleting environment resources (renewable and non-renewable).
Sustainable businesses are generally more attractive to shareholders- especially in the wake of the adoption of the UN sustainable development goals, we have seen and continue to see shareholders vote for sustainable business practices, prefer sustainable business offerings and in some cases choose board leadership who can drive the sustainable business agenda- such action is often termed shareholder activism. This week for example in the global energy sector we have seen Engine No1 get at least 2 board seats on Exxon Mobile Corp. Engine No 1 is a hedge fund deeply committed to funding sustainable business practices and resolving climate change issues often termed as a sustainability activist. Exxon Mobile Corp is one of the world’s largest publicly traded international oil and gas companies. It has headquarters at Irving, Texas. It is a child of the merger between Exxon (formerly the Standard Oil Company of New Jersey) and Mobil (formerly the Standard Oil Company of New York).
Engine No 1 has a stake in Exxon and at least 2 persons from Engine No 1 leadership were this week elected by Exxon shareholders to the Board, simply because shareholders feel that Exxon has not done enough with regards to deepening pledged cuts on greenhouse emissions, and shareholders believe Engine No 1 leadership will steer the oil company in the right direction with regards to sustainability. We expect to see similar behavior take route across all sectors and industries including in Africa especially for listed companies where leadership roles are elective. More and more shareholders, investors and regulators are calling business management to account with regards to sustainable business practices.
In the particular case of Exxon Mobil Corp, the CEO Darren Woods reelected mainly because of his alignment with global efforts to fight climate change and ensure sustainable development- by advancing low carbon projects and improving profits. The failure to entrench sustainability within the business in the last couple of years contributed to Exxon’s loss of 22 billion dollars amidst the Covid 19 pandemic. Non-sustainable businesses are proving more expensive and less profitable to run.
Every business in Kenya and Africa needs to align its business bottom align with sustainable business practices. No effort should be spared and alignment may include hiring experts and PR companies to support the board in coming up with viable solutions in terms of projects and policies that will enable business to ensure that the business bottom line remains sustainable.