Pressure from the public, environmental advocates, and international lawmakers is mounting, pushing companies to make a conscious effort to reduce their environmental impact. And making a change is no longer just a nice thing to do.
“It’s a financial issue for many businesses now,” Lauren Penneys, director of business development at machine-learning company Descartes Labs, said at Fortune’s Most Powerful Women Next Gen summit in Laguna Niguel on Wednesday. “What we see a lot is, the conversation is being forced within these businesses themselves.”
That’s because factors like a company’s carbon footprint now heavily impact that company’s reputation. Consumers are becoming more aware of which companies are prioritizing the issue, and are often supporting those that do by buying their products. Businesses, if they haven’t already, have to start thinking about how they’re going to rise to the occasion, agreed the members of a panel at Wednesday’s summit.
All of the panelists worked for companies that put the environment at the center of their businesses. On the panel was Penneys; Patagonia general counsel Hilary Dessouky; Davida Herzl, co-founder and CEO of environmental analytics firm ACLIMA; and Sinye Tang, vice president of finance and strategy at geothermal energy company Dandelion Energy. All four offered pointers for other companies aiming to minimize their environmental impact.
Build Climate Change Into the Budget
Companies should factor the costs of using environmentally conscious suppliers, recycled materials, or other initiatives into their budgets from the beginning.
“Understanding where you are, what your baseline is, really is the critical first step to then determining where you can have the biggest ROI,” Herzl said.
Patagonia has put this piece of advice into action. The outdoor-clothing maker has made a commitment to be carbon neutral by 2025, said Dessouky. It also has a program called Worn Wear that allows customers to trade in or buy used pieces of its branded clothing, reducing waste.
Self-education Is Critical
Panelists stressed that companies have the responsibility to educate themselves on how they can make a difference.
Luckily, there are plenty of resources out there to help leaders along the way. The panel suggested engaging with local nonprofits to learn ways to get involved, and relying on those sources (among others) to research the best ways to create environmental policies for their businesses.
Engage Your Government
Beyond changing internal practices, companies can have a larger impact if they work with their local governments. Business pressure helps push governments, local and larger, to take action on issues they might not otherwise, the panelists said.
An example of such pressure happened last week, Herzl said. “A coalition of United States CEOs came together to demand that the United States stay in the Paris Climate Agreement,” Herzl said. “Those are the kind of moments … that can have a profound impact.”
More must-read stories from Fortune’s MPW Next Gen Summit:
—Chanel Miller is more than “Emily Doe”
—The “blameless post mortem” and other techniques that spur innovation
—Career pivots are daunting. Here’s how three powerful women made them work
—Goldman Sachs removed one word from recruiting materials and female hires soared
—Exclusive: Enterprise scion Chrissy Taylor to become car rental giant’s CEO
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