President Donald Trump finally fulfilled his campaign bluster to withdraw the United States from the Paris climate agreement.Predictably, the global condemnation was immediate, and resounding.
In a stinging rebuke, French president Emmanuel Macron derided Mr Trump's decision and mimicked the latter by calling for the world to "make our planet great again". His Elysée speech in English was unprecedented for a French president, underscoring his disapproval.
European Union leaders rejected Mr Trump's suggestion to renegotiate the Paris accord. Premier Li Keqiang vowed that China would uphold its Paris pledge. India, the third-largest polluter behind China and America, promised to stay the course; Prime Minister Narendra Modi described failure to act on climate change "morally criminal". Here at home, Singapore reaffirmed its commitment to the pact.
But political leaders were not alone in their dismay. Industry's titans led corporates in expressing solidarity.
Tesla CEO Elon Musk and Disney boss Bob Iger quit their White House advisory roles. Goldman Sachs chief Lloyd Blankfein was stirred to use his inaugural tweet to express disappointment. CEOs of top companies like Google, Apple, Facebook, Microsoft, Salesforce, BlackRock, JPMorgan, Cargill, Dow Chemical and General Electric echoed criticisms. Even oil majors Exxon Mobil, ConocoPhillips and BP voiced support for the Paris deal, just before Mr Trump's announcement.
Climate change, sustainable development - sustainability - these are not mere corporate buzzwords. That corporate giants were emphatic in disapproving Mr Trump's decision stridently exhibits their conviction: sustainability is not only fundamental to Earth's survival, but also essential for commercial success.
Climate change, man-made and caused by growing greenhouse gas emissions, is real. And its effects pose real threats to businesses. Supply chains are disrupted when climate change-triggered freak weather events, like floods, hurricanes, heatwaves, droughts and blizzards, wreak devastating havoc on factories, infrastructure and crops.
The Center for Climate and Energy Solutions attributes US$15 billion (S$21 billion) to US$20 billion of losses directly to a single event - Thailand's 2011 flooding. Honda reckons that it lost over US$250 million when floods destroyed its vehicle plants. HP blames more than half of its 7 per cent revenue decline, in 2011's fourth quarter, on a hard disk shortage caused by the floods. Insurer Lloyd's forked out US$2.2 billion in claims, its third-biggest loss in its history
In Paris, countries had pledged to cap global temperature rise to below 2 deg C above pre-industrial levels, while targeting a 1.5 deg C limit. Putting this into context, NASA data indicates that 2016 was the warmest year ever, with temperatures more than 1 deg C above pre-industrial times. Sixteen of the 17 hottest years were after 2000, since record-keeping started in the 19th century.
We may not feel a ½ deg C increase, but it makes a monumental difference. It will engender reduced crop yield, greater droughts and higher sea levels. A recent scientific study, published in Earth System Dynamics, indicated that with a 2 versus a 1.5 deg C increase, crop yields will be twice reduced in tropics like Central America and West Africa.
In America, as the Risky Business Project highlights, a warming climate means that the Midwest will probably face crop yield loss of up to 19 per cent by mid-century and 63 per cent by end-century. This will distress agricultural supply chains, cause significant unemployment and harm food security. The Midwest accounts for two-thirds of America's corn and soybean production. As of 2012, it comprises over 520,000 farms worth an annual US$135.6 billion.
The impetus for companies to take action is clear. They are paying growing attention to climate risks. The Carbon Disclosure Project reported that its "supply chain" membership grew 20 per cent from 2015 to 2016. It counts 89 members like L'Oréal, Nestlé, Unilever, Toyota and BMW, which harness their nearly US$3 trillion procurement budget to request emissions-related data from over 8,200 suppliers.
Risks aside, businesses are reacting to evolving social attitudes and consumption patterns. Consumers are increasingly sustainability-conscious.
A 2015 Nielsen survey found that for consumers willing to pay a premium, sustainability reasons registered 10 to 13 percentage points higher than all respondents' averages. Millennials constituted 72 per cent of those accepting of higher prices. But lest we think it is only younger generations who care, 51 per cent of baby boomers were prepared to pay extra, seven percentage points higher from the previous year. Unilever reported that in 2014, its sustainability brands grew twice as fast as others, contributing half of its entire portfolio's growth.
While government can lead the sustainability charge with accords and legislation, industry must therefore play a driving role. MSCI data shows that the world's largest companies' market capitalisation was a whopping US$35 trillion, twice America's 2015 gross domestic product. With their behemoth size, the related risks and opportunities, corporates cannot turn a blind eye to sustainability.
Sustainability has also been core throughout Singapore's history. Our government launched the Garden City programme in 1967, just two years after independence. Trees were planted, streets scrubbed, the Singapore River cleaned and anti-pollution laws enacted. Today, we are indeed a city in a garden.
But sustainability is more than a clean environment. The Sustainable Singapore Blueprint (SSB) makes this clear. To achieve a sustainable nation, three mutually-reliant pillars must be reinforced: an active economy providing jobs; a beautiful society where inclusive communities have a high quality of living; and a cool and clean environment enabling a thriving country. Today, June 5, marks World Environment Day, an appropriate opportunity to reflect on this shared vision.
Whether government, citizens or industry; we have a collective responsibility for achieving sustainability. Prime Minister Lee Hsien Loong summarised this in the SSB, "We will build a green economy, nudging our businesses into doing good while also doing well. We also encourage civic participation for an active and gracious community… It is our duty and responsibility to build on their (our pioneers') legacy, to make Singapore even greener and more liveable, and to work with others to build better cities and a healthier planet, for ourselves and future generations."
The writer is Head of the Sustainability and Stewardship Group at Temasek International.
