By Horacio Arredondo*
This week media attention has focused both on the G20 meeting in Brazil and on COP29 in Azerbaijan (the annual United Nations conference on climate change). Both are connected by demanding greater cooperation from rich countries in the face of global challenges. In the case of COP29, the aim is to agree on a new climate financing objective, a major challenge, since according to the World Economic Forum, more than 200 billion dollars a year are required to address climate change. However, so far we have only reached a small part of that figure and the commitments made in Baku will probably not be enough.
With each new evidence that climate change is not an abstract threat, reality requires us to radically transform our way of life and, above all, the way we operate our companies. It is not about adopting commitments that we know in advance that we will not fulfill, but about proposing a structural change in our functioning as organizations and society.
Beyond the mitigation To reduce greenhouse gas emissions, there are two fundamental concepts associated with the climate crisis that especially concern companies: adaptation and the resilience. The effects of climate change are already here, and adapt It does not only involve reacting to them, but developing a anticipatory capacity to survive in a constantly changing world. This capability must be integrated on multiple fronts: in the way we design our cities, plan our supply chains, and manage our business operations. For its part, the resilience should not be limited to get back to normal after a crisis, because “normality” no longer exists. Being resilient means focusing on our continued reinvention capacity.
In addition to these two capabilities, it is critical to examine the role of the financial sector in facilitating climate action, as has been discussed in Azerbaijan. Allocating funds to projects labeled as “green” or “sustainable” was just the beginning; today we must go further in mobilizing resources to fight climate change. In Mexico, an important step was taken in 2023 by creating the sustainable taxonomybut we must prevent it from becoming a simple transliteration of international standards with no real impact.
While it is true that large corporations have enough financial muscle to adapt their operations and investments to these standards, the challenge is to include smaller companies, which constitute the core of our business fabric and, in general, lack access to affordable financing. Excluding small and medium-sized businesses from this transition not only affects their potential growth, but limits the scaling of sustainable solutions for the entire economy. Therefore, the financial sector must play a more proactive role, developing financial products that, in addition to being accessible, adjust to the reality of SMEs. Ultimately, the challenge is to create an ecosystem that allows and encourages SMEs to access financing, which implies simplifying requirements and optimizing transparency.
Finally, I urge companies to stop seeing sustainability as a burden or sacrifice. On the contrary, this is a magnificent source of innovation and differentiation in the market. Companies cannot continue to operate with the idea that climate solutions are a mere complement to daily operations, they need to rethink their entire business models, incorporating sustainability at the core of their strategy.
Organizations that manage to integrate adaptation and resilience capabilities will be the ones who lead in a context where sustainability will not only be a competitive advantage, but a condition sine qua non. This challenge is not only the responsibility of governments, it is a collective challenge, in which the private sector can assume a fundamental role.
As the UN Climate Change Executive Secretary, Simon Stiell, expressed at COP29, we must “leave the theater and get down to work.” We can’t keep kicking the ball forward. If we do not act today, tomorrow will be too late. And the bill, in the end, will not only be economic, but existential. Are we willing to pay that price?
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*Horacio Arredondo is dean of EGADE Business School
The opinions expressed are solely the responsibility of their authors and are completely independent of the position and editorial line of Forbes Mexico.
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