The invisible cost of nature

Companies have to change. Dramatically.

So says Sunny Verghese, co-founder & group CEO of Olam International. That’s because the ultimate environmental cost of global production in many sectors – what he calls the “invisible cost of nature” - risks becoming unsustainable unless change occurs.

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“We're losing [trillions of dollars] every year under our noses but we don't realise that is the case,” he told ANZ’s Finance & Treasury Forum. “Companies have to change.”

“The efforts these companies are making toward sustainability ultimately lead to better financial performance.” - Won

Speaking at the forum in Singapore, Verghese said businesses need to ask if they are leaving a better planet for us all – and that broad acceptance of industry standards is one solution.

“Adhering to a certain ESG (environmental, social and governance) standard - which banks and financial institutions… are now insisting on - allows everybody to average up their game and lift the game … becoming more sustainable,” he says.

Shinbo Won, Director, Investment Stewardship, agrees businesses “have to be focused on sustainability”.

“It strengthens our view that a lot of the research out there supports sustainability,” he says. “[Research shows] the efforts these companies are making toward sustainability ultimately lead to better financial performance.”

Bankers are seeing the same impetus: ANZ Head of Sustainable Finance, Katharine Tapley, says she has noted a stark shift in dialogue when dealing with clients and investors.

“Investors are increasingly asking their companies that they invest in to demonstrate how it is that they are transitioning to a low carbon economy, transitioning to a more sustainable economy,” she says.

“From both ends of the spectrum we're seeing this become a very key driver.”

Sunil Gupta, Head of Renewables at Sembcorp Industries, a fourth panellist, said businesses around the world are starting to take notice. Some financial institutions are simply refusing to provide debt for fossil-fuel related projects.

“It's not just a matter of what we want to do from sustainability,” he says. “Our stakeholders are telling us they're not going to be our partners.”

Shane White is Content Manager, Institutional at ANZ

This article was originally published on ANZ’s Institutional website.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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