Where does culture meet climate risk?

The fast view

• We see a future where externalities are increasingly valued and priced by the market. A new set of tools is needed to uncover the companies that thrive in that environment.
• An appraisal of corporate culture can be the key to uncovering sustainable businesses.
• Culture is about values and purposes, behaviours, how people interact and how the organisation is set up. In a strong corporate culture, there are engaged employees, people make better decisions and there is more space to innovate.
• In our work with the London Business School, we see that culture matters. Those businesses with a strong culture outperform and the advantage is not competed away.
• Next Era Energy is an example of a strong culture in action. It is a leader in renewables with an innovative culture, driven by engineers.
• There are four recurring elements for strong culture: an ownership mindset – where the focus is on business growth rather than the completion of tasks; recognition – not just financial recognition but also peer to peer recognition. This becomes increasingly important when businesses go through a crisis. Trust is also important, alongside strong support structures that motivate and develop employees.
• We observe real differences in the innovation impetus from engaged employees.
• How does it link to climate change? A strong culture includes an understanding of long-term risks, of which climate change is one. If a company is thinking about its people, it is usually thinking about its other key risks.
• Culture can’t necessarily be expressed in numbers. For example, it is not necessarily how many women are on the board, but whether their contribution is valued. Our approach seeks to analyse what really matters to the future of a business.