Pipeline Insight: Sustainability Will Affect Your Customers’ Supply Chains and Finances – Finance – Strategy
IT vendors who haven’t considered the importance of sustainability to their business customers will find Michael Salvatico’s keynote address at this month’s CRN Pipeline conference telling.
Salvatico works with companies and regulators to advise on responsible investing trends and identifying ESG issues in his role as Head of ESG Solutions for Asia, Pacific, Middle East and Africa at S&P Global Sustainable1.
He says sustainability as a business priority impacts how companies operate, their strategic goals and how they manage risk.
CRN spoke with Salvatico ahead of his keynote and panel discussion at the CRN Pipeline conference later in August.
One of the examples of the business impact of the Sustainable Development Goals cited by Salvatico is in supply chains, where the focus is increasingly on the sustainability of a company’s suppliers.
“If I’m a company and I set a net zero goal, stakeholders are going to ask me about my scope 1 emissions, the emissions I’ve produced myself, the scope 2 emissions, the emissions that I buy and scope 3 emissions, emissions that come into my organization from my supply chain and throughout the value chain,” Salvatico said.
“So that means that in addition to all of those things when I look at suppliers that are important to me, another factor to consider is the carbon intensity of the products that I buy from that company, because that is going to contribute to my carbon footprint. carbon and how customers rate me. So there’s a direct link, if you will, between the metrics that supply chain companies produce and that get fed back into the organization.”
Access to capital
Regarding access to finance, Salvatico highlights the change that has taken place in the financial sector, where sustainability is now assessed with respect to both equity and debt.
“We are at a pivotal moment for the world of finance, where the financial industry has recognized the importance of sustainability and is evaluating the sustainability of the organizations it funds,” he said.
Salvatico said banks are likely to assess a company’s risk through the lens of climate resilience, such as an organization’s exposure to physical risks such as wildfires or floods, or what would be the impact of a carbon price on the company’s operations.
“Companies assessed through this lens that have lower risk may benefit from a reduced borrowing rate.”
As companies seek to deliver shareholder returns and improve their bottom line, consumers and investors are placing increasing pressure on companies to be good corporate citizens.
“The expectation of companies and their behavior is that they behave responsibly,” Salvatico said.
“There is evidence to show that being a good corporate citizen helps improve a company’s long-term sustainable profitability.”
From the perspective of attracting and retaining talent, producing good quality products and increasing trust in the community, sustainability can provide competitive advantage, he said.
He told CRN: “If you’re a company that cares about its people and the quality of the product you make, you attract the right talent, you create a product that will be used, be valued, it’s going to have an advantage. If you are selecting vendors, also with sustainability in mind, you are likely selecting better vendors, vendors that are also more focused on talent retention, talent attraction, injury reduction, and producing good products.
Join Michael Salvatico and business leaders as they unveil the future of Australia’s IT channel at this year’s CRN Pipeline Conference August 23-26 on the Gold Coast. Register your interest in attending the conference.