COP26 - ServiceNow UK&I Chief says more regulation needed to penalize companies not doing enough on climate

Profile picture for user ddpreez By Derek du Preez November 9, 2021 Audio mode
Summary:
Jordi Ferrer, ServiceNow’s UK & Ireland VP and General Manager, says that too many decisions are purely price-based, rather than taking into account broader value metrics.

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(Image by Gerd Altmann from Pixabay )

Technology companies attending COP26 in Glasgow this month have struggled to reach a consensus on how the industry can best come together to tackle the climate crisis. Whilst there is agreement on the need for more collaboration and transparency, there is a reluctance to place limits on the capitalist structures that have enabled these giants' success. 

However, ServiceNow's VP and General Manager of UK & Ireland, Jordi Ferrer, gave a frank assessment of what needs to change. Whilst Ferrer believes that capitalism and economies of scale are not incompatible with protecting the environment, he does want to see more value placed on non-price based decisions and for companies that are not doing enough to be penalized. 

It wouldn't be right to say that ServiceNow has this all figured out at this moment in time, but Ferrer's comments point to an issue that goes beyond a single organization. Ferrer's remarks speak to the systemic problems we face in tackling the climate crisis and highlight the role that governments need to play in order to force change. 

It's also worth noting that Ferrer believes that even with harsher penalties for those not taking the climate crisis seriously, there will be bigger opportunities for green-focused companies. The markets just need to be forced to create conditions that favour those sustainable businesses. 

Ferrer highlights how COVID-19 has shown just how quickly change can happen, if the powers that be want it to. He says: 

I think that we firstly need to set a higher expectation and objective. The sense of urgency that COVID-19 brought…it was life and death for many companies, it was a question of survival. So that forced the corporate agenda and the government agenda to change. I think the danger is that we just go back to normal. So the question is, what governance are we putting in place, in government and the private sector, to force that greater aspiration? 

I think a lot of the time, those objectives are either not aggressive enough, or they're not public. That to me, is what it takes. And I think the younger generations are going to have a set of expectations.

For many years, I've been thinking, why is it that a lot of times the metrics that are put in place to decide on a public bid don't include environmental impact? Why doesn't it include recycling? Why doesn't it include the social aspects? 

Better, transparent metrics

Ferrer argues that a new framework with stronger requirements needs to be formalized, so that companies can start enforcing it. In his eyes, he still sees too many price-based, short term decisions being made, without thought to the long-term environmental or social consequences. He explains: 

I think consumers are becoming more discerning. But when it comes to B2B, buyers need to be more discerning. I think there's still too much price based decision making, not so much value based decision making. If you're considering environmental cost, social cost, governance cost implications in your decisions, then you're also going to force the B2B market to move. I just think that we need to force more reporting. 

I also think, again, regulation would really help. I think a lot of times organizations complain that regulation slows things down. But you need regulation. Capitalism is great, but it needs to have boundaries. Accounting for your environmental impact, your social impact, it is key. But now, how are you communicating that to the consumers? To the end users? How are you measuring the impact?

Ferrer says that he doesn't fundamentally believe there is anything wrong with the concept of industrial scale, but that we are currently stuck in a cycle whereby growth has been ‘at the expense of…' since the beginning of the Industrial Revolution. 

Ultimately this comes down to more and better regulation and companies accounting for things beyond ‘growth' as the sole driver. And penalising those that don't play ball. He adds: 

What is it that you're trying to maximise? I think there's nothing wrong with economies of scale, as long as you've been respectful and you are not diminishing the value of the people or the companies that are enhancing whatever you're doing.

At the end of the day, what we're missing are the cost of the inputs, the environmental impact of those inputs. And then if we quantify that, then there's nothing wrong with the capitalist economy. What's wrong is to not account for your environmental, negative environmental impact. That's what's wrong. The question is: what is regulation there to do to penalize companies for not doing the right thing? 

What we need is more transparency, as to the impact. More metrics so that buyers and consumers can make more discerning decisions, as to what the reality is. 

I have no doubt that if we continue on the same path of sustainability, of environmental impact, of societal impact, we'll start getting to a place where the impact is minimised. It gets smaller and smaller. And hopefully the companies that really take this seriously and use that as an advantage will win over those who don't care.

My take

It was refreshing to hear such a clear and to the point take on what's required to deal with the grave situation we find ourselves in. It's been said time and time again that the climate emergency is actually getting worse, not better, and we need radical ideas to quickly cut carbon emissions. Ferrer's points, to many, will not even seem that radical - just obvious. However, it sometimes feels that things aren't moving quick enough and companies would rather stick to the status quo. 

But as Ferrer notes, change isn't a bad thing. These changes could be good for customers and good for the companies themselves, in the long run. I'll finish with his words, where he says: 

I'm very hopeful that things will get better. But that means that we have to do a lot of things now to enforce some rules that discriminate against companies which do not do the right thing. 

What will happen is that if you tighten regulation, then probably profitability will be impacted in some cases. In some cases, probably negatively. But for companies that will do the right thing, they will gain more market share, they will gain more customer loyalty and probably end up being better off. 

Disclosure - ServiceNow is a diginomica partner at time of writing.

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