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Richard Barker is a member of the International Sustainability Standards Board and professor of accounting at Oxford university’s Saïd Business School, where he served as deputy dean.

The greatest change we face is the sustainability-related transformation of the global economy. We can either figure out a way to make economic activity sustainable, or the system starts to break down.

There are two alternative outcomes. The first is that global warming remains within the Paris Agreement target of 1.5C. This will mean the change in how we power and operate our economy will be fast and dramatic, and will create winners and losers. The second is if we maintain our trajectory of global warming beyond Paris limits, where the transition to a sustainable economy will be too slow to prevent unprecedented disruption. Winners would be outweighed by losers. Either way, there is change and uncertainty, and thereby opportunity and risk.

A lead indicator of this change is the auto industry, where the transition to electric vehicles has already been disruptive. Tesla is a relatively new entrant, yet its market capitalisation is now roughly equal to the rest of the global top 10 automakers combined. This disruption continues. A truly zero-carbon vehicle is also carbon-free in production. Porsche set a target of (net) carbon neutrality throughout its value chain for new vehicles from 2030. Others will follow.

The case for decarbonising arises because a sustainable economy is more valuable than one heading for collapse

Inevitably, the implication is that Porsche’s suppliers must decarbonise. An example is Norway’s Hydro, which is investing in recycling to produce aluminium with a carbon footprint 30 times lower than the industry average. In turn, there are implications for mining and other industries.

Transitions such as these are not philanthropic, but business decisions, to enhance economic value. The case for decarbonising arises because a sustainable economy is more valuable than one heading for collapse. As this becomes increasingly evident, companies that better manage climate-related risks and opportunities will be the suppliers of choice. There will be more regulation (and taxes or subsidies), changes in consumer preference and greater social pressure on the licence to operate.

This enhances the business case for sustainability, increasing the opportunities for innovation and the risks from business as usual. One example is in electricity generation, where solar and wind have become economically competitive and are gaining market share.

While the climate-driven transition is under way, other transitions will follow. Climate change is one of nine “planetary boundaries” that economic activity cannot sustainably exceed. Others include biodiversity loss, water use, change in land use (like deforestation), and pollution.

With water, withdrawals already exceed sustainable levels in several regions. This problem is set to grow as the effects of climate change reduce flow in glacier-fed rivers. Non-dairy milk is growing, given that oat milk uses 600 litres less water per litre of milk than its dairy alternative. Likewise, the market in second-hand clothing is increasing, reflecting the fact that a cotton T-shirt takes 2,700 litres of water to make.

Land use is integral to food and other renewable natural resources, manufacturing and construction, waste management, climate mitigation and access to critical minerals. All economic activity depends in one way or another upon the resources of nature.

Companies that finance, insure, advise or provide other services to industries are indirectly dependent on natural resources, creating risks and opportunities. In the 2024 World Economic Forum ranking of global risks over a 10-year horizon, the top four are all environmental: extreme weather events; critical change to Earth systems; biodiversity loss and ecosystem collapse; and natural resource shortages.

Executive MBA Ranking 2024

This is an article from the EMBA report publishing on October 14

Your business might be exposed even if its environmental impact is low, such as through vulnerability to climate-related weather events. State Farm, the largest property insurer in the US, stopped offering homeowner insurance in California in 2023, declaring it “necessary . . . to improve the company’s financial strength”. These outcomes have repercussions: the college graduate who can’t get a home loan because she can’t get insurance has an effect on retail banking and on the employer seeking to hire her. Disruption of systems can have widespread consequences, many of them not immediately apparent.

One illustration is pandemic risk, which increases as economic growth causes deforestation and other changes in land use, especially as livestock and wildlife come into closer contact. Preparing for the next Covid-19 might feel like normal business practice in risk management and strategic planning. It should. Global economic activity has reached a scale where a stable climate and an abundance of natural resources can no longer be taken for granted.

Viewed in terms of share price performance and access to capital, investors want to understand how any business is responding to these risks and opportunities. Reporting on sustainability to investors is not a compliance exercise, it is a communication of value creation and business resilience.

IFRS Accounting Standards are now complemented by IFRS Sustainability Disclosure Standards, which are being adopted across global jurisdictions. Both enhance financial reporting, and help companies communicate value-relevant information in the transition to a sustainable economy. 

Views expressed are those of the professor and may not reflect those of the ISSB

Shares in the owner of convenience store giant 7-Eleven have jumped after a report that it has received a new takeover offer from Canadian rival Alimentation Couche-Tard.

The new offer values Japan’s Seven & i Holdings at more than $47bn (£36bn), which is around 20% higher than Couche-Tard’s original offer, according to Bloomberg News.

In September, Seven & i rejected a $38bn approach from Couche-Tard, saying it grossly undervalued the firm and that any potential takeover would face major regulatory hurdles.

BBC News has contacted Couche-Tard and Seven & i for comment.

Seven & i shares were around 5% higher in morning trade in Tokyo after initially jumping by 9.5%.

The new offer was reportedly submitted to Seven & i on 19 September and no discussions between the two sides have taken place since.

After the previous offer was rejected, Seven & i was added by Japan’s Finance Ministry to a list of businesses that are considered to be “core” to the country’s national security.

The move, which is largely considered to have little impact on Couche-Tard’s buyout attempt, forces prospective foreign investors in such Japanese companies to seek a government review.

A Japanese company of Seven & i’s size has never been bought by a firm from overseas.

Historically, companies from Japan were more likely to buy foreign businesses.

Last year, the Japanese government issued new guidelines on mergers and acquisitions, which called on companies to not reject credible takeover offers without proper consideration.

7-Eleven is the world’s biggest convenience store chain, with 85,000 outlets across 20 countries and territories.

If the deal went ahead, Couche-Tard’s footprint in the US and Canada would more than double to about 20,000 sites and create a 100,000-strong global convenience store chain.

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UK business leaders have pressed ministers to publish a clearer timeframe for their sweeping reforms to employment law, as unions and employer groups received a first glimpse of the measures to be set out in draft legislation later this week.

The Financial Times revealed on Friday that many of the measures in “Making Work Pay”, a package the Labour government has billed as the biggest upgrade of workers’ rights for a generation, will not kick in until as late as 2026 or even — in a couple of cases — until 2027.

Deputy prime minister Angela Rayner and business secretary Jonathan Reynolds met unions and business groups on Tuesday to brief them on the broad content of the employment bill they will publish on Thursday. 

But business groups said that while they now had a clearer view of which measures would be included in the bill or implemented in other ways, there was still scant detail available on how central measures — such as the “ban” on zero-hour contracts or the right to day one protection against unfair dismissal — would be implemented.

Measures that are a priority for unions — including new rights for them to access workplaces — also have yet to be worked out. 

“Almost all [the measures] will require a lot more work,” one business lobbyist said.

The government is racing ahead with the legislation in order to meet its political promise to deliver the changes “within 100 days”.

Yet in reality, the imminent employment bill will be “skeleton legislation” and many of the biggest reforms will require further consultation and secondary legislation before it will take effect in workplaces — pushing implementation back by months or even years for certain measures. 

The government is expected to set out its thinking in more detail in a commentary to be published alongside the bill. But it was not yet ready to publish consultations on the regulations that would be needed to bring crucial measures into effect, attendees said. 

Business groups want ministers to publish a clear timetable for consultations and implementation alongside the draft bill, in order to reassure employers they will not be hit by a sudden avalanche of rule changes and will have time to prepare.

They argue that combined uncertainty over the Budget and employment law changes are already making employers wary of committing to new hires.

“There needs to be time to absorb it . . . it needs to be well communicated and well understood,” the lobbyist said, adding: “We need to try to ensure whatever comes through doesn’t increase the challenges of recruitment.”

Ministers were warned that small businesses, which often employ people seen as higher-risk hires, were particularly concerned about the impact of the package, according to people who attended or were briefed, with Rayner returning to this point more than once during the discussion. 

“There’s been a lot of meetings but it feels as if things have not really been set out,” said one person who has been involved in weeks of talks with ministers and officials over the draft legislation.

However, people present at the meeting said the mood was broadly positive, with unions and businesses reassured that their main concerns had been factored in.

“There’s no horror stories out of today’s meeting, no shocks,” one union figure said, adding: “Outside the revolutionary left, most of us are pretty happy with how much progress we have made.”

A government spokesperson said: “The majority of employers support our proposals to strengthen employment rights and boost productivity. This can only be achieved by working in partnership . . . with both business and unions to ensure we get the balance right.”

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A former UK energy industry lobbyist has been appointed to the influential role of leading the government’s climate policy watchdog as it prepares to set a new legal limit on the country’s greenhouse gas emissions.

The Climate Change Committee said Emma Pinchbeck, head of trade body Energy UK, would take over in November, ahead of its publication of a new “carbon budget” next year for the 2038-42 period.

The UK was the first major economy to set a legally binding target five years ago to reach net zero by 2050, but the committee has since advised bluntly and repeatedly that it was not moving fast enough.

The 38-year-old Pinchbeck represented the interests of Energy UK’s approximately 100 members across the heat, electricity, transport and tech sectors, which it said generated about 80 per cent of the UK’s power through wind, solar, hydro, nuclear, biomass and gas.

While it also represents some members involved in oil and gas extraction, UK Energy says it does not advocate for these parts of their business and agrees only to cover specific activities such as renewables.

The trade group said Pinchbeck had been a “powerful advocate” of the transition to clean energy. In the role, she also spoke in favour of burning biomass for power generation and promoted carbon capture, storage and utilisation, which some scientists and environmentalists believe is being promoted by the oil and gas industry to prolong fossil fuel production.

The government announced £21.7bn in support spread for the country’s first carbon capture and storage projects last week, being developed by Italian oil group Eni, BP, Equinor and TotalEnergies. The programme will run for 25 years, relying on a mix of taxpayer funding and higher energy bills.

Pinchbeck also has experience in the non-profit sector as former head of climate change and energy at WWF-UK. But it was her private sector background that CCC interim chair Piers Forster, a professor of climate physics, said would help in assessing the UK’s plans to decarbonise energy.

The committee has been without a permanent head since its outspoken former chief, Chris Stark, stepped down in April. He then warned the UK was losing out on green investment because of the policy rollbacks under Prime Minister Rishi Sunak. Stark is now leading the new government’s “mission control” attempt to decarbonise the electricity system by 2030.

Ed Miliband, UK energy secretary, said Pinchbeck was “well placed to advise and challenge government” on its net zero goals, ensuring it meets its climate commitments with “ambition and urgency”.

Within its first weeks in office, the Labour government also selected former Siemens UK chief executive Jürgen Maier to chair the £8.3bn state-owned GB Energy, which will own, manage and operate clean power projects and support carbon capture and hydrogen development.

It also recently appointed the new UK climate envoy, Rachel Kyte, who has extensive experience in climate policy after working at the World Bank and as a professor at Oxford’s Blavatnik School of Government.

Kyte’s appointment was the subject of opposition questions in parliament this week surrounding a donation by Quadrature Capital, the investment arm of a hedge fund group that funds the independent Quadrature Climate Foundation, where Kyte is co-chair of an advisory board.

Miliband said “all the proper processes were followed” and Kyte was esteemed for her climate leadership. QCF said it was focused on “funding and supporting science-led solutions to climate change”, adding that its donation was “values-based” and that it was “non-partisan and apolitical”.

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