Tomás Sercovich: Ireland has right size and right culture to drive corporate sustainability

Born in Argentina and having studied in Italy, and worked in Spain, Tomás Sercovich is an internationalist whose interest in business and sustainability is both global and local.

These days local means Dublin for Sercovich, and as chief executive of Business in the Community Ireland, he is helping firms improve their sustainability and transparency.

“The one thing I have found about Ireland is how easy it is to engage with businesses, government, stakeholders and civil society. It is the right size, the right mindset, and the right culture,” he said.

As part of Five Degrees of Change, the Business Post’s energy and environment podcast sponsored by PwC, Sercovich gave his three policy changes and two personal changes for a greener world.

Policy: Change company governance to make it more inclusive and incorporate diverse thinking

Everything in business starts and ends with governance, according to Sercovich.

“At the end of the day that is where decisions are taken,” he said.

Sercovich believes that more diversity on boards is needed, to reflect gender diversity, and to integrate environmental or social expertise into the governance structures of companies.

“My key message is for businesses to ask if they are at risk of groupthink. And then who do you bring in to your board? We talk a lot about wanting to see workplaces that reflect the diversity in our society. Well, boards should also reflect that diversity,” he said.

While Sercovich said good work was being done around regulating things like gender diversity on boards, there was less of a focus on the need for diversity of socioeconomic background, or ethnicity.

But as important as reflecting diverse backgrounds is bringing in diverse skillsets.

“How do you ensure you have people that really understand decarbonisation? Or societal impacts? It is not just as simple as snapping your fingers and making it happen,” he said.

“This will have to be a combination of the carrot and the stick. Regulation will play a role, but also we need to look at market pressures.”

As shifts in the market – both regulatory and from what clients demand – make sustainability a greater requirement for all businesses, Sercovich said the relevant expertise will naturally be needed on boards.

“Ultimately, we would like this to be mostly the forces of market rather than regulation, but we are going to need a bit of both,” he said.

Personal: Rallying the collective voice of progressive business

The area you decide to work in dictates not only where you will spend most of your time, but where you are likely to be able to make the biggest impact on the world as part of a wider team.

For Sercovich, that is why he has chosen to work in the space of corporate sustainability. He wants to use his platform to rally the voices of progressive businesses.

“The main thing for me is that there is a lot of injustice and inequality in the world … The question is how you make change happen. My conclusion is that it is through business. That is where I see the biggest opportunity for change to be driven, “ he said.

One of the proudest elements of Sercovich’s work was the low-carbon pledge pioneered by Business in the Community Ireland, where more than 70 companies have committed to setting science-based emissions targets, and to develop plans to deliver them and to publish their environmental impact.

“It was just small numbers at the beginning and not very high level of ambition. Now we are working on much greater ambition and taking on greater challenges and looking at absolute emissions,” he said.

It can be both a rewarding and frustrating experience, as businesses make real efforts for change, but that change sometimes comes slow.

“It is definitely a both,” Sercovich said.

Policy: Change the valuation of non-financial aspects in business so they can impact on decision-making

Two decades ago, it would have been impossible to get the attention of senior executives in companies on issues to do with sustainability, Sercovich said.

“Today it isn’t, it is critical. Regulation and incentives have moved over time, and this really looks unstoppable,” he said.

To continue this, Sercovich thinks even greater weight needs to be given to the non-financial aspects of company performance. So how low-carbon it is, or how little waste it generates, or its social impacts.

That means being able to both measure and put a value on those activities.

The measurement side is already under way, as the EU’s Corporate Sustainability Reporting Directive will gradually force most medium and large businesses to publish data on their environmental impacts.

“The challenge is what do we do with that information? Is that information really influencing how we evaluate a company? That is why I think the key to this puzzle is a thing called integrated reporting,” he said.

Integrated reporting is a method of putting together a company’s annual report and accounts that better integrates the impacts and value of non-financial elements.

In time, executive remuneration could even be linked to delivering value across these different areas, once integrated reporting presents them accurately.

“We need different ways of expressing value … At the end of the day, it would be a way to value companies looking at the positive impact they have on the economy, the taxes they pay, the employment they create, but also the environmental damage it produces and the impact on society.”

Personal: Try to bring more sustainable living choices to my life

Sercovich is trying to address his own environmental impacts, with a focus on his travel and his diet.

Sercovich tries to limit his flying, with an exception made for occasionally returning to Argentina to see his family. For domestic travel, Sercovich doesn’t drive, and so he isn’t faced with that “dilemma”, and likes to prioritise rail travel.

“That change in how we make these personal shifts has to become a part of our working lives too,” he said

Sercovich has found his experience professionally has given him a good insight into what food brands are sustainable, but he thinks more information is needed to make the right choices.

“What I am lacking is having more facts and figures. Like in some cases you can buy food that is produced locally, but it has higher emissions because it is not done efficiently. Other times you can buy imported food, and it is hyper efficient because of the scale. So those are some of the conundrums I face,” he said.

Policy: Future-fit and future-proof business models

While much of the focus on corporate sustainability is how to make businesses decarbonise for the sake of the environment, Sercovich also thinks businesses need to pivot their models to sustainability for their own sake.

“Nobody is talking enough about the opportunity. So how are companies going to make money in the future?” he said.

“Understanding what the needs are going to be in 30 years as a business, and how Ireland can be a hub for those types of businesses and hence be amongst the leaders when it comes to competitiveness.”

For many years, ESG has just been “the right thing to do” according to Sercovich. But the shift that is slowly starting to happen now is businesses realising they can make money from waste and the circular economy, or from new materials for sustainability, or from clean energy.

“Sectors that will be affected also need to consider their next steps. Bord Na Móna is great example, which is fascinating and admirable in so many ways, because there is also a societal piece there about how they are upskilling and reskilling their own workforce from peat to green energy,” he said.

“This is about transforming and evolving those sectors,” he said.