Businesses must adopt new ways of thinking to fully understand the threats posed by climate change and to create more effective, impactful ways of reducing their carbon footprints, according to new research from Imperial College Business School.

The study, conducted by Dr Simone Cenci and Matteo Burato of the Leonardo Centre for Business on Society at Imperial College Business School, explored how organisations currently think and act in regards to tackling climate change, and their effectiveness in aligning their emissions with global climate targets. They worked alongside Dr Samuel Tang of the Institute for Sustainable Resources at University College London and Dr Vincenzo Vastola of Montpellier Business School.

The researchers analysed climate change action data gathered by the CDP (formerly known as the Carbon Disclosure Project) – a leading non-profit international organisation that systematically collects information on organisations’ carbon management processes and outcomes via surveys.

They reviewed evidence from 622 large publicly-traded companies across 32 countries, working in the energy, industrial, material and utilities sectors, between 2012 and 2020, reviewing emissions targets, total greenhouse gas emissions, supply chain policies, product development and emissions reporting.

“It is well recognised that lowering greenhouse gas emissions to a level compatible with the climate targets set by the Paris Agreement requires significant changes in behaviour and attitudes towards environmental issues by both individuals and organisations,” says Dr Cenci.

“The problem is in the way organisations approach solving such challenges, with a narrowly-focussed view meaning many initiatives fail to deliver the level of success needed to reach set national and global targets,” he continues.

The solution, he and his colleagues suggest, lies in adopting a ‘system thinking’ mindset. System thinking explores how individuals can make and understand the connections between a set of events and how they link to their own experiences. This allows them to understand the impact of their own actions and make positive changes to their behaviour.

Existing research has found that an individuals’ capacity to understand the effect of climate change and to adapt their own behaviours to address it requires the development of specific cognitive abilities, such as system thinking.

“System thinkers recognise that their behaviour is embedded in complex socio-economic systems and that natural and social phenomena result from constant dynamic and multiple interactions between the social economic and natural worlds as opposed to a sum of siloed processes.” Dr Tang explains.

Their results revealed that the organisations which already exhibited system thinking traits were able to achieve superior environmental outcomes in comparison to others with similar asset characteristics and policies in place, reporting lower greenhouse gas emissions.

The research, suggests that, to more effectively combat climate change; organisations need to build Organisational System Thinking into their core processes and functions.

By recognising that their operations are often out of alignment with their own and wider sustainability goals, and are affected by multiple societal and environmental factors, the research shows that companies can make a greater, more authentic impact – aligning their emissions pathways with those expected by the climate targets of the Paris Agreement.

Furthermore, as individual system thinkers also appreciate that the relationship between themselves and the wider world is ever changing, they recognise that the solutions they put in place need constant refocus and adaptation. Such an approach, Dr Cenci notes, would allow organisations the flexibility and proactivity many are currently lacking.

“Meeting global climate targets, such as those set by the Paris Agreement depends on the actions and behaviours of industry. Therefore, understanding which factors drive the necessary internal changes in management practices that can help companies reduce their emissions is crucial to designing better incentive schemes, such as targeted environmental policies and market-based solutions that can help countries meet their nationally determined contributions,” Dr Cenci concludes.

Whilst governments across the globe have already included system thinking training in educational curricula, these findings, the researchers say, hold important considerations for business leaders. Policies aimed at fostering system thinking within companies could provide a much-needed nudge toward making truly effective changes in organisational sustainability behaviour.