Climate change is going to affect countries, economies and businesses whether we engage with it or not. Yet the complexity of competing priorities facing politicians, regulators and C-suite executives has never been more extreme. It is little surprise that ‘challenged’ is how leaders described their current state of mind at Criticaleye’s CEO Retreat.
Held in association with Accenture and Salesforce and aptly themed ‘People, Purpose, Planet’, the two-day event discussed how leaders need not choose between growth and sustainability. In fact, going green is good business and offers countless opportunities for investment, growth and innovation.
Toby Siddall, Managing Director & Sustainability Lead for UK & Ireland at Accenture, set the tone for the robust discussions and learning for C-suite executives on how they can make an impact: “The idea that sustainability is either discretionary, or viewed purely as a cost, I think means that we're missing opportunities to create real value that shareholders and society actually need.”
Sustainability could offer the biggest investment opportunity in history. “Disruption is inevitable, so focus on driving the change you need; don’t avoid it,” said Toby. “There are three elephants in the room - climate, nature and communities – and we can’t address one while ignoring the others. Yes, we need to stop emissions. Climate change is going to be the single biggest driver of biodiversity loss and socio-economic suffering. But we also need to focus specifically on restoring the regenerative capacity and biodiversity of nature."
These solutions are going to rely on circular economy principles, more efficient use of clean technology, big data, and innovation. “Sustainability is also a social challenge. If we're not giving people access to new opportunities in a just and fair way at a local level, then it's not really going to go anywhere,” added Toby.
The uncertain economic backdrop was not lost on speakers and attendees but being bold and brave is crucial to drive an effective sustainability agenda. “It all comes down to leadership. C-Suites and Boards need to stay informed of the issues and be data driven with bravery to support new business models. But we also need to recognise that technology, digital and data capabilities will be integral to both the sustainability breakthroughs we need, and to business performance and growth,” said Toby.
Douglas Millican, CEO of Scottish Water, said: “The first thing about [sustainability is] inspiring people with the possibility, as well as the imperative. You have to support managers to help take partners on that journey, to see the potential and the impact for them... I think increasingly companies are recognising that it's central to their future legitimacy, that if they don't embrace a decarbonised future, they will not command the confidence of the customers they serve or of society.”
The challenges lie in embedding sustainability goals throughout a business, with clear lines of accountability. Zahra Bahrololoumi, Executive Vice President and UK and Ireland CEO for Salesforce, which achieved Net Zero across its full value chain in 2021, said, “It is not [just] the responsibility of the C-suite to deliver on sustainability goals. It's the responsibility of the whole organisation from top to bottom.”
Measures that Count
For businesses, one of the real challenges lies around reducing their Scope 3 emissions, which relates to suppliers across the entire value chain. Douglas commented: “Commercial models need adapting to the changes in risk and opportunity that come with a decarbonised future. When it comes to SMEs, we need to create a learning environment across our supply chain, so it's not just a bilateral relationship between the supplier and [us], it’s actually creating multilateral relationships across the whole supply chain.”
Marc Engel, Vice Chair of AP Moller-Maersk reiterated the sentiment that collaboration will be key in realising sustainability goals. “When you analyse your carbon footprint, most of it will sit in your Scope 3, not in your Scope 1 or 2. And it's also the most difficult to get behind, because it's not actually generated within your operations. But you have to realise that your Scope 3 is always someone else's Scope 1 and 2… Understanding your value chain and therefore having greater access and visibility to your Scope 3, which is someone else's Scope 1, is a very big opportunity.”
The effectiveness of carbon offsetting as a strategy for achieving Net Zero was questioned by panellists. Sally Bridgeland, Chair of Impax Asset Management and a Board Mentor at Criticaleye, said, “The reality is, carbon offsetting might provide a helpful set of training wheels in the sense of at least it’s making you think about how much carbon you're having to offset so you can quantify it and put some kind of price on it, but does it really work in terms of getting the world to Net Zero?”
Douglas emphasised the importance of weighing-up what is achievable over different timeframes. “I think it is about balancing the short and long term. Part of this is about inspiring people and getting people to open their minds, taking a look at what’s possible and getting their confidence levels up.
"If there are some things that we need to do short term, as long as they are contributing towards the long-term journey, and we're learning from them, getting experience, new innovations and ways of working, then that's got to be a good thing, even if those shorter term actions might not provide the best possible long-term return. So, for example, that's where using land well and offsetting carbon is worthwhile in itself and a good way to get people thinking and started.”
The important thing is to create momentum by tying in Key Performance Indicators (KPIs) to achieving sustainability objectives, including compensation and remuneration. Jo Whitfield, who until recently was Chief Executive for Food at The Co-op, said: “Take it in five-year chunks and work out the aspects that you want to do in that timeframe, and then ensure that you've got in-year targets that you can keep tracking against and key performance indicators to measure people against. KPIs must have a life; they have to have an energy around them; they can't just be numbers on a page; they have to be conversations that are linked to your vision.”
Sustainability impacts everything in a company, from talent acquisition to purpose. In 2022, it has almost become socially unacceptable to work for a company that hasn't set a Net Zero ambition by 2050. However, most CEO tenures might only last five to 10 years. "It is really important that Boards challenge not just the end goal, but what a company is doing in the next two to five years," said Marc. “The real support is for Boards to make sure senior executives are not having last decade’s discussion, which is: what is this all going to cost? What are the benefits?
"The reality is a tightening economic environment will also create massive amounts of opportunity. It’s about bold decision-making and being supportive and understanding that basically you need to take risks in this space, just like... in any other part of your business when you want to grow.”
If the right business models are created by leaders who have the right mindset, then there is an unprecedented chance to drive growth and improve standards of living with a sense of responsibility, transparency and accountability. Toby concluded, "The key message is that it's about shared impact and not just market share. We need to think more radically about those collaborations across sectors and across value chains. And we need to co-invest in the infrastructure, technology, data, the platforms that are going to allow those collaborations and partnerships to happen."
By Bridgette Hall, Senior Editor, Criticaleye
By Bridgette Hall, Senior Editor, Criticaleye
