LEADERSHIP INSIGHTS

According to Richard Gillies, Director of Plan A & Sustainable Business at Marks & Spencer, the world is now on the cusp of another revolution – the sustainability revolution. “There have been three major reorganisations of society – the agricultural revolution (18th century), the industrial revolution (19th century), and the IT and digital revolution (20th century). Each of them fundamentally changed the way human society operated,” he said. “We are about, because of population and resource constraints, to go through the next one which is the ‘sustainability revolution’. This revolution will change the paradigm in which we operate. It will change our world, because we currently live in a very wasteful society.”

Experts have forecast that, by 2030, the world’s population will have grown by a third, demand for water will grow by a third, and demand for energy will increase by 50 per cent. Furthermore, the world’s demand for food will grow by 50 per cent in 20 years’ time.

It is expected that, within 25 years, almost 75 per cent of the world’s population will be living in ‘mega-cities’. Around half of these mega-cities will be coastal and will face numerous threats around climate adaptation.

There will also be a change to the disparities of wealth that the world sees now and the rate at which technology is changing will impact the population massively.

“These drivers mean that we need to embrace the holistic approach to sustainability – economically, socially and environmentally – to get the right outcome,” says Peter Bonfield, CEO, BRE.

Claudine Blamey, Head of Sustainability at Segro says: “The traditional way of doing business is being challenged because it no longer works, short-term thinking and setting a goal that only generates profit for shareholders does not translate into a business that will succeed in the long-term. It is important that businesses find a way to work closely with their stakeholders in order to truly optimise their licence to operate.”

Although these figures are staggering, there remains inaction on the part of society, including businesses, to create a more sustainable future for the planet. There are a couple of reasons for this. One is that ‘sustainability’ is challenging to define with the experts even debating its true meaning. Another is that the UK population has not yet been hit with the true consequences of harmful actions, such as water shortages or extreme heat.

“Our definition of true sustainability is fairly vague and woolly because we’re not quite sure what it looks like. However, I would describe a sustainable business as one that is carbon positive, wastes nothing, is regenerative to environments and has a positive impact on people, either those that it serves and trades with, or those that it sources from,” says Richard. “It is about direction. If you set off in a certain direction then it informs each decision along the way.”

“Those companies that get it (and there are very, very few companies that do) do it not to save the planet but rather because it is great business. If you get the basic principles of sustainability, minimise resource use, minimise waste and optimise efficiency, it saves you money and makes you more competitive,” says Peter.

“If you’re a more sustainable business, you have a more competitive offering. You can delight your customers, so that when they are buying their yogurts, knickers or suits, they feel good about buying them. If you are an environmentally sustainable business, you delight a whole range of stakeholders and feel good about your business,” continues Richard.

The companies that don’t get it are backward, claims Peter, they are the ones focused on just conforming to the legislation and being compliant.

What can businesses do?

“A political framework on tackling climate change will emerge at some stage. In the meantime, business can do a lot without help from the politicians – whether in their supply chains, their factories, the design of their products or in using their brands to educate people about more sustainable living,” says Paul Polman, Chief Executive Officer of Unilever.

“Tackling this with urgency and priority makes good business sense and companies that embrace it as part of their strategy will see higher rates of growth and lower costs. However, those who wait to be forced into action or who see it just as reputation management or corporate social responsibility (CSR), will do too little too late – and may not even survive.

“So, what do companies have to do? How can the challenges of climate change be turned into opportunities? First, you have to decouple business growth from environmental impacts. That means a new business model with companies having to find ways to grow with fewer resources,” he continued, suggesting that this means rethinking the following:

• How you operate
• What you make your products with
• How you market them
• How you sell them
• How you ask consumers to use them

Creating a culture

Attempting to write and create a corporate sustainability plan can be extremely frustrating. Not many people are interested in going in a new direction as sustainability is still seen as something that is undertaken by ‘beardy, tree hugging, sandal wearers’. This is when creating a strong leader led culture around sustainability is great.

“We had a leader who believed in it and wanted to go in that way,” says Richard. “He was a very bold and said ‘we’ve got a plan, we’re going public. Bang, it’s gone! No room for manoeuvre, it is now a public plan.

“What has been absolutely imperative for us is that it is leader-led, not leader endorsed, not leader sanctioned, not leader sponsored, not leader nodded at in some meeting and then never thought of again. It has been leader-led. Stuart Rose was consistent in creating an overarching framework and noise. Every public speech he does, every interview he does, in every meeting he is involved in, he continues to keep it on the agenda.”

Richard Pamenter, Vice President – GMS Head of Engineering & EHS at GlaxoSmithKline (GSK): “It is important that as leaders we help move sustainability into the mainstream of our business activities. We need to help our organisations to stop thinking about it as purely part of the Corporate Social Responsibility agenda and start thinking more about it as an area of business opportunity, an operational activity rather than a corporate functional activity.”

However, what do you do if sustainability initiatives are not leader-led, how do you cajole your chief executive, who is risk averse, and how do you cajole the chairman and board to get behind sustainability, allow you to deliver it and get the outcomes the project deserves in a risk managed way? “It’s not easy. You have to force it and every time the lawyer comes to you and says how and why you can’t do things, you have to go back to them and say; well I don’t want to know how you can’t, tell me how you can,” says Peter.

Jon Bentley, Energy and Environment Partner, IBM Global Business Services UK & Ireland says, "A sustainable culture is one in which people are motivated both by values - doing the right thing - and by performance - doing things which make sense for the business as well as for society and the environment. The role of leadership is to create the enablers of this culture so that people at all levels in the company can take action which makes a difference. In IBM, this starts with our Chairman and through our values reaches down to every IBMer, whatever our role in the corporation."

Employee engagement

Sustainability initiatives can be different throughout the organisation. Some organisations may base a certain percentage of management’s cash bonuses on sustainability. However, sustainability can mean something different for Marks & Spencer employees working on the shop floor. When asked what it means to them, for example, they invariably respond along the lines that Plan A means recycling hangers – 'we are doing our bit by recycling our coat hangers'.

This drives home the point that not all initiatives need to be huge - everyday things can be very helpful and work to get everyone on board.

“I am incredibly proud of our employees and the personal commitment that many of them have made to our corporate responsibility and sustainability (CRS) goals. We don’t have a sustainability function or department. While our commitment to sustainability is led from the top, it’s our employees who are really behind our progress and driving change within every part of our business. A recent survey also told us that CRS is one of the top two drivers of engagement among our employees. This feedback from our employees drives us to ask questions about how we can improve everything we do,” says Hubert Patricot, President of Europe, Coca-Cola Enterprises.

Consumers

There is debate around whether consumers want to buy sustainable products. Although most aspire to buy them, when it comes to sustainable products, consumers are typically unwilling to pay extra for them. What must be created are goods and services that people want for the reasons that they want them, not because they are sustainable.

“The big prize comes from changing consumer habits and behaviours. We know that consumers will not compromise on price, quality or convenience for ‘greenness’. So sustainability has to be built in to the design of the product. Occasional disruptive innovation can help – like shampoos that don’t need water – but breakthrough innovations like this are few and far between. The biggest opportunities actually come not from technology or legislation, but from incremental improvements. These small changes, when multiplied by billions of consumer usages, add up to something substantial,” says Paul.

Richard Gillies says, “Consumers want clothes that make them look good, sexy, slimmer, taller, older or younger. They want to buy food because it tastes great, makes them thin, gives them energy, is convenient, can be passed off at a dinner party as a meal that you cooked yourself - whatever reason they buy Marks & Spencer foods, they’re the reasons that they will still buy things from us at the moment in this paradigm.”

Small changes in the way consumers use existing products may be key to a more sustainable future. Hubert says, “We communicate where consumers make their purchasing decisions. To do this, we have to work with our customers, the retailers, where people shop. For example, we are using merchandising and point-of-sale material to help consumers understand how their Coke bottle can have a purpose and after-life if recycled. Consumers may be surprised to learn that they can reduce the carbon footprint of their can or bottle by as much as 40 per cent if they simply make sure it is recycled.”

Supply chain

It is not enough to create a culture within the organisation - to have a truly sustainable product, the practices of the suppliers have to be investigated.

Jon says, “Use the power of your procurement. Insist that your suppliers adhere to a 'code of conduct' which sets out sustainable behaviours and standards. You can start with a light touch and then gradually raise the bar year-on-year. Working in conjunction with other procurement organisations can add weight to your efforts if you are not a large organisation or don't have large spend with particular suppliers. Collaborating with your suppliers will help find solutions which benefit their business and yours.”

“Interestingly,” continues Peter. “We have found that, if you give suppliers throughout the chain early enough warning, for example, explaining that 20 per cent of the evaluation is about environmental sustainability, then they will innovate to deliver. In the end, you pay less for products because, when people innovate, they find ways of minimising resources and waste, and optimising efficiency.”

Conclusion

“You know you have been successful when you don’t need a ‘Plan A’ or ‘Plan U’- when sustainability is ingrained in the business,” said Peter.