Leading business strategist Andrew Winston advises Unilever on sustainability issues. His latest book, The Big Pivot, explains how climate change threatens the global economy, but also provides opportunities for resourceful businesses. He speaks to David W. Smith about why big business is finally getting the message.
Are we seeing a sea change in the attitude of businesses towards sustainability?
Yes, I think there are grounds for optimism. Part of my book is about how companies need to push for Government policies on sustainability. For a long time, they have spent a lot of time and money fighting government regulations. That’s kind of been the main goal of their lobbying. But we need a price on carbon, so we need companies to push for it and that is starting to happen. For example, executives from the BICEP business coalition (Business for Innovative Climate and Energy Policy) testified to a Government task force about their corporate commitments to reduce carbon pollution and they have asked for a price on carbon. There are some pretty major mainstream companies in BICEP, including Ikea, Kellogg’s and General Mills. When the World Bank put out a statement on carbon a few weeks ago, it was signed by 1,000 companies, a lot of which were global businesses.
The climate discussion has moved in a similarly rapid and astonishing way to gay rights. It’s recently become unacceptable to say in business that gays should not have equal rights. Many businesses were ahead of the curve in offering domestic partner benefits. Similarly, in business, it’s becoming strange to say that climate change is all a hoax, or ‘BS’. The sceptics are getting quieter, whereas it was normal in business meetings to be a denier a few years ago. So there is progress.
Business can lead the way on social issues. Both the military and business were ahead of the Government on integration, then the Government followed. That’s not totally crazy as the Government has to be representative of the people make sure people are ready for certain things.
So, is there more hope for a price on carbon?
Yes, for the first time. It used to be naive to say we’d get carbon legislation, but I think it’s now being taken seriously in unusual places. The former treasury secretary Hank Paulson, a former Goldman Sachs banker and a Republican wrote an op-ed in the New York Times saying we need a price on carbon. He also co-wrote a report called Risky Business clearly stating that climate change will cost a lot of money unless we take strong actions. His co-author, Robert Rubin, was another former treasury secretary from Bloomberg.
They translated the dangers of climate change into financial terms because that’s what business does. But that’s not necessarily wrong. For me, it’s okay for business to be a translator. Businesses do need to make profits. We get into dangerous territory when they always try to maximise profits in the short-term. That’s actually not a good way to run a business regardless of what you think about sustainability issues. Innovation requires long-term thinking and we’ve got very short-term focused.
Which companies are leading the way?
Unilever is the world leader right now. Their Sustainable Living Plan is one of the most aggressive and thorough strategic documents around managing a company’s effect on the world. They thought about it strategically. It is their corporate strategy. There’s no separation between their sustainability strategy and regular strategy, which is not the case for pretty much everyone else.
There are a lot of companies doing good things in pieces of the story. Wal-Mart has issues around wages and their role in hurting small business, but it has pushed hard on many aspects of the green agenda. They have reduced the footprint in their supply chain dramatically and buy more renewable energy than any company in the US. Companies aren’t black and white. There are things they do well and things they don’t.
Ikea has also done a tremendous amount. They are not public so they have a little more leeway, but they’ve been aggressive on renewable energy and on sourcing of green materials. Kingfisher retail chain in Europe has set a goal to be net energy positive and build a regenerative enterprise. It’s an aggressive, very positive target. They are not doing it to hug polar bears, but because they believe it’s the best growth path in a world of tighter resources. It’s smart business. Companies that help reduce their carbon footprint are going to do very well.
‘The bottom line is business can’t thrive unless the planet and society thrive too. Treating business as separate is absurd,’ Andrew Winston
Companies that shy away from sustainability assume that everything green must cost money. That’s not true. There are sometimes concerns about the up-front costs being greater and you could be disadvantaged as a business compared to peers. But that idea is way overstated. Companies find tremendous advantage in reducing energy, waste and materials. They are sometimes happy for their competitors to think it’s very expensive.
Has President Obama disappointed on the environment?
Obama, arguably, has done a lot. In the press, it’s become the law that he’s not successful at anything. But he’s done great things on health care and also on the climate. The administration passed legislation raising the fuel efficiency of cars aggressively so that by 2025 they will have doubled the fuel efficiency of cars today.
There are also new laws in place about carbon in power plants that the Environmental Protection Agency proposed this summer. Given the lack of support Obama gets for any agenda, it’s amazing what he’s got through. There’s a good chance he’ll go down as having a very good environmental legacy.
He’s been helped by the shift in attitudes of the business community. There’s a convergence so it’s getting easier for the regulators. They have more support from their funders and let’s be honest the business community funds so much of US politics.
Are you hopeful about the future of sustainability in business?
Yes, there’s a lot more hope than a few years ago. I was at the People’s Climate March in New York, which got little media attention, but hundreds of thousands of people were there. They came from all backgrounds and that’s important because we have to get out of the ridiculous assumption that climate change is a right-left political issue. The scientific consensus about having a real problem on our hands is not about whether you are a democrat, or a republican. It’s about the functioning of our planet. It isn’t a separate planet where the birds live and we seem to forget that. The bottom line is business can’t thrive unless the planet and society thrive too. Treating business as separate is absurd.