Then and Now: How Corporations Went ‘All In’ on Sustainability
Two decades ago, the business of business was business, to paraphrase economist Milton Friedman. While a few funky companies took environmental threats and social inequities seriously, most major corporations stayed mum on such issues, at best seeing corporate social responsibility as a marketing fad or necessary PR response to negative allegations.
The times have changed dramatically, and there’s no better evidence than the annual Sustainable Brands conference, where thousands of sustainability experts from the world’s largest corporations gather to discuss trends and best practices. This year’s conference in Vancouver, British Columbia, was also the setting for the launch of All In, a book chronicling business leadership’s path to a more sustainable future.
Written by the knowledgeable triumvirate of Cranfield University emeritus professor David Grayson, CBE, GlobeScan co-CEO Chris Coulter, and SustainAbility executive director Mark Lee, the book posits that there are three distinct eras of corporate social responsibility. There’s the “harm reduction” era of the 1990s and early 2000s when companies tried to simply reduce their harmful environmental and social impacts; a strategic era that spanned a decade of the mid aughts during which businesses began to measure and plan for those impacts across all departments; and the purpose-driven era we find ourselves in now, where the focus is not just mitigating negative effects but striving for positive contributions throughout the entire company. By 2025, the authors estimate, we’ll have arrived at a “regenerative” era in which most businesses prioritize social inclusion and zero-waste initiatives.
The authors had 20 years of data to draw on, mining the GlobeScan SustainAbility Leaders Survey—the longest continuously running survey of its kind, and which last counted more than 1,000 responses. Throughout, the authors use the United Nations’ sustainable development goals for 2030 as a touchstone for what business going “all in” should accomplish.
Make Change caught up with all three authors at the Sustainable Brands conference earlier this month to talk about what’s changed over the past two decades, and what needs to happen for business to help meet the UN’s sustainability expectations just 12 years from now.
Seeing the trajectory over 20 years, what can you tell me about the big shifts in business now that sustainability is a core tenet of most major companies and is something that people seem to take with increasing seriousness?
Chris: Looking at 1997 and today, I think we quickly forget how things have changed so dramatically. Back in ’97, DOW Chemicals, DuPont, and Shell were viewed as the leading companies—authentically leaders, true leaders—and what they were leaders in was understanding their material impacts and beginning to minimize them. [There was] lots of regulatory pressure, lots of environmental consciousness—they're big industrial hitters that were causing lots of pollution and they were being pressured into reduction. So that's how leadership began. But then I think a lot of other CSOs [chief sustainability officers] began flexing their muscles inside companies like Walmart and GE and led to much more strategic approaches. And now we have remarkable companies like Unilever, but also like Tesla, that are really much more focused on ‘how do we change the world?’
Do you think the startups and direct to consumer companies founded with sustainable and ethical business principals from the get-go are putting pressure on bigger corporations to fold those values into their structure and mission?
Mark: There's demand for that, but the big folks are really good at scale and these [startups] are really good at ideas and god, we need both.
MC: The most recent GlobeScan SustainAbility Leader Survey reveals that, in terms of progressing the UN’s sustainable development goals, in the private sector 23% are rated as excellent while 37% are rated poor. Just looking at that, you wouldn't think the private sector is doing very well at sustainability. What are the things that are dragging down that perception? And what are the things that are really incumbent upon business in general to go from not only that poor perception but really that poor reality to getting into an “All In” space?
Mark: Our survey and others show this almost catastrophically low trust in business, and national government is the other one on the bottom of the pile. But you can't mix up the trust with expectations. The framing question from 1997 asked: Five years after the original Rio conference, which institutions have made the most progress on advancing the sustainable development agenda? National government is last, private sector pretty much next-to-last, and it's been that way for 20 years. But there's a mirroring question that we ask year over year as well, which is: which institution do you have the highest expectations to lead on this in the future? It absolutely flips over every single time. National government goes to the top, the greatest expectation is there. And boom, private sector is always number 2. So, we've got this love-hate relationship with these institutions that we see as failing to deliver so far, but there is also this heavy recognition of potential there. [Businesses have] power and speed of markets, they're the ones who can break through. I'm not sure if the distrust is so thick that the private sector can't win over the public if they give us enough cause.
But business pivot the wrong way fast, too. We're in the nightmare of [data] privacy, championed by Facebook but participated in by everyone. Business is not getting it all right by half. Yet the potential there is immense and there's a confluence of societal expectations rising for what business needs to do to be a good business and business being more willing to grab that mantel, too.
Chris: But I think that expectation-performance gap is really significant. Experts and the public and the world are right: business generally isn't living up to what it needs to do. So I think that's honest, and a true assessment, a starting point. We've looked at a number of companies that seem to have broken through and relatively done better than others, but they all have problems. We said in the book we're not thrilled with the idea of putting even more responsibility on the shoulders of big global businesses in particular, but we also feel it's one of our short-term pathways that we need to do because they’re truly global. They have reach. They have tens of thousands of suppliers and supply chains. They can scale their change and shift things in the time that we have to address the carbon crisis.
What that brings to mind is when you have a country that pulls a political 180, and for instance, pulls out of the Paris Agreement...
Mark: Just a hypothetical [laughter].
And then you see this rush of businesses come in and say, we're still in, literally. I do wonder if 5-10 years down the road, today’s students are going to grow up and have even more expectations from these bigger companies. We already see that in hiring.
Mark: In this year’s survey, we partnered for this first time with Net Impact in addition to Sustainable Brands. And what we wanted to do was boost the 18 to 35-year old response rate in the survey and be able to compare it to our experts, who tend to trend older because they're farther advanced in their careers. … That young cohort said, ‘it's what I do at work that's going to make the big difference and how I make those choices as well as my investment choices that shifts this.’
I think this has been a remarkable couple of years. This isn't a landscape any of us really expected, whoever would have expected Marc Benioff of SalesForce to get to a podium and talk about LGBTQ rights? Will people make investment and other choices based on those kind of advocacy positions that they see in the private sector and frankly they're not getting from their political leadership?
From the management perspective, how is this All In framework taking shape and what kind of influence do sustainability employees have on other departments where the main concern is not sustainability, the main concern is growth or shipping?
David: It will be interesting to see whether we all come up with the same immediate set of reflections to that. One of the things I've been fascinated about long before the idea of the All In book came up was a survey that GlobeScan does with BSR for their conference where they ask delegates about the degree of interaction that their sustainability specialists have with the other key strategic business functions, whether that's new business development, legal, finance, HR, marketing, etc. Of course, in a company in which sustainability is really embedded, all of those relationships should be scored 5 from 1 “never speak to them” to 5 “we're working so closely all the time.” According to the data, there's still a long way to go in terms of getting that cross-actualization, which is why we say it is so important that an organization has a sustainable culture. And the word ‘culture’ you don't see so much in earlier books about embedding corporate sustainability, yet it is absolutely fundamental.
Chris: I would say not just culture but purpose, because when the purpose is clear, it's hard from those people to deviate from it.
Mark: It's easy to talk about Unilever too much but, it is unique that they are asking every exec first to identify their personal purpose to understand that as a means of leading and now over the course of the last year they've pushed that to the employee base, so they get 3,000 employees—including at factory level—and the intention is to take every single employee in the company through a personal purpose training and how that aligns and is expressed at work. That's probably over-indexed, it might be too much. But there's no way you can vest this in a corner with chief sustainability or ethics or reputation or other officer. If this isn't about how the leadership writ large models the behavior all the time when nobody's looking, then it won't work. In that sense it's got to be purpose driven and culturally embedded, and that means aligning compensation systems. I think lots of people who are in sales and marketing and whatever else, they want to do this, but when they're compensation metrics tell you that 100 percent of your reward is here, adding this in is really hard. When they start to come together you see change in how they buy or how the sell or both.
David: One of the examples we've approached in All In is about BASF. Once BASF decided they wanted to be a sustainable, purposeful business, one of the first things that they did is run several different workshops with people across the organization. And the purpose of those workshops wasn't just to transmit, it was as much also being on the receiving end about ‘if the company is really trying to [be sustainable], then we're going to need to change this, we're going to need to change that.’
Chris: I think that CSO roles are really important and we've found those people who are vested with kind of driving that agenda inside company are courageous, they're bold, they're systemic thinkers and they're pretty intense people. Steve Howard at IKEA was talking about driving [the agenda] and not taking ‘no.’ Hannah Jones at Nike has the same type of personality, which is serious, ‘we're embedded and we're driving this forward.’
What's exciting, I think, in the shift in leadership over time is a lot more women are in charge of that function now. Almost all the leaders in corporate sustainability have a significant, senior-level woman who's driving it. That wasn't the case 10 years ago and it definitely wasn't the case 20 years ago. So this is a feminization of this role that's interesting, too.
Mark: … I think there's something about that which makes tremendous sense. [There’s] collaboration and listening and openness and responsiveness and nurturing and all of the things that women do better in the workplace and in relationships. Everybody needs to learn that those are skills that lend themselves to leading in this space, in a collaborative way, in kind of a greater good way.
… [But] I don't think [sustainability officers] have to be at the executive table. I think there has to be evidence that the topic is at the executive table and at the board level. A lot of companies say the chief sustainability officer is the CEO and sometimes I think it's bullshit and sometimes I think it's really true.
Chris talked about how Shell was a leader in the early days of the survey … They talk about the CEO being the chief sustainability officer, there isn't one otherwise. (There's another member of the executive council who's [also] responsible for it). And as we're wrapping up the book last fall, you have Shell announcing carbon targets that exceed the Paris Agreement. The oldest-line energy company is suddenly stepping out in front of all the governments saying, ‘this is possible. Here's our plan through 2050, where's yours?’ And that was very much a Ben van Beuren [Shell’s CEO] initiative.
That's the kind of changes that we're looking for from folks who lead companies that we perceive to be dinosaurs today. I want Ford to turn out to be more like Tesla and Tesla to turn out to be more like Ford. I desperately want Orsted, the Danish energy company, to be more like Shell because I want that scale and I want Shell to be more like Orsted because they need to radically move the renewables in their portfolio forward. Gotta have, again, that balanced blend.
Chris: Where's the new leadership coming from, this regenerative air that we're predicting? It's hard for people to point to companies or even sectors that are going to drive it forward. Then there's emerging markets: We're not seeing a lot of Chinese, Indian, African, Latin American companies that are breaking through, so that's not sustainable. We need new leadership and different approaches from those parts of the world and we're hopeful that that'll happen at some point, but it's not visible to us yet.
Mark: There has to be a way to make index investing, which I think is the power particularly in retail markets now, work in alignment with this. … I think we're seeing increasing evidence that it can … So indexing and passive investing have to come together with this agenda and figure out how to have influence regarding ESG, from governance on down, for the retail consumer to get what they want and for companies to deliver and be rewarded in markets for doing the right thing as well.
David: When we first got together and talked about this project, we had quite a discussion about what was going to be our own purpose in doing this and the tone of voice and so on, and we all quite independently said this is going to be glass half-full, not glass half-empty. We want to be encouraging and inspiring to people. And we have to recognize that going all in is a journey more than a destination. There will be new issues coming up, there will be changed expectations around the world and so on. The crucial thing is having a kind of openness, because leadership is ultimately about spotting the weak signals before other people do, and that's what we're encouraging businesses to do by going all in.