What challenges and strategies are top of mind for you in sustainable business?
Noble intention alone never was enough – and now we all know that. The phrase ‘ESG backlash’ does capture the sense that the veneer has been ripped off many overly simplistic commitments made when sustainability was in vogue everywhere. But it is of course much more nuanced. Some key sectors, especially within finance, are rolling back their commitments. However other major areas of the global economy now have systemic underlying drivers towards sustainability – from Chinese dominance of low priced but high quality solar and battery technologies, to the hyperscalers’ desperate need for innovative decentralised power solutions for AI given constrained grids. Even in finance, pension funds, as key asset owners, are becoming more activist in switching mandates away from asset managers under-performing on sustainability to better meet their duties to protect long term value in a climate changing world – and better match the values of their pension holders.
What should we be doing differently today?
The Cambridge Institute for Sustainability Leadership paper in Sept 2024 on Competitive Sustainability was both insightful and prescient given what’s followed. My favourite line was “It is time to move on from trying to put ‘sustainability thinking’ into business and instead start putting ‘business thinking’ into sustainability”. We need to change our mindset. The time we’re in is an age of disruption – business leaders everywhere are grappling with an even more VUCA world. Despite sky high valuations, no one is sitting comfortably. Taking a business approach to sustainability means thinking smartly and focusing on the weak and strong points in your business that disruption identifies. That’s the way in for sustainability. That means finding ways to be a better partner for growth customers if you’re B2B. Or better ways to identify what a consumer needs next if you’re B2C. In both cases it means looking hard to see how AI might enable new entrants to disrupt your business model. It means understanding where supply chain or operational shocks from the nexus of climate adaptation / water scarcity / energy competition will hit first. It means targeting development programmes and employer brands at the tight band of key skills you’re fighting for in the talent marketplace.
IF YOU COULD RESET SUSTAINABLE BUSINESS, WHAT WOULD YOU EMPHASIZE?
I’d start with boards. Boards need to really understand where their weak and strong points are and – if we’re honest – be fearful enough of the risk, or excited enough about the competitive opportunity – to commit to the investment decisions at scale that will move the needle on sustainability. We need bolder asks from business for firmer government policy to enable the climate transition – but that will only come when boards see how urgent it is that they do that. As Europe’s carbon border adjustment mechanisms kick off, the deforestation and simplified ESG reporting requirements return, and the UK, Canada, Australia, Japan and California step up too, can we be more surgical in the next phase of our policy ambitions?
WHAT ARE YOU MOST PROUD OF?
I’ve led major growth strategies in the context of disruption in different sectors across the world. At SABMiller we built what was essentially a $1bn bottom line sustainability value plan responding to trade policy shocks (localising agriculture with new innovative products), water scarcity (protecting watersheds where major volume growth was at risk), changing consumer trends (expanding the portfolio to zero alcohol products, and responding to craft beer with purposeful brands) and addressing energy costs (major energy efficiency savings).
Bringing growth and sustainability together – often through partnerships.
At BT we founded the UK Electric Fleet Alliance with the Climate Group, which saw major companies invest to transition much of their fleets to EVs and ask (with Greenpeace!) for earlier ICE bans to enable the transition. At BT and at Accenture we put in place the right guardrails and cultural awareness that enables the faster innovation needed to take AI and big data opportunities to market. Also at Accenture we looked at how technology can simplify and accelerate sustainability progress through digital twins, geo-spatial sensing and AI. Now I guide the leaders of private equity owned companies to understand how sustainability can help them respond to disruption and better enable growth.
Disruption creates opportunities and ‘putting business thinking into sustainability’ means being ready to exploit those opportunities, very effectively.