OBSERVE The Odgers Berndtson Global Magazine_ No. 18
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For more than 50 years, Odgers Berndtson has helped some of the world’s biggest and best organisations find their senior talent. We do so by forming strong relationships with the most talented people, with those Our special thanks to the seeking them and following Odgers Berndtson between our own contributors to this issue: teams globally to bring both sides together. It Kit Bingham, London is because of our deep, Catherine Broome, London non-transactional and Paul Butterworth, London lasting partnerships Tony Gaffney, Toronto that our clients can Clare Glackin, London acquire, develop and Jane Griffith, Toronto retain their strongest Elaine Grotefeld, Vancouver leaders. Lauren van Halderen, Johannesburg Lucy Harding, London We deliver executive Patrik Kvikant, Helsinki search and leadership Jonathan Rossotto, London services to businesses Yan Vermeulen, Singapore and organisations varying in size, structure and maturity. We do that across more than 50 sectors, be it commercial, public or not-for-profit, and can draw on the experience of more than 250 Partners and their teams in 29 countries. Observe magazine is printed on Revive Offset 100% recycled paper odgersberndtson.com Join the conversation at: @odgersberndtson #obobserve CBP001008 Linked Odgers Berndtson
OBSERVE The Odgers Berndtson Global Magazine_ odgersberndtson.com No. 18 Issue 03 2019 the sustainability issue act now!
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Welcome Welcome to Observe 18, the We explore how organisations – and sustainability issue. the people who run them – can intensify There has never been a global their efforts to combat society-sized challenge quite like the climate problems like the climate crisis. emergency. It is predicted to We speak to someone who led the affect every person on Earth. sustainability charge at one of the We have already felt the effects, world’s largest consumer multinationals: many of them dramatic, yet the Paul Polman, former CEO of Unilever. evidence is that this is just a taster We also explore the role of the of things to come. Board on taking on a planet-friendly In response, we must accelerate the agenda. Where exactly does the decarbonisation of the world economy green buck stop? on an unprecedented scale. And we look at the place of the Chief So, this sustainability issue of Sustainability Officer in driving change. Observe magazine is arguably our most Businesses have an extraordinary important one ever. Because business power to adapt, and often to lead the has a vital role to play in slowing the way, in finding solutions to big problems. heating of the planet and adapting to Observe 18, reflects that fact. That’s the future climate. It will take the very why I believe this Observe magazine is best leaders working with extraordinary not just a good read, but a genuinely talent to ensure success. essential one! In Observe 18, we consider not just the climate mountains to climb, but the Yan Vermeulen is a Partner in the solutions too; across sectors from food Odgers Berndtson Singapore office to shipping, infrastructure to fashion, and is Head of the Southeast Asia mining to finance. Industrial Practice OBSERVE The Odgers Berndtson Global Magazine_ odgersberndtson.com No. 18 Issue 03 2019 Observe To read any of the great content featured in Observe over the past five years, go to odgersberndtson.com and click on the ‘Insights’ tab @odgersberndtson #obobserve @odgersberndtson OBSERVE 3/19 5
Under Observation Stories from BANKING around the BACKING GREEN BONDS Euromoney.com has just voted world that HSBC as the world’s best bank for sustainable finance, stating: “If highlight some there is one bank that realises the urgency of getting capital working of the latest for the planet, it is HSBC.” The thinking on bank dominates in green bonds and green loans. Among its deal sustainability highlights last year it had the inaugural Hong Kong sovereign €200 million blue bond – a debt $1 billion green bond, Ireland’s instrument issued by governments, first green bond, the first green development banks or others to bond for protected agriculture in raise capital from impact investors Mexico, the first green bond for a to finance marine and ocean- telecoms company (Telefonica) and based projects that have positive the first green sukuk in the Middle environmental, economic and East. The bank was also the sole climate benefits. lead manager on the World Bank’s euromoney.com TRANSPORT BRANDS PLANE TRUTHS PERIOD GAINS Pieter Elbers, President and CEO The fight against single-use plastics of Dutch national airline KLM, is is now a mainstream issue, but taking its sustainability credential activists and environmental groups very seriously – even advocating say disposable menstrual products that some passengers consider are also a big part of the problem. alternative forms of transport when One brand, it comes to short-haul flights. He TOTM, is to says the firm is exploring a “whole be applauded range of initiatives” that could help for its eco it become more sustainable. Its products. Its tampons, pads and Action Plan for air transport in the liners are all made with GOTS Netherlands sets a target of 35 per (Global Organic Textile Standard) cent less Co2 by 2030 achieved certified organic cotton and contain BOOKS partly by introducing sustainable no rayon, perfumes, gels or chlorine fuel. KLM’s hub at Schiphol Airport bleach. TOTM also uses sustainable KLEIN ON FIRE is part of this overarching plan: packaging where possible, meaning terminals, offices, and ground its tampons come complete As we go to press, a new book operations will also be climate with biodegradable cardboard from Naomi Klein, On Fire, is neutral. Schiphol already runs applicators while its pads are about to be published. It gathers entirely on electricity generated by wrapped in biodegradable or together for the first time more Dutch wind and is making efforts compostable biofilm. Furthermore than a decade of her impassioned to increase energy efficiency (for the packaging the products writing from the frontline of climate instance, by using LED lighting) are shipped in is also breakdown, and pairs it with new and limiting commuting. environmentally friendly. material on the staggeringly high klm.com totm.com stakes of what we choose to do next. Klein sees the climate crisis not only as a profound political challenge but also as a spiritual and imaginative one. Delving into topics ranging from the clash between ecological time and our culture of ‘perpetual now’, to rising white supremacy and fortressed borders as a form of ‘climate barbarism’, this is a rousing call to action for a planet on the brink. [See more book reviews on pages 32-33 of this issue] 6 OBSERVE 3/19 odgersberndtson.com
Contents CONFERENCES 8 Sustainability: Setting the scene INVESTING IN THE FUTURE Jim Thompson, Head of Odgers Berndtson’s US Sustainability Practice The Nordic Chambers Business Forum annual event, to be held in London on 28 October, will focus on ‘Investing in Sustainability’. Understanding mega 12 Boardroom trends is key to developing new business. That goes The vital role boards must play in rapidly also for climate change and the wider Sustainable developing sustainability programmes Development Goals where the Nordic countries are seen by many as leading. But looking ahead, what 17 Sector focus I: Food are the strategic opportunities in sustainability for companies across technology, services, finance etc. 18 Fashion’s green challenge – and for investors in both advanced and emerging The fashion industry needs brave economies? This always-engaging conference will aim to find some answers. leaders in order to become greener [See our feature on ESG, pages 28-31 of this issue] dkuk.org 22 Infographic Sustainability statistics to make you feel RENEWABLES both alarmed and encouraged IT’S ELEMENTAL 24 Imagining a better future According to businessgreen.com the Paul Polman, former Unilever CEO, UK’s National Grid has teamed up talks to Observe about sustainability with the Alan Turing Institute to use machine learning to more accurately 28 Money transfer predict generation levels from wind ESG-related investing has come of age and solar technology. National Grid is using artificial intelligence (AI) and machine learning 32 On the shelf to help predict how much energy the The latest sustainability books UK will reap from turbines and solar panels when the wind is blowing 34 Chain reaction or the sun is shining. The new AI Shining a spotlight on the supply chain PHOTO BY JAN KOPŘIVA ON UNSPLASH prediction models have improved solar forecasting by a third. The project is 40 Cleaning up our act similar to the collaboration between A two-part look at cleantech Google and AI innovators Deep Mind, which is also using AI technologies to better predict energy output from 47 Listen up! wind farms. National Grid says that by Some of the best sustainability podcasts 2025 it aims to be able to operate a zero carbon electricity system. 48 Reality check nationalgrideso.com Inclusion & Diversity within the sustainability framework FOOD 51 Sector focus II: Shipping LET THEM EAT… INSECTS 52 Rise and rise of the CSO As climate change A look at the developing role of the continues to wreak havoc on global food production, Chief Sustainability Officer some enlightened folk are looking to other forms 56 Why Asia must do more of food that require far less MNCs in the area need to up their game land to feed us. One company, Micronutris, is the first French farm for 58 World’s most important bank edible insects for human consumption. Plastic Bank wants to save the oceans Mealworms and crickets are transformed into flavoured crackers, energy bars, chocolate and pasta packed with proteins, fibres and vitamins. During its 61 Sector focus III: Mining lifetime one mealworm eats the grand total of half a shaving of carrot. What’s not to like?! 63 Odgers Berndtson worldwide micronutris.com A list of all 61 offices in 29 countries @odgersberndtson OBSERVE 3/19 7
Overview sustainability: W H A T L I E S A H E A Jim Thompson on why organisations – and the people who run them – must intensify their efforts to combat society- sized problems like climate change 8 OBSERVE 3/19 odgersberndtson.com
Overview Corporate sustainability has three On the social side, meanwhile, parallel mandates: to manage the companies are investing huge impact of business decisions on amounts of time, money and energy the environment and society while in order to align themselves with improving the long-term viability their increasingly values-conscious of the business. Hoping to “meet customers. One of the best examples the needs of the present without of this comes from the diamond compromising the ability of future industry, which has spent enormous generations to meet their own needs”, sums implementing mine-to- the sustainable business movement consumer blockchain technologies was first embraced by a few altruistic that can demonstrate to morally individuals, then grew to have some scrupulous consumers the authentic marginal marketing or brand benefits, and nonviolent provenance of their and now offers its practitioners gems. Why? Because a company’s measurable financial benefits. environmental and social policies are Perhaps this is why the world’s now, more than ever before, closely largest and most influential companies informing the bottom-line. have become increasingly vocal As sustainability initiatives shift about their environmental and social from basic environmental compliance commitments: they’re cutting their and corporate responsibility to carbon footprints, they’re audibly core and remunerative aspects of D ➜ PICTURES: UNSPLASH / IKON / WIKIMEDIA COMMONS / PLASTIC BANK focusing on operational waste doing business, the structure of the reduction, they’re investing in new sustainability function is changing. green technologies, and they’re using Sustainability teams, which often their clout to promote social agendas used to be subsidiaries of marketing on both local and national scales— departments, are now becoming all while maintaining their fiscal distinct departments of their own. commitment to good governance. Some companies are even elevating Microsoft, for example, carbon sustainability officers to the C-level, neutral since 2012, has pledged to giving their Chief Sustainability reduce its total operational carbon Officers a direct reporting relationship emissions 75 per cent by 2030. And to the CEO and board, a greater role Apple, which powers all of its global in strategy development, and more facilities with 100 per cent renewable latitude in governing the firm’s stance energy, is pushing its environmental (both internally and externally) on commitments down its supply chain. sustainability. ➝ @odgersberndtson OBSERVE 3/19 9
Overview The good news and their loyalty to the company, while Despite the up-front costs, (e) accomplishing the stated goal of corporate sustainability actively offsetting the negative environmental benefits both the company and its costs of doing business. Between various stakeholders (shareholders, 2005 and 2018, the world’s 100 most employees, customers, local and sustainable companies – as listed by global communities). As former New Forbes – significantly outperformed York City Mayor and sustainability their less green competitors. Top of advocate Michael Bloomberg put it the list in 2018 was Dassault Systemes, when talking about cities: “Parks and a French firm that designs engineering trees make cities more beautiful, and software that assists organisations in they also suck carbon and soot out waste reduction. of the air. Energy efficiency reduces I don’t want to understate how emissions while cleaning the air and important this is – for the planet, for saving money. Bike lanes and mass branding, for employee engagement, transit make it easier to get around and for talent attraction. The younger town while also shrinking city carbon third of the US workforce, for instance, footprints.” And all of this helps “cities is demonstrably values-driven. Despite attract new residents and businesses”. widespread student debt, the rising Businesses, like cities, can now cost of living, and the fact that they accrue significant financial and possess on average 40 per cent less than their parents did at their age, a significant majority of Americans under the age of 40 will still the good news (a) leave a job for a lesser-paying one that more perfectly aligns with their values, and (b) pay more for a product that is brand benefit by offering others the environmentally sustainable. benefits of sustainability initiatives. This is important because, in order Companies that institute rigorous to attract millennial customers corporate sustainability goals can and millennial talent, companies (a) proclaim themselves as forward- have to pursue the kinds of social thinking and social-minded, which (b) and environmental initiatives that makes people feel good about buying this generation cares about, which their products or services and (c) generally means doing real good for makes its employees feel like they’re the environment and for the human accomplishing more than simply lining stakeholders (both in the US and the company’s coffers, which (d) abroad) who are affected by the act increases their engagement at work of doing business. 10 OBSERVE 3/19 odgersberndtson.com
Overview Jim Thompson is Head of Odgers Berndtson’s US Sustainability Practice The bad news profits for shareholders). The bad news is that our current Given the fact that corporations, like sustainability efforts fall far short of the their human leaders, are programmed systemic environmental changes now to focus their energies on tangible required of us. short- and middle-range goals rather Even while companies like Toyota, than vague shapes in the far distance, Apple, Microsoft, Neste, Merck, Delta how should – indeed, how can – Air Lines, Shinhan Financial Group, businesses take the next step to act on and thousands of others take what what the numbers seem to require? seem like drastic environmental steps, I do not, of course, have all of the atmospheric C02 levels continue answers; but I have hopes. I hope their meteoric rise. The numbers are that corporate boards, tasked with truly terrifying. In 2013 atmospheric overseeing their organisations’ medium CO2 levels punched above 400 parts and long term viability, can intensify per million for the first time in three their efforts to combat society-sized million years. In 2019 we hit 413 ppm. problems like climate change. I hope To put this in perspective, back in that those companies with board-level 1970 atmospheric CO2 was at 323 sustainability expertise, board-led ppm; and from the last ice age to the committees devoted to sustainability mid 18th century, when large scale and corporate responsibility, and industrialisation kicked off, C02 levels actively enabled Chief Sustainability remained more or less flat-lined around Officers will serve as examples 280 ppm. If still more drastic measures for others. I hope that executives, are not taken – by companies, by consumers, and employees will nations and by consumers – global continue to act on their values, putting temperatures are expected to increase competitive pressure on businesses the bad news by some three degrees Fahrenheit by to increase their environmental and 2050 and seven degrees by 2100, a social commitments and therefore process which will radically transform generating market-based solutions to the world as we know it. climate change. I hope that businesses But how can companies take more will find it in their interest to pressure active measures? The corporate governments around the world to world has never yet faced a problem implement sweeping environmental on the scale of climate change and policies – to do, in other words, what the corporate model seems poorly the international business community suited to finding a solution. The costs has done quite successfully with issues of inaction are at once difficult to like equality, civil rights, voting rights, measure or predict and will be doled poverty, and ozone depletion over the out with relative equanimity across the last century. corporate spectrum; and so, though Lastly, I hope that by taking there are competitive advantages to a leadership role in addressing be gained by engaging in operational environmental demands, businesses greening initiatives, there is little around the world can help restore obvious advantage to taking more some of the public’s faith in corporate severe measures — nor is it clear how values, reigniting the old notion that such measures might align with that businesses are agents of progress and third pillar of corporate sustainability vessels of societal good, not simply and responsibility: economics (i.e. manufacturers of undispersed profit. ■ @odgersberndtson OBSERVE 3/19 11
Boardroom ROGER CHOUINARD / IKON IMAGES All aboard? 12 OBSERVE 3/19 odgersberndtson.com
Boardroom Is your board really playing its part in helping tackle some of the environmental and climate problems we now face? If not, then it’s time to act – now! L ast year Deloitte published a report titled: the long term strategic threats and opportunities Sustainability and the board: What do facing the business, to ensure a company continues directors need to know in 2018? One of to evolve and remains adaptable for changing its central arguments was this: “Although times.” Critically, Bingham adds: “Sustainability it might not be the first boardroom and a response to climate change are central to a topic you think of, sustainability is now central company’s long-term survival and success, making to corporate competitiveness and a company’s it a vital topic for boards. In the past, many boards continued ability to operate. Traditionally and companies adopted cheap and easy fixes – a encompassing topics as varied as environmental generous donation to a relevant charity, or a glossy disasters, labor relations, safety incidents, or brochure. Today, that is insufficient.” scandals, sustainability affects all sectors and challenges even the most progressive companies The pivot to purpose and the most thoughtful directors.” For Vancouver-based Coro Strandberg, an expert Deloitte envisaged sustainability securing more on sustainability leadership and transformational time at and in between board meetings, in part business practices and relationships, the because there is “no single, standardized approach insufficiency to which Bingham refers is part to incorporating ESG [Environmental, Social of a much wider and more fundamental board and Governance] into boardroom discussions discussion. Says Strandberg: “In the future we will on business strategy and risk. The stakes are move towards redefining ‘what is the purpose high, and directors need to act now to recognize of the corporation?’; which is a question of key sustainability as a fundamental element of their concern for any board.” Strandberg calls it the ‘apex stewardship and fiduciary role”. question’ that must be answered by shareholders, Fundamental indeed. If we cannot rely on boards owners and management alike. “I call it ‘the pivot to to play their part in resolving some of the burning purpose’,” she adds. “I wouldn’t start by saying ‘now (literal and metaphorical) environmental issues, you’re on the board what about sustainability?’. then things are indeed bleak. I would say you’re on this board and what’s the purpose of the company and how does the board Board responsibility have oversight of the company’s purpose?” Boards that neglect – or are simply ignorant And that, says Strandberg, means a call to of – the clear benefits of deploying a strong action for boards to “get a humanitarian or societal sustainability programme, Deloitte’s report went purpose”, one that even goes beyond profits and on, “do so at their own peril. There is a growing shareholder returns and having good customer body of evidence indicating that sustainability relations - although it shouldn’t, of course, abandon factors influence financial returns and present an these crucial areas. This overarching fundamental opportunity to drive long-term value.” approach to what a company is, and what it stands We discuss elsewhere in this issue the financial for, has been brought into sharp relief by the crises and investment upside of an active sustainability we all now face. The role board directors must play programme but here the focus is on what one in this unfolding drama cannot be overstated. might call board behaviour. Tony Gaffney, Managing Partner, Board and CEO Kit Bingham, Partner in the Board Practice Services at Odgers Berndtson in Canada, echoes at Odgers Berndtson in London and Head of this sentiment: “Boards have a duty to consider the Chair & Non-Executive Director Practice, is how their company and its sustainability measures unequivocal: “The role of the board of directors up against emerging ESG standards and to ensure has been described as ‘creating tomorrow’s that their business plan ensures adherence to company out of today’s’. It follows that boards are those standards. Sustainability considerations vary responsible for considering and scenario-planning across industry sectors. However, it is essential that ➝ @odgersberndtson OBSERVE 3/19 13
Boardroom companies consider sustainability from the indicators related to the company’s all perspectives including those of their overall climate impact, for example its customers, investors, employees and carbon handprint, are regularly reported other stakeholders.” and reviewed also at the board level. There are rising societal expectations, The board has annual discussions believes Strandberg, with all on business-related operational stakeholders looking for businesses sustainability matters. The sustainability to play more of a role in society. It can function is organised directly under mean the board should revisit the very Neste’s CEO which also ensures the Kit Bingham, Odgers essence of the company – why does the visibility of sustainability issues to Berndtson, London: company exist? Which in turn is linked the board.” “Sustainability and a to a general public decline in trust (of response to climate change are central governments, organisations, companies Maintaining focus to a company’s long- and so on); investors calling for more, Kähkönen expresses an important term survival and consumers braying for action. sentiment that other boards would do success...” For Strandberg and Bingham the well to follow: “Translating sustainability avoidance of tokenism is key. Strandberg targets into operational targets is a very believes that being a director on a company-specific issue. Our experience board where you are, perhaps, the is that a proper materiality analysis STRANDBERG CONSULTING sole sustainability expert is simply not is necessary. Neste’s overall business good enough. “It’s not about having performance is closely linked to the one person on a board! You get labeled company’s sustainability targets.” as ‘that sustainability person’! I have a In Africa, Lauren van Halderen, solution for tokenism: board education Joint Managing Director of Odgers NESTE on the relevant sustainability topics Berndtson’s Sub-Saharan Africa material to your company. Plus, you business, believes that boards and Matti Kähkönen, Chair of Finnish need to have a very skilled Chair and leadership teams in her region must energy company other directors who are exposed to and similarly “maintain an ongoing focus Neste: readily accept diversity of thought.” on balancing competing stakeholder “Neste’s overall business interests to ensure sustainable growth of performance is Boardroom action the organisations they steward”. closely linked to It is encouraging to note that some Valli Moosa, a South African politician, our sustainability boards really have upped their game. Chairperson of the WWF South Africa targets.” For example, take Finnish energy Board and Independent Non-Executive company Neste, one of the top three Chairman at AngloAmerican Platinum, companies on the Corporate Knights told Observe that: “Business existence 2019 Global 100 list of the Most is characterised by rapidly evolving Sustainable Corporations in the world. customer needs, shifting regulatory and Neste, which posted revenues of EUR investor requirements and escalating 13.2 billion in 2017, is also the number environmental concerns. one ranked energy company in the world “In one organisations where I thanks to its industry-leading exposure chair the Sustainability Committee, to clean revenues, top quintile resource we are responding to a variety of Lauren van Halderen, productivity for energy, carbon, water, trends including artificial intelligence, Joint MD Odgers NOx and particulate matter combined transparent supply chains, demographic Berndtson Sub- with excellent innovation capacity, and shifts, ethical fashion, resource scarcity, Saharan Africa: “Boards must gender diversity on its board. anti-plastic sentiment and climate maintain an Talking to Observe, Neste’s Chair Matti change. While these trends represent ongoing focus on Kähkönen declared: “Sustainability is at risks, they are also opportunities balancing competing the core of Neste’s business model and to which we need to respond with stakeholder interests to ensure sustainable an integral part of Neste’s strategy that determination and commitment.” growth...” the board approves. Van Halderen adds that businesses “As the company’s business is focused in her region “need to find new, on providing renewable and circular innovative ways to achieve sustainable solutions to combat climate change, value creation, growth, greater social 14 OBSERVE 3/19 odgersberndtson.com
Boardroom ❝ ...You need to have a very skilled Chair and other directors who are exposed to and readily accept diversity of thought ❞ Coro Strandberg, Vancouver-based sustainability leadership expert equity, promoting a sustainable, Boardroom action thriving planet to provide solutions Boards unsure of how to accelerate for future generations. Stakeholders their sustainability programme would do should support the development of well to take note of Neste’s approach. commercially and environmentally As Kähkönen states: “The company is sustainable solutions for the company as developing its portfolio of renewable well as enhancing sustainable long-term and circular solutions to reduce shareholder returns.” global dependence on fossil oil and WWF Still, as Strandberg rightly points to contribute to improving recycling Valli Moosa, out, educating board directors to know of plastic waste in society. Neste is Chairperson of how to change things in favour of committed to progressing towards the WWF South Africa Board and greater sustainability must come from reaching its corporate-wide climate Independent Non- actively wanting to do it. “Boards have targets, while supply chain management Executive Chairman professional development objectives remains high on the agenda.” at AngloAmerican Platinum: for their directors and every year the Adds Kähkönen: “Neste is “We are responding governance committee is responsible for committed to transparency in our to a variety of making sure that there is a programme operations and performance. We trends including artificial intelligence, of education to equip boards with the communicate promptly, consistently transparent supply knowledge that they need. But it’s not and accurately, and provide a sufficient chains, demographic happening as rapidly as I would like. level of information to ensure that all shifts, ethical “Well-governed boards have an annual stakeholders can form a true and fair fashion, resource scarcity, anti-plastic evaluation of the board’s performance. view of Neste and its current and future sentiment and You should have questions in there operations simultaneously and equally.” climate change. on how knowledgeable the board is Every day that goes past without While these trends represent risks, on sustainability matters. If directors a coherent and implementable they are also rank themselves low it’s then for the sustainability strategy is a day lost opportunities to governance committee to decide what to the inexorable rise of climate and which we need to kind of education is needed. Not just the environmental change. It’s time for respond...” board overall but also its committees.” boards to act now! ■ @odgersberndtson OBSERVE 3/19 15
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Food Sector focus We are what we eat. Food is currently the largest reason for the energy imbalance on earth. The statistics are terrifying – yet there is cause for hope Four (of many) reasons for hope: 1 Emerging technologies, incorporating data and AI, as well as artificial ‘meats’ are at an early stage, offering visions of ‘vertical’ urban farms, soil-less growing, and replacement of intensive meat raising. The question is: can these scale quickly to make a global impact? 2 High-Pressure Processing could extend the shelf life of food by 10 times. The technique effectively inactivates micro-organisms to guarantee food safety. This combination of high pressure and low-temperature UNSPLASH environment safely maintains the taste, food, appearance, texture and nutritional It’s the single largest source of greenhouse resilient, sustainable and efficient ways. This value of food. gases, with 31 per cent attributable to food means reducing emissions and pollution, 3 and its associated distribution chain. Food minimising waste and improving our soil. Kickstarter is also the single largest consumer of fresh companies water, the largest user of land and the single Drought could also be a more fundamental like Exo are largest cause of biodiversity loss and soil problem for food producers. At two degrees hoping to make nutrient depletion. of warming, a highly likely scenario given the insect protein bars current rate of carbon emissions, droughts commonplace in But just as the current food system is will decimate the Mediterranean and much our diets. Insect draining the earth of resources at an of India. At three degrees, Central America, protein tends to unsustainable rate and driving climate Pakistan, western US, and Australia will be contain about 60 per warming, it will have to cope with the almost permanently drought-stricken. cent protein, is packed challenges of the coming climate. with vitamin B12 and Turning to the oceans, the source of fully one has more calcium For example, globally, grains account for fifth of all animal protein we eat, acidification, than milk. 4 about 40 per cent of the human diet. Add warming, oxygen starvation and pollution have Lab-grown soybeans and corn, and you’re up to two- undermined this source of food. Many have meat, otherwise thirds of all human calories. described a mass extinction of species. Off known as in Australia, for example, fish populations have vitro animals or ‘clean The UN estimates we will need nearly twice plummeted by 32 per cent in just a decade. meat’ could be on as much food like that in 2050 as today. But, sale very soon. It just as we need to grow more grains and Can we face this challenge to our most could also make meat other related foodstuffs, for every degree of fundamental daily need? Is there such a thing production a new warming yields decline by a startling 10 per as a sustainable food system? We have less form of sustainable cent. So we need to produce food in more than a decade to act, and find out. engineering. @odgersberndtson OBSERVE 3/19 17
Fashion FASHION’S GREEN CHALLENGE F ashion and sustainability does not the business was an issue. Together, on the face of it seem a natural fit. these findings indicate that it has By its very nature, fashion demands never been more important for fashion that we constantly engage with the brands to have a credible, workable new, encouraged to make multiple sustainability policy. This requires a purchases through a throwaway culture robust leadership team that understands often founded on low prices and quick that sustainability issues impact every delivery or through the psychological area of a business, from ensuring ethical obsolescence of this season’s ‘must production methods and minimising have’ item. plastic use through to auditing every link To put it in context, global clothing in the supply chain to ensure the most is production doubled between 2000 and made from the least. 2014. In five large developing countries Catherine Broome, who leads – Brazil, China, India, Mexico and Russia executive search assignments within – apparel sales grew eight times faster Odgers Berndtson’s global consumer than in Canada, Germany, the UK and practice in London, specialising in the US. senior and C-suite mandates within the Slowly, however, the world of Fashion and Luxury industries, believes fashion is changing and consumers the drive for sustainability must come are looking for more from the from the top. She says: “The two brands they engage with, key traits to look for when choosing aspiring to buy from companies someone to head up a brand’s that can help them make a sustainability team are courage and meaningful difference. vision. Vision usually comes first from In a 2018 survey carried a top leadership perspective. When out on behalf of sustainability you are looking for someone to lead consultancy and creative agency that change through an organisation, Futerra, 88 per cent of UK and US courage is so important. Catherine consumers said they wanted brands “There will need to be initiatives and Broome, to help them be more environmentally actions that don’t make immediate Odgers Berndtson friendly and ethical in their daily lives. sense in terms of revenue. It’s not just In a June 2019 survey for the fashion fashion – in any business where you Amy industry bible, Drapers, 91 per cent of propose something to reduce profits Powney, Mother of brands and retailers reported that their it’s counterintuitive, so that’s where Pearl customers were showing a growing courage comes in really strongly.” interest in environmental issues, while Amy Powney, Creative Director just 42 per cent said they themselves of London-based contemporary offered a sustainable product range. womenswear brand Mother of When asked about the barriers to Pearl, is an advocate of leading sustainability, 34 per cent said lack of from the top. She has said: the required knowledge and skills within “There’s no handbook on how to 18 OBSERVE 3/19 odgersberndtson.com
Fashion LAURA JAMES on the steps fashion brands are taking to improve their sustainability credentials in response to growing consumer demand make a brand sustainable, but I wanted Eileen Fisher’s to know from start to finish where our Waste product was grown or derived, who was No More: making it and the social impacts along recycling the way. I’ve journeyed to find the best clothing factories, suppliers and farmers who care about the planet and its inhabitants as much as we do.” In April 2019 Odgers Berndtson Eileen Fisher’s Waste No More staged a roundtable event to discuss programme is equally clear: consumers sustainability and its impact. It invited can bring back items from the brand’s senior figures representing leading range they no longer wear and get brands, retailers, e-tailers and global vouchers in return. The clothing is platforms within fashion and luxury. A key then cleaned and resold through the finding was the importance of a selective company’s Renew programme. approach over, for example, a strategy French luxury conglemorate LVMH that tries to cover off too many topics. – which brings together brands such Companies do well when they Fendi, Dior and Givenchy – has demonstrably stand for something entered into a five-year partnership selective in sustainability, such as a with UNESCO to safeguard biodiversity commitment to eliminating plastic, across the planet. Board member boycotting animal products, using organic Antoine Arnault said of the initiative: cotton or reducing synthetic materials. “This partnership marks a significant Conversely, firms that try to cover too step forward along the path on which many bases, risk not standing for any. the LVMH group has already embarked This clarity of vision works well for to safeguard biodiversity. We are brands such as Stella McCartney, delighted to have this opportunity to whose products are all vegan, meaning work closely with UNESCO on these Vegan consumers can be certain that not only essential issues.” clothing are there no skins, fur, angora or feathers It is often, however, smaller brands from Stella McCartney in the collection, but also that the glues with hands-on founders which lead used in bags and shoes are not derived the way when it comes to end-to- from animal origins and none of the end sustainability – ensuring ethical brand’s cosmetics have been tested decision-making from source to shelf. on animals. A desire to create products that have Another example is Toms, the minimal impact on the Veja California-based ethical shoe brand, environment is often sneakers which has given away 60 million pairs of one of the key reasons shoes to children through humanitarian these brands were organisations while ensuring much of its launched. range is vegan. French company ➝ @odgersberndtson OBSERVE 3/19 19
WWW.MANUFACTURINGEVENT.CO.UK LEADING MANUFACTURING TOWARDS A SUSTAINABLE FUTURE. ARENA MK, MILTON KEYNES 1st JULY 2020 Join us at the 2020 National Manufacturing & Supply Chain Expo in the Arena MK, Milton Keynes on the 1st of July to hear from an impressive line-up of manufacturing leaders, academics and government agencies who will engage in a stimulating blend of key note addresses and debates. KEY TOPICS INCLUDED: SECTORS COVERED: • PROCUREMENT • LEAN MANUFACTURING • CONTROL & • FOOD & DRINK • CHEMICALS & PHARMACEUTICALS AUTOMATION • SUPPLY CHAIN OPTIMISATION • INFORMATION • LIFE SCIENCES • RUBBER, PLASTICS & NON- TECHNOLOGY LOGISTICS • ENERGY MANAGEMENT • FACILITIES METALLIC MINERALS • METALS • ELECTRONICS MANAGEMENT • SUSTAINABILITY • PROJECT MANAGEMENT • • ELECTRICAL EQUIPMENT • PRECISION HEALTH & SAFETY • WAREHOUSE MANAGEMENT • MATERIALS ENGINEERING • 3D PRINTING • MACHINERY • HANDLING • ROBOTICS • AND MANY MORE TRANSPORT • OTHER MANUFACTURING ...ALSO IN BELFAST ...AND IN DUBLIN NORTHERN IRELAND Titanic Exhibition Centre, Belfast, 27th Feb 2020 CITYWEST, 29TH & 30TH JANUARY 2020 www.northernirelandmanufacturing.co.uk www.manufacturingevent.com Contact Gareth at garreth@prempub.ie or on 353 1 6120880 for more information
Fashion Veja’s sneakers are designed in France Marta Ortega – daughter of Amancio and made in Brazil from recycled plastic Ortega, founder of Zara’s parent bottles, organic cotton and natural company Inditex, and a member of rubber. Founders Sébastien Kopp and the Zara women’s design team – said: François-Ghislain Morillion worked in “It’s something that we all feel really investment banks for a short while passionately about as individuals, as well after graduating college before as in a work capacity. [We are] always starting an NGO which audited French looking for ways in which we can do companies’ supply chains, looking better: working on new technologies, primarily at environmental and socio- new ways to work with recycled economic issues. materials, and helping create new Based on what they saw, then fabrics that our designers, as well as they launched Veja and the brand others in the industry, can work with has become massively on-trend, in the future. It’s the right thing to do. synonymous with sustainable fashion It’s an approach that we’re absolutely and incredibly successful, which is committed to.” doubly impressive as the brand has UK brand Toast does things never advertised. Speaking to the differently in an effort to counter fashion website Make it Last, Kopp the throwaway culture, encouraging said: “Veja’s secret to transparency sustained long-term use of pieces and sustainability is to go into the field from its clothing range. It even runs – to know what we’re talking about. regular mending workshops for Sustainability is not a Powerpoint, it is customers keen to avoid making more the mud of the Amazonian forest, further unnecessary purchases. understanding the problems of reality.” With consumers increasingly Catherine Broome believes larger demanding more sustainable clothing brands have much to learn from the within a greener supply chain, getting likes of Veja. “Smaller brands,” she says, the leadership structure working well Toast “definitely have the agility to react more will be vital to future business success. encourages long-term quickly to hot topics or areas of concern. Governments, consumers and brands clothing use Larger brands are not structured in that themselves are increasingly demanding by running way and so are slower to react. that fashion takes a firmer stance on mending workshops “The key is direct communication with environmental issues and responsible consumers. Often, very small brands will sustainability policies look set to become say, ‘we’ve noticed this and this is what a key driver to staying on-trend. we are doing about it’. Larger brands Catherine Broome believes the will be slower to process changes in structure of sustainability teams will consumer feeling, in world events, in be key to making these changes. She hot topics. What they can learn from says: “All teams are made of three key smaller brands is that direct and honest elements and the leadership of that communication team needs to be visionary. with the consumer “They have to be a very resilient is key.” diplomat, who can create buy-in But even within and have enough gravitas to enforce fast fashion things strategies. Underneath that you need a are gradually strategist, who can work out how the changing. implementation is possible in line with Spanish company Zara, the largest the current organisation or, if changes fast fashion retailer in the world, need to be made, how that will be produces 450 million garments and possible and what impact it will have on 20,000 new designs every year. the rest of the company. However, the company recently pledged “Then, at the grass roots level of the that all its cotton, linen and polyester team, you need innovators who need to will be organic, sustainable or recycled be protected so as to allow them to be by 2025. as creative as possible.” ■ @odgersberndtson OBSERVE 3/19 21
Insight & data 10 facts to ALARM you Every round-trip plane ticket from NY to LDN costs the Arctic By 2060, the cost of inaction on 3m 2 climate change is predicted to reach of ice $44 trillion, with the highest anticipated GDP [SOURCE: SCIENCE. losses in the Middle-East, Northern, SCIENCEMAG.ORG] and Sub-Saharan Africa, and South and Southeast Asia [SOURCE: OECD & CITIGPS] 2in3 ( (( ( (( extreme weather events in the last 20 ¼ of the plant and animal species years were influenced by humans Since 1950 humans have created approximately assessed in a recent UN-backed report face [SOURCE: CARBON BRIEF] 6,300,000,000 extinction, many within decades, unless urgent metric tons action is taken of plastic waste of which [SOURCE: DW.COM] only 9% has been recycled [SOURCE: VISUALCAPITALIST.COM] The average number of people exposed to HEATWAVES has increased by approximately 125 million since the beginning of the century [SOURCE: UN NEWS] A swath of rainforest the size of 40 football [soccer] fields disappears each minute [SOURCE: RAINFOREST-ALLIANCE.ORG] Nearly 90% of China’s population is exposed to triple the safe limit of particle matter in the air they breathe [SOURCE: IG.FT.COM] If concrete was a nation it would be the third-largest emitter of carbon in the world One washload of polyester clothes [SOURCE: BBC.CO.UK] can release 700,000 microplastic fibres into the environment. It is estimated that half a million tonnes of these microfibres end up in our oceans each year [SOURCE: THEGUARDIAN.COM] 22
Insight & data 10 facts to INSPIRE you Last year, Portugal generated enough renewable energy to power the whole country for the In October 2018, entirety of March. The national grid businessman, operator said that Portugal’s average philanthropist and renewable generation exceeded 103% conservationist consumption, which beat its previous People across record of 99.2% in 2014. This is the Europe demanded Hansjörg Wyss most amount of renewable energy announced that he that the European country has action to save bees. would donate generated in 40 years As a result, last year $1 billion the EU banned three bee-harming of his fortune over the pesticides from next decade to “help being used outdoors accelerate land and ocean conservation efforts around the world, with the goal of A United Nations On January 18, 2019, the report says the ozone, European Union voted on protecting 30% of the and confirmed an agreement planet’s surface by including the gaping to introduce restrictions on the 2030” hole over Antarctica, use of single-use plastics like will be fully healed by cutlery, plates and straws. the 2060s The new regulation could potential save the EU $24.9 billion [SOURCE: PBS.ORG] in environmental damage by 2030 According to the advocacy group E2, clean energy jobs 2018 saw the largest in 18 major US cities annual increase in considerably outnumber global renewable jobs in the fossil fuels sector generation capacity [SOURCE: ONETREEPLANTED.ORG] ever, with new solar photovoltaic capacity outstripping additions in coal, natural gas and nuclear power A German 20-year-old has spent combined just over a decade orchestrating [SOURCE: THECONVERSATION.COM] hundreds of youth-led initiatives SHUTTERSTOCK to plant trees around the world. Since he launched his initiative as a nine-year-old, he has helped to plant over one million trees – and with his new United Nations position as leader of its Billion Tree Programme he and his organisation will be planting one trillion more trees [SOURCE: GOODNEWSNETWORK.ORG] Last year, the world’s second largest coral reef, the Belize Barrier Reef Reserve System was removed from the UNESCO World French tyre maker Michelin has Heritage Center list of World announced that it will be replacing its tyre’s Heritage in Danger after years oil-based ingredients with wood chips instead. of conservational efforts The first tyre is expected to be unveiled in 2020 [SOURCE: GOODNEWSNETWORK.ORG] [SOURCE: WHC.UNESCO.ORG] 23
Paul Polman Paul Polman, former CEO of Unilever, talks to Observe about his lifelong commitment to sustainability and his plans for his new venture IMAGINE 24 OBSERVE 3/19 odgersberndtson.com
Paul Polman Observe: You spent more than livelihoods for millions of people. what would be your immediate 10 years as CEO of Unilever Crucially, this work was sustainability priorities for the pushing the boundaries of strongly aligned with the U.N. initial two-year period? sustainable business. Looking Sustainable Development Goals, PP: I think the key consideration back what do you consider in a bold effort to maximise for any business is to calibrate to be your most significant our impact. where you can make the biggest achievements? impact, which naturally will vary PAUL POLMAN : There are Observe: What can other according to your sector and two things that come to mind. organisations – both large and operational footprint. Firstly, driving a long-term, small – learn from the Unilever Every company can leverage multi stakeholder model is approach and who, in your their supply chain, partners and ultimately good for shareholders. opinion, is doing the most customers to mobilise action that During my time at Unilever we dynamic work on sustainability delivers positive change at scale, demonstrated this with a 300 right now (other than Unilever whether it be more sustainable per cent shareholder return over of course)? practices, enforcing human rights 10 years and consistent top and PP: The most important lesson is or helping to tackle corruption. bottom-line growth. This helped that being a responsible business However, I passionately to showcase the attractiveness is actually good for business. believe that the most burning of our model and hopefully In fact, I believe a multi- issue we all need to focus on encouraged others to change as stakeholder model is the only is climate change. If we do not well; It’s about value and values. model that will work long-term. make tangible progress on this And secondly, it’s clear that The only model that people issue, then I’m afraid the future the development agenda is an will accept. of civilisation and much of the increasingly attractive business Society is no longer willing to natural world is at risk. We are proposition. In fact, it’s probably tolerate the idea that businesses truly facing an existential crisis the biggest opportunity we are somehow run in the interests the likes of which the world has have globally, and badly needed of shareholders, or a small group never seen before. We must if we want to live within our of billionaires. ensure that we collectively stay planetary boundaries now and Businesses thrive when they below 1.5 degrees warming, for generations to come. protect our natural and human which requires us to be net Indeed, companies that capital, equal to financial capital, zero by 2050 according to want to be around long-term and serve all their stakeholders: the science. must have a positive impact on citizens, employees, suppliers, We also need to make sure society and the planet. Being partners and those who make up our growth is more equitable, less negative simply isn’t good the extended value chain. When and this requires us to establish enough anymore. That’s why you make your business relevant a new social contract, which we developed the ‘Unilever to the needs of the communities ensures we leave no one behind. Sustainable Living Plan’, so that and societies you serve, then Society and our economies can the company could continue to everyone benefits, including be much more successful if we play its part in helping to solve shareholders. promote far greater diversity the challenges the world faces. Fortunately, we are seeing and inclusivity. It was a determined effort to more and more great companies In the absence of fully decouple the company’s growth stepping up. A good example functioning political systems, from its environmental footprint is Patagonia Inc, an activist I also believe the private and help improve society’s company that has a deep sector needs to step up, both wellbeing. A concerted effort heritage of giving back and an individually and collectively. Bold to use its size and scale to drive ingrained culture of working to and courageous business leaders transformational change. protect the environment. Yvon must work together in deep and And we made great strides. Chouinard, founder and owner purposeful partnership to move SHUTTERSTOCK EDITORIAL In helping to improve the of Patagonia Inc, deserves huge at scale and speed, so we can health and well-being of over credit for his leadership. reach the tipping points needed. 650 million people; reducing Unilever’s environmental Observe: If you were joining Observe: Your new venture, footprint throughout the Unilever today – or another IMAGINE, plans to work with value chain; and in enhancing organisation of similar scale – companies to press ahead ➝ @odgersberndtson OBSERVE 3/19 25
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Paul Polman for greater sustainability. You to alter our trajectory. Sustainable Development Goals. also say that you will invest an I am however optimistic The cost of implementing unspecified amount of your that we can be successful, as the global goals has been own funds in the project. Do we already have the means estimated at $3-4 trillion a year. you not think that it is the role to realise the U.N. Sustainable Governments are unable to of government and business to Development Goals, de- provide all this funding – indeed fund these urgent programmes carbonise our economies and all overseas development aid is rather than leaving it to drive transformational change. collectively only around $160 individuals? We know what we need to do billion – meaning business PP: Given the scale of the and have the tools to do it. This and the financial markets challenges we face – climate includes driving greater energy must embrace this agenda. change, plastics in our seas, efficiency and use of renewables; Fortunately, it’s highly attractive deforestation, the extinction more sustainable food systems; and promises a great return, so crisis and gross inequality – it’s smarter infrastructure and it’s in our own self-interest. evident that everyone must play city planning; better use of There are plenty of examples their part, however big or small. of great companies walking the Private sector leaders have talk. Courageous leaders like the a key role to play. That’s where ‘zeronauts’, who are committing IMAGINE will focus its time and their businesses to get to net efforts. We will work with leading zero emissions way ahead of companies in key sectors and their peers and current policies. help develop and leverage heroic As well as the 870 global CEOs that have the ability to companies (with almost $17 drive lasting change, not only trillion in market cap) that have within their own companies, but made bold climate commitments also – and more importantly – via the ‘We Mean Business’ as an ambitious group that can platform, the International harness their cooperation for Chamber of Commerce, The B maximum impact. It’s up to us – Team and U.N. Global Compact the “courageous collective” – to technologies; deployment of are also very focused on this make a real difference. circular models of growth; and enormous opportunity. Groups I believe this will also in turn moving financial markets to the like these are forming powerful encourage braver political long-term. alliances, shaping markets leadership – which is desperately We now need to gather our and sending a clear signal to needed – and more ambitious collective willpower, so we can politicians that they are ready for public policy. We need to create simultaneously achieve strong bolder policy to put our economy a self-reinforcing “ambition-loop” economic growth, rapid progress on track for net-zero by 2050. between the private and public towards net zero emissions and sectors, which drives deliverable, greater social inclusion. Observe: You have said that impactful solutions. you “ended up in business and Observe: You say that you learned that I can help more Observe: In a recent interview regard the private sector as the people here to improve their you said: “We are carbon “main engine for change.” What lives”. Is this still your belief? junkies, exceeding many evidence can you provide to PP: It absolutely is my belief. planetary boundaries and using support this belief? Especially if you lead a large resources well beyond the PP: The private sector has the organisation that has global capabilities of this planet to expertise, creativity, innovation reach and touches many lives. recover.” Do you despair about and talent to deliver positive My ambitions remain the same – the future or do you still believe change. It accounts for the I want to make the world a better that we can overcome the biggest share of GDP globally place for future generations. With perilous position we are in? and has the financial resources to IMAGINE I will be re-doubling PP: I think we need to be realistic reach the tipping points needed. my efforts in promoting new about the challenges. We’ve done In fact, we won’t get there economic and business models untold damage to our planet and without business leadership. that have a positive impact on we are in a fight against the clock Take, for example, the U.N. society and our planet. ■ @odgersberndtson OBSERVE 3/19 27
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