How to Go Sustainable

By on July 1, 2013

Ten business leaders debate how to do more with less, at minimal cost to the planet.

Andrew Saunders: Thank you very much everyone for coming today; welcome to this round table on sustainability and the environmental agenda.

I was looking on Google and found a couple of definitions of sustainable business. How about ‘a sustainable business is one that has no negative impact on the global or local environment, community, society, or economy’? Or ‘a sustainable business is one that aspires to the triple bottom line of people, planet and profit’.

They’re pretty high standards and it’s immediately apparent from these criteria that sustainability is not a bolt-on. It has got to be built into the company from the ground upwards.

But is sustainability really a commercial decision? Or is it a question of reputation, or a matter of corporate responsibility and your license to operate from society?

Catherine May: I would be absolutely shocked if everybody in the room did not think that all of those things are key. Any commercially successful business must be on sustainable principles if it is going to survive. If you are in a consumer-based business, as we are, your consumers will demand that you are sustainable – if you are not, somebody else will be. It is something we feel very keenly.

Wilfred Emmanuel-Jones: I think that consumers are confused about what sustainability means. Is it sustainable that town centres are dying because supermarkets are making massive profits by moving their premises to the edge of town? Big companies are using sustainability to meet their own needs rather than there being a clear understanding of what is sustainable.

Ray Baker: When we asked our customers, the vast majority – around 90% – said they wanted to do something to reduce their environmental impact and be more sustainable, but they didn’t know how to. So I think, in the main, people are not coming in to ask us for sustainable products but they are saying: ‘Help me to do that.’

Dr Paul Leinster: At the Environment Agency we understand what it is to operate in this world as well as to be a regulator and advisor. Since 2006 we have reduced our fleet mileage by 25% and we are also looking to locate 80 medium-sized turbines on our own land to become a net exporter of electricity.

One of the things that we try and do is make sure we don’t just tell other people what to do. We should be able to say to anybody sitting around a table: ‘Come and see what we do and then you will know what to do yourselves.’

Joe Franses: I think there is a huge opportunity. We are now moving into an incredibly exciting second phase of corporate responsibility, around how we begin to use our brands to encourage sustainable consumption. That is the heart of what sustainability really means for a consumer.

Ed Mitchell: But is it not more fundamental than that, in that you would not have a business without water; maybe not Coca-Cola Enterprises Europe, but Coca-Cola companies around the world can only operate if there is a sustainable supply of water for them.

And Centrica has a great example around using skilled/semi-skilled engineers and working with young offenders and ex-offenders, bringing them into the work place, because they need core skills which are not available.

Wilfred, you would be a bit stuffed without a decent soil.

So it is about marketing and it is about the consumer, but it is also about the fundamental and environmental limits within which the economy operates.

Ray Baker: Is that not what sustainability is? Saving today’s business but making sure that it can still be there tomorrow.

Joe Franses: There are resource shortages. Some estimates suggest there could be as little as 70 years’ supply of bauxite (aluminium ore, from which drinks cans are made) left in the ground. And water, absolutely. We have done a lot of work looking at reducing water use in our factories. The bit that the consumer is interested in, and this is the link between the two strands of the debate, is the brand imprint of any product across its entire supply chain; so we have got water and carbon not just across our own operation but across the supply chain.

Dr Paul Leinster: It would be interesting to note, for example, does somebody make a decision to buy Coca-Cola or Pepsi on the basis of your sustainability statements? Most probably not. It is interesting to look at what is a societal driver of sustainability and what is an individual company’s decision as to why it is moving? but the consumer does not appear to be the main driving force.

Jonathan Garrett: It sounds very cheesy, but this is a journey and you have got to start it and it does start on the eco-efficiency bit. You get it, it starts paying some dividends and you say: ‘Right, what more can we do?’ and it is an evolution.

What are your priorities? Is it resources? Is it waste? Is it carbon? It is all those as they are all interconnected. We are doing a big road project – OK, so you can argue whether roads are sustainable, but our approach is that we want to deliver these projects as sustainably as we can.

The key thing that has driven this is innovation. We have used 400,000 car tyres to build an embankment – the first time it has ever been done on this scale. It has saved us money, but we had to work very hard with people like the Environment Agency, Road Research Laboratory and the Highways Agency to get it accepted from a specification point of view. But it is amazing when you get engineers, you give them a challenge and they actually go out and make it happen.

Gavin Neath: The harsh reality is only big, big organisations can even come close – if they work collaboratively – to addressing the major issues: deforestation, fish, water, and agriculture. Small organisations cannot. Big actually is good on this agenda.

Take tea: we buy 12% of the world’s black tea crop and we set ourselves the task across all continents, 7,500 estates, to bring that up to really very high standards of agronomy and worker welfare etc.

We are doing that and consumers are rewarding us for an irrational reason. They are saying: ‘Well if they are cultivating it that carefully it must taste better.’ The principal benefit of PG Tips is taste, same as Lipton, and somehow there is a line of sight which the consumers have between the cup of tea they are drinking and a bush in Africa and we get credit for that.

However, take something much more important, palm oil or soya, and the impact that these things have on rainforests. On palm and soya we are getting no credit, none whatsoever, from the consumer, but unless we address the issue in the next three to five years, collectively, there is not much hope for any of us, because once the forests go we are really stuck.

Andrew Saunders: What is the role of regulation in terms of sustainability and the environment – does regulation work in your industry? Does it help you do business and focus your mind on what needs to be done? Or is it more bureaucracy and box-ticking which stops you making money?

Jonathan Garrett Balfour: Beatty is global so we try to avoid UK-centricity, but we do use the regulatory landscape to help us identify mega trends. To help us work out where legislation is going and what the landscape will be like in 10 years’ time. If you want to be in the market in a given region you have got to get good at this stuff because someone else will be better than you if you don’t.

Ray Baker: There has been a view that regulation is not something we want. Actually that is not true. What we want is a leveling of the playing field, we want some certainty. Good legislation is great and it works well for business, but it can be that the senior managers in the business will say: ‘What is the minimum we have to do on this? Just tell me what I have got to do,’ rather than what can be done to actually benefit the business.

Dr Paul Leinster: Looking towards the regulatory road map people have been talking about, if you want to see where the environmental legislation is going you look at places like California, you look at Sweden. You look at what those countries are doing now, because other places will be doing the same things in seven to 10 years’ time.

And one of the drivers of sustainability, when you look at procurement, are things like ISO 14001 accredited environmental management systems which are just a given. To get onto the next level now you must have these things.

Ray Baker: There is also something about just saying: ‘Let’s just do this.’ Just get on and do it. How long have we been discussing plastic bags in the UK? Well, I had a phone call one day from China and they said: ‘By the way we are not giving away any plastic carrier bags at the moment.’ I said: ‘Why?’ They said: ‘Well they are banned.’

So we did it here too – overnight. Do customers mind? No. Does it make a difference to the business? Yes, a great difference.

Frances Leedham: We are quite heavily regulated both in how we manufacture and also in what we sell, so we face a number of challenges. China can change overnight in terms of its legislative requirements and for us trying to change a product which runs on a five or six year cycle is not the same as a quick decision as to whether you sell a plastic bag or not.

We do a lot of analysis of the pressures which are going to affect us as a business coming up to 2020-2050 – and supplies of basic raw materials are a major issue. It is quite easy to get caught up with what the customer is demanding, but there are some real, fundamental environmental issues that we have to tackle.

We are also doing full life cycle analyses across a lot of our product lines to understand all the different impacts, all the way from raw materials to disposal.

Joe Franses: Recycling is another key issue. We would love to get 25% recycled PET (the plastic used in soft drinks bottles) into our bottles; we simply cannot get enough of it. The reason we cannot get enough of it is really down to the fact that in Great Britain we need a uniform, at-home, recycling and collection system.

Matt Pumfrey: This comes back to legislation. The waste boys are saying: ‘It’s too costly for me to put a recycling system alongside my residual waste disposer.’ But we say: ‘Hang on, let’s be innovative around this.’ The incentives need to be in the right place – look at some of the schemes in South Wales with capture and saturation rates of over 90%, way above any local private waste company, because they are doing it in a proper manner.

Joe Franses: The interesting thing, and this goes back to the start of the conversation, is that for us the fundamental issue is our bottles rely on oil. So sustainability for us means the ability to make sure that we are using recycled PET as well as PET based out of plant-based material.

Dr Paul Leinster: Do you have to influence what is going on in the home? Doesn’t it depend where the bottles are used? No doubt you have the figures. It is understanding those key drivers and how you influence some of those other things as well and work alongside – especially with the government now thinking about nudges, what big society is, how you deliver those localism agendas to encourage people to do the right thing.

Joe Franses: A couple of years ago, we would probably have said that because a high percentage of our products are sold on the go, they are disposed of on the go as well. But when we looked at it more recently we realised that this is not true. Most are taken home and disposed of at home, so the at-home collection facility is the one that we really need to focus on.

Wilfred Emmanuel-Jones: The challenge to me is this: are there enough opportunities for entrepreneurialism in this country, where sustainability and recycling could be a market for small business to get into?

Matt Pumfrey: I did a lot of work with the community sector when I got back to the UK and there is some fantastic innovation in that space. They will go that extra yard, they will do stuff that we as corporates will look at on a spreadsheet and go: ‘I’m not even going to touch it.’ SMEs do have an opportunity to lead the way.

Andrew Saunders: What about sustainable growth – is it possible to achieve it or is it an oxymoron as some sceptics claim?

Joe Franses: For us, it is about decoupling growth from the carbon and the water that we are using. So yes, you could have growth if you are not going to increase the amount of carbon and water that you are using at the same time. I think that is the fundamental challenge we all have. I am not just talking about Coca-Cola, it is not just Unilever, it is the fundamental challenge that we all have.

Wilfred Emmanuel-Jones: Here is something controversial. Will it be the death of global brands? If you take sustainability in its purest form, the whole idea you have a global brand may no longer exist in 10 to 20 years. The challenge then is, if you want to become a large global business, what you have to do is get a lot of smaller businesses under some sort of umbrella, because this global name will no longer work.

Dr Paul Leinster: There have always been global brands, this is not the death of globalisation. Companies and organisations are organic and they will all be at different stages and the markets will all have different stages within that. There are global companies coming from the Far East which we never conceived of before.

So I think this is an organic thing. Essentially, the challenge in the UK and most probably in Europe too is that we have is to decarbonise electricity generation by 2030.

And if we are then going to hit our 2050 targets, there will only be 20% of the carbon available for all the activities that we do; how are we going to divvy up that among all those activities that we would like to do? So how do you decarbonise agriculture, or travel, or manufacturing because these are all things that we want?

Gavin Neath: The truth is there are four billion poor consumers out there in the world and are we going to say: ‘No growth for you, mate, because it is unsustainable’? That is the most unsustainable thing you could possibly do. They will be knocking on our doors very quickly. And so there will be changes in Europe and North America and other prosperous economies. But in India, China and Africa, consumption will be terrifically important in dragging people up out of poverty.

If you work for an international company, this is all you think about, because the prospects are all in the developing and emerging world. You think about how to tap into those markets all the time in ways which avoid those consumers and those countries making the mistakes we have.

THE PANEL

Jonathan Garrett: Group head of environment, Balfour Beatty

Gavin Neath: Senior vice president of sustainability, Unilever UK

Wilfred Emmanuel-Jones: Founder, the Black Farmer

Frances Leedham: Head of sustainability, Jaguar Land Rover

Dr Paul Leinster: Chief executive, the Environment Agency

Andrew Saunders: Deputy editor, Management Today

Catherine May: Group director, corporate affairs, Centrica

Joe Franses: Head of corporate responsibility and sustainability, Coca-Cola Enterprises Europe

Ed Mitchell: Director of environment and business, the Environment Agency

Matt Pumfrey: Director of sustainability management services, Serco defence, science & nuclear

Ray Baker: Director of corporate responsibility, Kingfisher plc

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