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Sustainability

Taking regeneration on board

Published 7 June 2021 in Sustainability ‚ÄĘ 6 min read

Boards and companies have made wide-ranging sustainability goals; regeneration is what they should be talking about.

Gulp and double gulp: imagine the grief of a hungry fish swallowing bait, only to find it contains a barbed hook. Senior business leaders will soon know what that feels like as they wake up to the market implications of the public commitments their boards and companies have made to a wide range of sustainability goals.  

And that‚Äôs a lot of companies, a lot of boards. Back in 2011, some 20% of S&P 500 business had produced sustainability (aka citizenship, CSR or ESG) reports. By 2020, that proportion had swelled to 90%, representing fully 80% of the equity of the largest U.S. corporations. 

So what were they thinking as they made those pledges? Often it felt like the right thing to do, at a time when key customers were rattling their supply chains. There was a certain comfort, too, in the fact that the U.N. had established a framework for such commitments, with its 2015 Sustainable Development Goals. That same year, too, the Paris climate agreement had signalled that global standards, rules and regulations were set to tighten. 

I have now spent 40 years working to shift business thinking on such issues, helping dozens of CEOs and scores of major businesses to evolve their priorities, targets and strategies. Unlike most advisors, however, we have pursued a twin-track approach. The first involves working, on a trusted advisor basis, to evolve the collective mindsets of top teams. The second, much less common, involves focusing new market pressures on those same businesses.  

Back in the day, our million-selling Green Consumer Guide series spurred a global wave of auditing, reporting and supply chain challenges. My ‚Äútriple bottom line‚ÄĚ (aka People, Planet & Profit), launched in 1994, helped radically expand the change agendas top teams had to address. To help them along, 30 years ago, I had the Financial Times cartoonist draw the cartoon shown below. The image has served as a talisman as I have worked with an A-to-Z of companies worldwide. 

My mission was to get the voices of nature (the fish), the socially disadvantaged (the woman) and the deep future (the robot) into boardrooms. One director of Greenpeace dubbed our strategy as ‚ÄúGreenpeace in pinstripes‚ÄĚ. Our aim: to get different voices into top team discussions. No trivial task, but radically easier now that next generation leaders bring new values and priorities into the top echelons of business. 

Once companies were hooked, we had to play them successfully. The intention was rarely to kill them, although with businesses producing asbestos, CFCs, DDT or lead that happened. Instead, we helped top teams imagine different futures, preparing themselves. Often this meant changing their CEOs and refreshing their top teams. Early on, such changes could be problematic. When green activist CEO Sir John Browne handed BP over to his prot√©g√© Tony Hayward, for example, the result was catastrophe‚ÄĒin the form of the worst-ever oil spill, from the Deepwater Horizon oil rig. 

Nowadays, however, such successions are more likely to see a deeper embedding of the change agenda, as when Paul Polman handed over the helm of Unilever to Alan Jope. The latter has pushed the boundaries still further by publishing the company‚Äôs Regenerative Agriculture Principles 

Many CEOs still assume that sustainability implies¬†a bit more transparency, a¬†trifle¬†more accountability,¬†a dash of corporate philanthropy.¬†Big mistake, huge. As oil companies like Chevron, Exxon and Shell¬†are¬†discovering, a seismic shift¬†is¬†happening¬†in how society views fossil fuels. Shell‚Äôs CEO, Ben Van¬†Beurden, recently wondered¬†aloud¬†whether his industry¬†would¬†find itself on ‚Äúthe wrong side of history‚ÄĚ?¬†His company‚Äôs defeat in a major court ruling, forcing a massive acceleration in its decarbonization efforts, and Exxon‚Äôs simultaneous defeat at the hands of a minnow, an¬†activist hedge fund called Engine Number 1, suggests that the tide is turning‚ÄĒfast.¬†¬†

Corporate top teams that think they can lobby their way through using firms like Burson Marsteller (later known as BCW Global) notorious for defending the flanks of the asbestos, tobacco and fossil fuel industries, risk being exposed.  

And, cranking up the pressure, a parallel shift is under way. The technologies that the PR and lobbying folk worked to so hard to defend are being upended by a series of disruptions. Think of what Elon Musk and Tesla did to the auto industry. Picture what it was like to lobby to protect the flanks of a rogue brand like VW, only to find your client self-disrupting by pivoting into electric vehicles. If you want a window into how markets will be disrupted, track RethinkX. What’s already happening to the fossil fuel and auto sectors will also happen to sectors as diverse as cattle ranching and dairying, and financial markets.   

For decades,¬†we¬†have helped business embrace the ever-expanding corporate responsibility agenda‚ÄĒwith recent additions including public access to health care,¬†the malign effects of¬†wealth divides, corporate tax evasion, and the unintended consequences of AI. But all that effort has¬†signally¬†failed to avert¬†the¬†incoming tsunami of ‚Äúwicked‚ÄĚ problems. That‚Äôs why we¬†now¬†hear so much talk about ‚Äúresilience‚ÄĚ‚ÄĒthe resilience of individuals, families, teams, organizations,¬†supply chains, industries, economies and, ultimately, of our climate and¬†biosphere.¬†Reason: the economic, social, political and environmental systems on which¬†our wellbeing¬†depends¬†are wobbling,¬†signalling serious instabilities.¬†

In launching the first-ever ‚Äúproduct recall‚Ä̬†of¬†a management concept¬†in 2018, through the¬†Harvard Business Review,¬†I¬†have been¬†one of¬†the¬†voices calling time on the CSR- (and now ESG)-as-usual agenda.¬†Many leaders assume that talking up the need for resilience will ensure effective, timely action.¬†Good luck. The only thing that will do that is a re-commitment by business and government leaders to sustainability as a¬†regenerative¬†agenda. Making things less bad, as¬†challenging¬†voices in the sustainability space have¬†insisted¬†for some time, is not remotely enough. Nor¬†is the growing number of commitments to net-zero¬†greenhouse gas¬†emissions.¬†¬†

All helpful, but what¬†we¬†need now is¬†clear-eyed¬†commitments¬†to building a truly Regenerative Economy, restoring past damage and creating the conditions in which our societies and¬†nature¬†can flourish over generations.¬†In short, the sort of long-term thinking¬†and action¬†spotlighted¬†in that¬†long-ago¬†cartoon of the robot with¬†its¬†‚Äú3001‚ÄĚ shoulder flash.¬†¬†

This is an ambitious agenda, for which most boards are ill-prepared. To get a better handle on it, we are  working with Board Intelligence to prepare boards and C-suites for the coming challenges and opportunities. We already hear people like Walmart CEO Doug McMillon committing the giant retailer to becoming a regenerative business, while PepsiCo promises to regenerate 7 million acres of farmland. But, while welcome, even such initiatives as these are not going to be enough on their own.  

So¬†the¬†multi-billion‚ÄĒand some cases¬†trillion‚ÄĒdollar¬†question for¬†your¬†top team¬†is this: What¬†are you,¬†and what should you be,¬†doing¬†to prepare your business¬†to succeed in¬†tomorrow‚Äôs¬†Regenerative Economy?¬†

Authors

John Elkington

John Elkington¬†has been described as ‚Äúthe godfather of sustainability‚ÄĚ. He has co-founded four companies, including¬†Volans, where he is described as Chairman and Chief Pollinator. He is the¬†author of 20 books including¬†Green Swans: The Coming Boom in Regenerative Capitalism. He has served as a member of¬†more than¬†70 boards and advisory boards.

 

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