Reinvigorating Corporate Purpose
November 30, 2021
By Bloomberg Live
The recent COP 26 conference highlighted the connection between people, purpose and planet, and stressed the urgency to pledge and stick to net zero commitments, while phasing out fossil fuels and slashing methane emissions. It’s clear that corporate environment, social and governance (ESG) efforts must continue to be escalated on a global level. While conscientious consumers and investors are driving ESG initiatives toward profitability, many businesses have been in pandemic survival mode. How will they move forward, with purpose, to close the wealth gap, reduce their environmental impact, and recover in sustainable ways, and how can the many businesses accused of “greenwashing” be held accountable?
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Lydie Hudson, CEO Sustainability, Research & Investment Solutions, Credit Suisse
Alex Liu, Managing Partner and Chairman of the Board, Kearney
Robert Metzke, Global Head of Sustainability, Philips
Antonio Neri, CEO, Hewlett Packard Enterprise
Rob Opsomer, Executive Lead, Systemic Initiatives, Ellen MacArthur Foundation
John Fraher, Senior Executive Editor for Business, Finance and Climate, Bloomberg
Anjani Trivedi, Columnist, Bloomberg Opinion
Reimagining Corporate Purpose Post Pandemic
There was much to be learned from the pandemic’s disruptions, according to Antonio Neri, CEO, Hewlett Packard Enterprise, particularly when it came to rethinking the way employees work. “The last 18 months have been very hard for everyone and these challenges have caused permanent lasting changes,” said Neri during a one-on-one conversation. “These changes need to be incorporated into the cultural fabric of our company because culture is everything in the end, and one of the biggest challenges we faced was mental health, the need to provide more tools to our employees to allow them the flexibility to do the work wherever is best for them going forward,” Neri continued.
Neri conceded that talent retention and acquisition is a big challenge given employees are reassessing their aspirations about where they want to work. “The ESG agenda plays a big role now going forward in attracting and retaining talent. There is a war for talent, no question, in particular in the new areas: AI, machine learning, cloud computing and cyber.”
For HPE, ESG strategy is about combining energy-savings with innovation. “We don’t think about just achieving net neutrality by carbon credits, we’re really radically changing the architectures, and we have a commitment to become net zero by 2050, however by 2025 we have milestones that are going to reduce our energy consumption by 30 times,” explained Neri.
HPE headquarters’ recent move to Houston offers a surprising, firsthand look at the effects of the hiring crisis. The assumption that people would not go to Texas, at the heart of many social issues, is not bearing out, Neri said. The decision was carefully thought out. “Houston is the most diverse city in the U.S. It gives us the ability to do business in a more progressive way. We see tremendous growth opportunities.”
Putting the right people in the decision-making rooms is essential to purpose, said Alex Liu, Managing Partner and Chairman of the Board, Kearney. He explained the empowerment method of “middle out,” unleashing the boldness of those who have day-to-day power to create solutions for the future. “They are the ones who know how to adjust pricing or reconfigure global supply chains to reach the purpose.” When it comes to overcoming differences and the struggle to fill roles, Liu said it’s important to realize that 90 percent of diversity is invisible, and offered an elegant simplification. “Employees need to feel worthy of bringing their full and complete self to work.”
Solutions for a Planet in Crisis
No longer a footnote, what does sustainability now mean in commerce?
ESG used to be just about the environment, said Lydie Hudson, CEO Sustainability, Research & Investment Solutions, Credit Suisse. Taking on its full scope is two-dimensional; requiring companies to develop their own transition models and to help clients do the same, such as providing access to innovation financing. Rob Opsomer, Executive Lead, Systemic Initiatives, Ellen MacArthur Foundation, added that shrinking the negative footprint doesn’t define the journey. “Ultimately, that doesn’t tell us where we want to go. It’s not very inspiring to say we want to become less bad.”
The playing field needs to be leveled among ‘leaders and laggards’ said Robert Metzke, Global Head of Sustainability, Philips, who spoke about driving change with a marketing narrative of science-based targets, financial incentives, building capability and people who step up. Hudson picked up that thread to point out how lack of consistent policy, regulation or disclosure makes it difficult to analyze corporate progress. The “acid test” methods noted by panelists will eventually indicate “who is on a journey or off the journey.”
At the core of transitioning is not a sustainability strategy, but a sustainable strategy, Metzke said, moving from “Friday afternoon feel-good activities to day-to-day decision-making,” and understanding what it means for all stakeholders, including suppliers. “When businesses come under pressure, they reduce everything that’s not core. Sustainability needs to be part of the core.”
Massive opportunities to score better environmental and economic outcomes are still out there, Opsomer said, when purpose is integrated into the core, as well as products and services. An estimated $700 billion in opportunities by 2030 are available in the fashion industry alone, according to a report issued in November by the Ellen MacArthur Foundation. Over the last few decades, flooding the market with more and cheaper clothing had the opposite of the intended effect, driving average profit margins down, Opsomer said, in addition to extensive environmental impacts. Applying the circular business model, the industry could regain its financial and sustainability footing by repairing, reselling and renting clothing, to the tune of 20 percent of its market.
Sustainable and durable are not mutually exclusive when it comes to business models, Hudson said. Future-proof, profitable enterprise is possible, particularly now with the shift toward a willingness by consumers to pay green premiums. Experimentation and an appetite for innovation will drive that, such as vegan leather and the transition from legacy energy. “There has to be a tolerance for the cycle time of innovation to pay off,” Hudson said. In the investment world, that means creating a “glide path” that reveals the path to returns.
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