‘We can’t run a business in a dead planet’: CEOs plan to prioritize green issues post-coronavirus
Part of the Amazon rainforest in Peru
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The coronavirus pandemic has created significant new ways of doing business that could benefit both the economy and environment, according to business leaders, who said there was no other option but to shift toward sustainability.
In June, Brazilian cosmetics giant Natura launched its “Commitment to Life” vision for the next 10 years. The plan includes pledges to reduce its emissions to net zero, have 30% of its management made up of under-represented groups, and make all of its packaging reusable, recyclable or compostable.
“(This) is even more relevant because of the time we are in and the importance of really thinking about how we want to shape the world coming out of this crisis,” Natura CEO Roberto Marques told CNBC by phone. Natura owns British brand The Body Shop, Australian skincare company Aesop, and in January closed a deal to buy American business Avon, creating a group that it claims has 200 million customers.
For Natura, financial growth and sustainability go hand-in-hand, and executives’ remuneration has been partly based on green goals, Marques said.
As with other manufacturers, it’s in Natura’s interest to focus on sustainability in an effort to ensure, for instance, that raw materials are available in the long term. “We can’t run a business in a dead planet … There is no other option for companies and leaders,” Marques added.
Asked what he would like from Brazilian President Jair Bolsonaro, who has been criticized for his skepticism over green issues, Marques said: “We strongly believe that the answer is dialog, including the key stakeholders.”
For Richard Mattison, CEO of Trucost, a company owned by S&P Global that estimates climate risks to businesses, the pandemic has created opportunities that are good for the economy and the planet.
Mattison suggested there were three things companies can do: cut business travel, instigate a work-from-home policy and make supply chains more local.
“For example, if the professional services sector set a work-from-home policy for three days a week, that would (put) the entire passenger transportation system in alignment with climate goals,” Mattison told CNBC’s Geoff Cutmore in an interview in May.
Reducing business travel by 40% and relying more on video calls would mean the aviation industry was on track to meet climate goals pledged as part of the 2015 Paris Agreement, he added.
Travel is something that companies have signaled they may cut. For example, Martin Sorrell, executive chairman of advertising group S4 Capital, has said he will fly less. “I will travel less. I will attend fewer conferences. I will be more conscious of deploying my time in a much more effective way,” he told CNBC in May.
Governments around the world are releasing funds to boost the economy during the pandemic — and some have included green measures. In May, the European Commission announced a new coronavirus-related stimulus package, with 150 billion euros allocated to green initiatives.
For Helen Clarkson, CEO of nonprofit The Climate Group, post-pandemic spending is a critical opportunity to invest in ways to get to net zero greenhouse gas emissions. After the 2008-2009 recession, sustainability issues tended to be ignored, she told CNBC by phone. “There was really a sense of leave us alone, we have just got to get things back to normal and then we’ll come and talk to you sustainability people again,” she said.
But now, things are different, in part due to pressure from younger generations and also because businesses are having to reimagine themselves, Clarkson added.
“(The pandemic) is almost the biggest psychological shock we’ve all had … Every business is looking at its business model and its budgets and its annual plans and saying, well, this is up for grabs,” Clarkson stated.
Compare Ethics is a site that lets shoppers compare clothing brands’ commitment to issues such as paying a living wage or using recycled materials. It was founded by young entrepreneurs James Omisakin and Abbie Morris, who said the pandemic has meant that consumers have paid more attention to supply chains.
Abbie Morris and James Omisakin, founders of Compare Ethics, a sustainable e-commerce fashion platform.
“Consumers and employees are now acutely aware of how their lives can change overnight and how supply chains directly affect them,” Morris told CNBC by email. She added that sales of clothing via the Compare Ethics platform were up 150% in June compared to May.
Omisakin is hopeful that the business world will continue to think about green issues. “There’s no choice now but to place the planet first. Senior leaders know that without synergy, nature will ultimately disrupt and disarm business efforts,“ he told CNBC by email.
The Climate Group has put pressure on governments to create a policy framework to speed up the way green energy is bought by corporates, and in June sent a letter to the EU calling for, among other measures, the funding of electricity infrastructure to be prioritized. Signatories included AB InBev, Google and Visa.
Europe leads the way when it comes to green initiatives, Clarkson said. “Where Europe leads, others will follow. I feel the reason it’s important to keep the pressure on the EU (is) because they’re the most likely of all the regions in the world to (take action).”
In June, Unilever announced a $1 billion investment into a climate and nature fund and pledged net-zero emissions across all of its products by 2039. Marc Engel, the company’s chief supply chain officer, called for governments to make plans for net-zero emissions goals by 2050 at the latest.
“These long-term goals must also translate into short-term targets to reduce greenhouse gases consistent with that level of ambition. Right now, we’re simply not there,” Engel stated in an email to CNBC.