How customer demand is driving Nissan, Starbucks, and Chevron toward sustainability
As the G7 Summit kicks off and the United Nations Climate Change Conference COP26 looms on the horizon, regulatory plans on how to reach net-zero carbon emissions may soon become more concrete. But for many CEOs, the move to sustainability has been increasingly driven not by regulators, but by consumers and investors.
Investors contributed $51.1 billion into sustainable funds in 2020, compared to less than $5 billion five years ago, according to an MSCI report.
Reducing waste and lowering carbon emissions were recurring themes at this week’s Fortune Global Forum, where the consensus was that cutting emissions has become better for business.
Nissan Motor president and CEO Makoto Uchida told the Fortune Global Forum audience that his company’s focus on hybrids and EVs has been driven largely by consumer demand.
“While electrification speed is supported by local policy and investment, the most important is customer preference,” Uchida said, acknowledging that many people are reluctant to trade in a full-size pickup for an electric vehicle.
A similar observation came from Natarajan Chandrasekaran, chairman of Indian conglomerate Tata, who noted that the company is moving its automotive business completely toward electric vehicles while moving its power business toward renewable energy. The business has had strong cash flows, he said, because its leadership has managed to “pivot the group toward the future.”
Meanwhile, consumer packaged goods company Procter & Gamble has had to respond rapidly to changing consumer needs, including an increased demand for eco-friendly packaging. “Consumers more and more want sustainable solutions,” said David Taylor, the company’s chairman, president, and CEO.
As a result, the company has been working to make more sustainable products and packaging. Consumers, he said, are demanding “meaningful improvement across the area of climate, water, energy, and plastic waste.”
Kevin Johnson, president and CEO of Starbucks, spoke of his desire for the coffee chain to become “a resource-positive company,” one that “gives more than we take from the planet.” It’s an initiative that customers have supported, he said. Starbucks already has set goals to achieve carbon-neutral green coffee and conserve water usage in coffee processing by 50% by 2030.
At Chevron last month, shareholders voted 61% in favor of cutting emissions generated by the use of the company’s products. Chevron is now investing in new technologies such as hydrogen and carbon capture and storage, and pushing for more renewable energy investment, said chairman and CEO Michael Wirth.
The bigger challenge in lowering emissions is the use of Chevron’s products, he said. “We don’t really control demand, so we are meeting a legitimate market demand.”
Danish multinationals Ørsted and A.P. Moller-Maersk have been first movers in the energy transition and have partnered to develop an industrial-scale production facility to produce sustainable fuels. Ørsted, the biggest player in offshore wind, will supply the power, while Maersk—which plans to operate the world’s first carbon-neutral liner vessel by 2023, seven years ahead of schedule—will offtake the fuel.
Søren Skou, CEO of A.P. Moller-Maersk, said that while the company currently offers a shipment service for 10% of the average price of a shipment, the demand of customers who are trying to cut scope 3 emissions from their supply chains is growing.
“We have moved away…from thinking of decarbonization in terms of cost and capex investment…to thinking about it equally as a market opportunity,” he said. As the demand for green delivery increases, A.P. Moller-Maersk is hoping to benefit from its first-mover advantage.
Skou added that big business is “way ahead of the politicians” on this issue. “We are not being driven by regulation,” he said. “Actually, we are trying to drag regulation forward so that we can maintain a level playing field as much as we possibly can.”
Mads Nipper, CEO and president of Ørsted, said there is also an investor expectation to be more sustainable, and that businesses should work together to decarbonize instead of “leaving it up to the courage and initiative of every single company.”