If there was one big theme at Fortune’s recent Global Sustainability Forum, a virtual event where leaders gathered to discuss how companies are responding to the new climate reality, it was this: “the math and the path,” as Mike Roman, CEO of 3M put it. In other words, how do you make your processes and products more sustainable— and how do you make that work financially?
“Whether it’s carbon neutral or water or taking waste down or eliminating virgin plastics, those are all important for us to step up so we get that sharp focus. I think that’s when you start to see action, you can get people lining up or suppliers lining up,” Roman said. “I think it’s a little bit of the dynamic from the pandemic, where you get clear direction and develop a clear math and path.”
Those two aspects of sustainability resurfaced throughout each of the four breakout sessions where panelists shared best practices and observations about the changing world of business as it relates to the environment.
Getting to net zero
At the crux of the sustainability push in recent years has been a goal of reaching net zero or zero emissions as a company. Many panelists agreed that in order for this to work, everyone along a supply chain has to do their part.
While many larger corporations are tackling this goal, they represent just one fifth of the world’s businesses, how can companies find ways to engage the majority to follow suit? Many leaders suggested tapping supply chains and incentivizing partners to either adopt their practices and reduce emissions—or lose a major client.
“I’ve long said that sustainability is a team sport,” said Mitch Jackson, chief sustainability officer at FedEx, “and if we’re going to transform the world economy with respect to a net zero or zero emissions world, we’re going to have to be working together to do that.”
Shiro Kambe, senior executive vice president of sustainability at Sony noted that while the company’s efforts at reducing emissions began with headquarters, it was soon adopted by business units when they realized it affected the bottom line.
“There is a clear sign that the customer’s choice could be very much impressed by a company’s attitude toward the environment,” Kambe said.
That’s one way, panelists agreed, that a company can justify the work required to hit these massive net zero milestones.
Another key component for success is getting help from the government. Kristen Siemen, chief sustainability officer of General Motors said that customers who opt for electric vehicles often have to choose between charging their cars at home or at their business. It’s up to the government to build the infrastructure needed along the country’s highways for these electric cars to be usable on the road.
“We’ve said from day one we can’t do this alone,” Siemen said.
The plastics paradox
Where Ellen Jackowski lives in Northern California crews collect garbage, recycling and yard debris from the curb each week. In Haiti, that doesn’t happen.
Jackowski, chief impact officer and head of sutainable impact at HP, said the company came up with a way to procure recycled plastic for the company’s ink cartridges while preventing that plastic from ending up in landfills in Haiti.
“We’ve hired a team of local collectors to pick up that plastic waste to send it to a local recycler that we’ve partnered with where it’s washed and shredded and then we purchase that to put into our ink cartridges,” she said. HP has also had to teach their customers about their ink cartridge return program, where used cartridges are collected and repurposed by mail.
The solution is one that highlights the role of businesses in shifting consumer expectations and habits to ensure green practices aren’t thwarted. Panelists talked about consumer habits, the availability of recycling infrastructure and the opportunities within production to reduce single-use plastic—or ensure plastics are from recycled sources.
“The latter part of our discussion really focused on behavior change of the consumer and how companies can help aid that, and some of the complexities that we’re all struggling with as we work to incentivize the consumer to change how they use our products and their expectations,” Jackowski said, summarizing the break out session.
Ann Tracy, chief sustainability officer of the Colgate-Palmolive Company said there’s often a gap between consumer intention and action when it comes to newer products.
The company developed a toothbrush with an aluminum handle and a replaceable plastic head, which requires that the customer keep the handle, which Tracy said is a very different way of using a toothbrush.
“They want to do the right thing but then when it comes to actually doing it or even paying more for it, it’s tough,” she said. “So that’s something we wrestle with.”
Tackling the global water crisis
When Michael Goltzman, Coca-Cola’s vice president of global policy & sustainability, joined the breakout session, his virtual background pictured a sugar cane field in China. And when the time came to talk about repurposing wastewater to minimize environmental impact, he had the perfect anecdote at the ready.
Coca-Cola, in partnership with UNDP, WWF and the Chinese International Development Group, established a drip irrigation system for Guangxi sugar cane farmers, which uses wastewater byproducts to irrigate the fields.
“The water coming from the sugar processing facility needed to be treated, but once it’s treated it can be used,” Goltzman said. “You don’t have to withdraw from the ecosystem to water those crops.”
Panelists discussed the importance of monitoring local watersheds for negative impacts from production as well as making products that actually require less water.
Alexandra Palt, L’Oreal’s chief corporate responsibility officer, said the company has done this with products such as dry shampoo and leave-in conditioners, both of which require less water than traditional shampoo or conditioner products.
“All of these innovations help to use hygiene products in water-scarce areas,” she said.
The green bottom line
The final break-out session touched on how investing in sustainable companies is not just a fad or a niche method of investment; it’s one that sees financial returns.
“It’s been critical for people to understand that climate and climate risk and disclosure about that is a critical part of financial stability,” said Audrey Choi, Morgan Stanley’s chief sustainability officer and CEO of its Institute for Sustainable Investing, “as well as really being responsible for disclosing, measuring, and accounting for things that are fundamental to business returns.”.
She noted that Morgan Stanley did a study comparing 11,000 different investment strategies, which showed that sustainable investment strategies were less volatile than their counterparts.
Sustainable investing might sound tangential to the root problem of climate change, but Choi said businesses are picking up on the importance.
“People increasingly understand why environmental issues are actually material to profits and align with profitability and risk reduction,” Choi said. “So this is no longer this false trade off between the two.”
