Name: With Climate Change, 'The Cost of Not Acting Is Higher Than the Cost of Acting'
Uploaded: 2024-10-01
Duration: 17 min 27 s
Description: Diane Brady sits down with Paul Polman to discuss global ESG challenges, from lobbying pressures to Paris Agreement resistance from Trump

Diane Brady sits down with Paul Polman to discuss global ESG challenges, from lobbying pressures to Paris Agreement resistance from Trump

With Climate Change, 'The Cost of Not Acting Is Higher Than the Cost of Acting'

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One of the unique experiences you've had is being a business leader, one of the few business leaders working directly with heads of state policymakers. I just wanna start before you give us your reading of this week of has that did that shape your um perspective in a different way? And obviously you cared about these issues at Unilever. How did this experience through the Un Global Compact and being part of the sustainability? Well, so, so I had the fortune to uh chair the uh International Chamber of Commerce. Um I've been a long time chair of the World Business Council for Sustainable Development. Um The B team I chaired for a long time with Richard ST and Richard Branson and the Un Global Compact I chaired too long. I, I was reminded that I had some Russian similarities with someone who doesn't want to move out of his job either. And uh no, I, I wanted to leave but I was there quite a long time. But anyway, there's a time limit now, the uh and we have found a very good replacement with Yer Rodin from IKEA who is a wonderful leader. But anyway, I always felt that um uh two things that um we needed to get all these organizations on the same hymn sheet to really move the world forward and these broader systems changes. And I put myself in those positions there. A little bit of that. People said, why do you do all those things? But it was basically the same thing is to get that agenda uh aligned. And then the second thing was I was very fortunate by to be asked by Secretary General Ban Ki Moon at that time to be part of a panel. He, he had, he had quite a lot of courage, although he was very modest as a South Korean, but quite a lot of courage to say we need the business community to be part of the development of the Sustainable Development Goals, which were the sequel to the millennial development goals. So we were all in Rio plus 20 in 2012 and that was held in Brazil. So I was heavily involved already at that time from the World Business Council, which actually was created at the first Rio. Interestingly enough by a guy called Smith. He from at that time, very fours sided. There were only about six or seven business people at the original Rio and look at it now and unga we call it the things. We've come a long way. Thank God. But anyway, Ban Ki Moon said we want you to be part of this high level panel of what they call 27 eminent people. Most of them were heads of state or former heads of state. So uh chaired by David Cameron from the UK, a developed country. Uh Yudhoyono Sby, who was then president of Indonesia and mid developed country and then Ellen Soley from Liberia, a stressed country. It would be an understatement. Uh I go into this room in New York for our first meeting and they all look at me and you know, you know, you feel obviously intimidated, but it was like, here comes the problem walking into the room. You know, I was like, ok, what did I sign up for? But, you know, 2.5 years of working intensively drinking from a fire hose, it was one of my best experience is to become a different person, hopefully a better person from what we learned because we listen to farmers, to people with disabilities, to people from all parts of the world to the use. And it was um and everybody wanted to have this world function for everybody and had different ideas on how to do this and then to be able finally in an environment like that to synthesize it down, which sounds complex with to the 17 goals on 69 targets, which is basically you could see it as a score count of where we are, but also where the biggest opportunities are. So I immediately launched after that, the business and Sustainable Development Commission, which I asked Mark M Brown to chair. He was an under secretary at the UN. We synthesize it down for business to make it simpler. And that was the first report where we really talked about, you know, in the neck between now and at that time, it was, they would, they look at you now and say, here comes the solution to the room. Well, we, we would, we would certainly want, I think people would say, you know, we are at the point where the cost of not acting is higher than the cost of acting. And this is a big economic opportunity that uh we definitely like to keep the narrative as hopeful that it is possible. We don't have to solve all the problems tomorrow. You know, you don't eat an elephant in one bite, but you, you can solve 80% of it. And we're trying to say to people who have the courage to do that. It's a crisis of leadership that we're trying to address here more than anything else. And I think that's in our own. It's coming finalizing your question because we were working with all these heads of state and in the intersection. That's where I like it the most because we need the systems change and we need to do that together optimizing in a system that's not designed to anymore, to work and where we are, it doesn't do anything. You can only make make yourself run so fast in a little spinning wheel, really need to work on the more profound changes of changing the system. I don't need to tell you that with Patagonia here or Maria was the economics of mutuality with Stephen and all the others. And that's really requires governments, it requires civil society, it requires business and I'm just very comfortable to be on that intersection. Well, and tell us, you know, obviously this is a room of people who care deeply about these issues or they would not be here. This is climate week people have chosen, they do care. What are you hearing? I mean, you get into some of the rooms, we don't get to go even how does it feel different from last year? Any sense of the zeitgeist shifting in some way? Yeah, I would say it's shifting all the time because the world is shifting so fast and sometimes it's confusing to figure out what is happening and every time we think it can get worse, we figure out something to surprise us. So, uh you know, and on the one hand that puts us down to the here and now and and makes us very reactive to symptoms. And on the other hand, because so many things are happening and I don't need to rehash them here. I think people are realizing that so many things are broken and actually they are all related that it is better, in my opinion. To then really have the serious discussions on what do we need to change? You know, when we had the financial crisis or when we had the uh COVID, it was putting a bandage on something and it was a single minded thing, but it's more complex than that. Now, people are starting to realize that in fact COVID was a wake up call. We saw that what inequality did, we saw what racial tension did. We saw the destruction of bio the first he did not or no disease with terrible consequences and all that stuff. So it gave us a better understanding that we're part of a system that we need to protect and that we are certainly can put ourselves at the top of the pyramid and think we're superior to that system. In fact, we're an integrated part of that system. So it has given us a wake up call coming to this week. It's too early to claim something, but don't underestimate the what the secretary-general achieved with the pact for the future. Um for the first time and to my comments, we, we grabbed the bull by the horn and the UN needs to be reformed. Uh We need to come to grips with A I and I think you can't make the, the gamekeeper and the hunter the same person which is a little bit happening in that industry. So the UN has a role to play. Uh the use uh how to build the international institutions. Again, it is worth reading the document uh because it's not only about aspiration, but it's something actually that's within reach, but would be a fundamental change in how we operate on a world order, including the Security Council and other things. Now they signed it. It was a little bit of pressure till the last minute. It was like signing the in 2015 and September, the SDG SI obviously was there having, having worked on it and that was an emotional moment. The Paris Agreement was an emotional moment and we see what happens to the world and how an agenda gets hijacked and you fall behind. But the fact that we have these um agreements, the fact that we have a UN despite its challenges is a very important thing, at least for what the world is right now. And then what you see here is a uh a cop that uh sorry, a cop. I saying an UN a week where climate change too is very high on the agenda. But where people have also understood that that needs to be a nature based agenda together very few companies that understand Nature Based Solutions and how to integrate them. But it's 30% of the problem probably even more so, food companies are close to becoming bigger carbon emitters than many of the fossil companies if you really want to have an honest discussion. And uh but you also see that it is a big part of the solution so that agenda is becoming more integrated. Uh Brazil understands that we just had discussions with the uh the people that are going to run that agenda. We're heavily involved in that. And then the US, we just have to see that it's a big, obviously unknown uh this week as well, but depending on what the outcome is. So I I when, when I did the Sustainable Development Goals, the US was represented by John Podesta and because it was a little bit formal, we always had to sit on alphabetic names. So Podesta and Pulman was sitting next to each other all the time. So John, I just came from John. He is now a big buddy and a good friend and I have a tremendous respect for him. But you know, we're going to and you saw the effects of the Ira the Inflation Reduction Act, the Chip Act, the Infrastructure Act. I mean, I'm not here for any political reasons. I'm not voting in your country, but there's a fundamental shift that has happened in this country that is actually for the positive and the economics work, the technology helps their signals from the marketplace. But also within a very difficult environment, you've also given the right incentives as much as you could. And so that is going to accelerate depending on who gets elected or is going to be slowed down and that it will be a big difference because a lot of people, I talked to believe that because a lot of the benefits are in red states, for example, that, that this will continue a pace. Well, Texas is now the biggest, not only on wind but also on solar, it just passed. And it was interesting in Davos when the Ira came out, uh I talked to quite a lot of senators from the Red States that were heavily lobbying the European industries come to my state. But then it would go on television for their home country at night and, and start talking Boki and Esg and all the other things. So yeah, that's politics nowadays. But I, I do believe that the Ira is, is difficult to unwind and uh and indeed the fact that the book goes into Red States is a pleasant uh not coincidence, but it's a pleasant effect. But um like I went to the White House to convince Trump to stay in the Paris Agreements and terribly failed. If the US doesn't show leadership, the world is paying a significantly higher price, including the US. So the difference between presidents here and you make up your choice. This is not why my comment is made is the equivalent of the emissions of Europe in a year. So I just want to be very clear, there are huge differences. So we got, this is like speed dating. I got the one minute. So in one minute, whether it's a Haiku or a poem or advice. But I think you talk about a crisis of leadership and I think it's very important to give your sense of advice to leaders in this room. Obviously to talk about es and G feels a bit perilous right now. What, what it doesn't, it doesn't, I think it's in this country more so than in Europe. Although some of that is always blowing over and it always comes to the UK first where I happen to live. But, but here it's a little, 1/13 century farmhouse with all your kids. 15th century. Not that old. I would never buy it that old. Although there are some Roman, although there are some Roman ruins on the property, but you're not allowed to talk about that because then the government comes in and we don't want that. So, exactly. We don't know what's there, but they had a hard time putting the heat pumps and that's all I can tell you. So you're marching over to this group. So, um, let's just look at the reality for a second. There were 100 and 61 proposals in the US this year alone, only six got passed many more that got passed last year. 24 in total got on the state of Texas is being sued now because their pension plans have a 600 million higher cost now because of this than what they otherwise would have had. Um, this country is moving forward very fast in many of the conversions in the industry. In fact, if you look at the numbers itself, more CEO S are now compensated on the en I this year than they were the year before the ESG funds are performing better and actually are increasing. You take climate action 100 where a lot of companies went out. Uh That organization is growing and has more members than it has ever had. True. Some us members went out but a lot of Europeans come in. So the press doesn't like to write about that because it doesn't sell. So you do. No, no, you do. But you're not press, you're, you're, you're far more intelligent than that, that I would call you press. So that's why I'm sitting here. But, but, but, you know, the people get the wrong impression. It's a little bit, you know, and, and obviously heavily fueled by the fossil fuel industry and, and, and by money and politics where some people just become, you know, you just hire them to say whatever you want. So where's the damage? Because there is damage? I don't want to be naive about this. The damage is that the, the direction is set for the reasons we talked about, but we need acceleration of that direction. We are in second gear in the car, in the car, we need to go to fourth gear. We are not in reverse. So it's easier to do to accelerate, but you see the ambitions of ceos collapsing. We, we, we see uh um few making bold statements of ambition which are needed. I need to tell my friends, I'm going to ma to run the marathon first. I have to tell them that before I actually go and run it. That is important. And the other thing where we are paying a price in collective action, there is this notion of which the senators played very well on competitiveness and antitrust and all that stuff that they scared people with. And then you get the lawyers that are risk averse and you get into this cycle. So you definitely see in the US um less partnerships at a time that we need more cooper leadership and, and when we need more ambition and then you see a little bit coming in in legislation, I think the Biden administration and John would have been more courageous if they wouldn't have had to work such a fine line of give and take because at the same time as we got the IRA, you also continue to invest in LNG facilities and, and drilling and on federal land and some other things that are frankly not needed. Um So, so that's the unfortunate part that we shouldn't deny it, but you know, it it is there. So what if you are a CEO, what do you do in this environment? First of all, be aware of the fast moving reality, the European corporate sustainable reporting directive is affecting all us companies that are sitting here. Um And that's increasingly the standards that are moving forward. And I think these are major game changes that should be taken into account. It's the first time that actually you have to report on materiality or what they call double materiality or impacts as well. Um So that, that is changing significantly. And if you want to make your company just governance, uh you miss a great trick because this is an accelerator of innovation and frustrating. So you need to be courageous. And then um the second thing that uh is is uh happening with, I think the CEO S need to be aware of is how do you better communicate that you build value, so communicate communication, communication, communication is very important to your own people. And so uh this is probably the biggest uh opportunity that is there. That is why countries, by the way seven countries are totally converted on energy. People might not know that 47 countries in the world are ahead of the Paris Agreement and there is no correlation that they do worse. In fact, these countries collectively do better than any sample of 47 countries. So there is enough evidence there then companies, I mean, you know, Deloitte does a lot of studies and often they are common sense that uh the the the companies that are leaving in this field are higher valued also the funds that are ese funds. Yeah, many are here. So, but, but we are not willing to put that story out and that's a little bit unfortunate. So make the value creation story uh very clear. And I think you can uh change the, the, the direction of the debate, which is important. And then my final point is move from what, what you might call, I call it towards positive advocacy. But it's really right now it's lobbying your trade associations, especially in this country singing a different song than what the company CEO S are saying. Um 6% of your CEO S go to Washington, but it's fighting for your own interest. The money that flows into politics doesn't go in the right direction with Ben and Jerry's. I used to always Ben and Jerry to agitate the system, but we stamped all this money, take your money out of politics, take your money out of politics because it's a devastating thing. And the companies that are the ones that are going to be expected in the future. They move to what I call positive advocacy, work with civil society, with your colleagues with governments to put the right frameworks in place to be sure that we have a world that we can function and nobody is served by anything else, the only world we have. And thank you very much. I think you're a role model and, and thank you for the service. You've had as well with UN global compact and other stuff.