United Nations Secretary-General Ban Ki-moon urged corporate leaders to back up their words about sustainable business practices with concrete actions at a KPMG-sponsored conference on sustainability.
Ki-moon praised the growth of sustainability reporting by a growing number of corporations at the conference Tuesday, but urged companies to go further. The event was held ahead of the upcoming Rio+20 sustainability conference in Brazil.
“Doing well by doing good has become an accepted business principle,” said Ki-moon. “That was a far cry from 20 years ago, when the United Nations hosted the first global summit in Rio de Janeiro. At that time only a few companies were exploring the notion of sustainable business. Today thousands are doing so. And yet, corporate sustainability as currently practiced has yet to rise fully to the challenge. The principles of sustainability have not penetrated businesses’ strategy, nor have we seen the depth of action that is needed. Those that have represent only a small percentage of the world’s estimated 80,000 multinationals and millions of smaller enterprises. We need corporate sustainability to be in the DNA of business culture and operations.”
Ki-moon noted that there are several factors holding back corporate sustainability from becoming more prevalent.
“Countless proven innovations and solutions, from energy efficiency to emissions reductions, are not supported with the right incentives,” he said. “In fact, incentive structures still tend to encourage unsustainable behavior. As a result, too many companies limit their sustainability efforts to pilot programs that never take off. Even worse, sustainability becomes more a matter of public relations than how companies operate. Governments and politicians are for personally pleasing constituents within election cycles. I’ve been urging the leaders of the world that they should not be the prisoners of constituents. When they have a vision and commitment, they have to carry it out, but too easily they have become prisoners of these constituencies. But business CEOs, I think you can do it. There are many restrictions on the leaders which constrain their movement. Even myself, I am constrained by the General Assembly and Security Council. There are more things which I cannot do than I can do on my own. But business CEOs, you have the power. When you take a decision today, it can be carried out tomorrow.”
He asked business leaders to participate in the Rio+20 conference in June and help protect billions of people worldwide from poverty and disease. They also should publicly report on their sustainability practices to investors and join with the U.N. on its sustainability initiatives.
KPMG International global chairman Michael J. Andrew talked about the role his firm is playing in sustainability. He warned that if companies don’t willingly participate in sustainability efforts, then they could find requirements imposed upon them.
“This is also an opportunity, not a defensive measure,” he added. “Those organizations that can actually improve their supply chains, look at their energy usage, design new products which appeal to that generation of people who are looking for sustainable, green-based energy products, those are going to be the winners going forward. It’s a question of those organizations being innovative and of changing the culture to continuous improvement throughout their organization.”
He gave his own firm as an example. “We started a program three years ago to reduce our carbon footprint by 25 percent,” said Andrew. “As a service organization, that is actually not a huge task compared to some of the people in this room. But what I had never anticipated was the impact it would have on our people. Just by doing those simple tests and talking to them, they then wanted to know how it would manifest itself in their lifestyle. We have 140,000 people around the world and the average age is 27. So these issues appeal more to them than traditionally, I think, in many other businesses: how can I adapt my lifestyle, at home, the way I live, to basically make a contribution. And now when I look at our recruiting numbers, and look at why people join KPMG, the ability to raise sustainability, to talk about environmental issues and climate change, is one of the key recruitment factors.”
That initial effort branched out into consulting for clients on sustainability. “I was contacted by my suppliers who said, ‘We understand that something is happening at KPMG. Could you actually share that best practice information with us?’” Andrew recalled. “So here you have an organization which isn’t really carbon intensive, and we can still make a significant contribution by influencing and educating a large body of people in the way they basically behave as individuals on this particular planet.”
KPMG provides services in sustainability areas such as taxation, including ‘carbon taxes,’ marketplace emissions trading, advising on best practices and reforming the supply chain, smart technologies, sustainability reporting and putting in controls and financial discipline around it.
One of the people KPMG recruited to help with its sustainability efforts is Yvo de Boer, the former executive secretary of the United Nations Framework Convention on Climate Change, and now a special global adviser on climate change and sustainability at the firm. He organized the conference and enlisted the participation of the U.N. and other international organizations. He also helped the firm prepare a report, “Expect the Unexpected: Building Business Value in a Changing World,” which looks at sustainability and other trends.
“The report basically looks at a number of global megatrends and forces that are shaping our future, and those megatrends and forces are quite frightening,” he said. “What we then went on to do is look at how those forces impact different sectors of the economy unless we can get change under control. Then in a happier third part of the report, we looked at what can companies together with governments actually do to drive change in a more sustainable direction. That really is the essential message coming out of that report, and out of this event as well, that collaboration is absolutely crucial.”
Unilever CEO Paul Polman, who oversees consumer product brands like Ben & Jerry’s ice cream, told CNBC host Ron Insana during a panel discussion about the problems of deforestation.
“We’re operating as a company in about 180 countries, and I’m off to Latin America this afternoon,” he said. “We have the freedom to be there with all of our products, and with that also comes the responsibility to be sure that the frameworks are in place for these businesses to be more successful. That’s not always the case in all places, and you have to participate in that process. Let me give you an example with climate change and deforestation. Illegal deforestation is still about 16 percent of global warming. It’s a major issue. Twenty percent of the Amazon is gone now, and it’s going pretty fast now. That has major repercussions.”
Royal Dutch Shell chairman Jorma Ollila noted that his company depends on a host government’s willingness to grant oil concessions. “You need an open, transparent relationship with the host government,” he said. A former head of Nokia, he said his company's major challenge was coping with the pace of technological change.
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