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Dec. 12, 2017

Green Supply Chain News: CEOs of DowDupont, Unilever and Walmart Talk to the Harvard Business Review about Sustainability


Totally New Business Models Needed, Unilever CEO Polman Says

By The Green Supply Chain Editorial Staff

As part of its Future Economy initiative, the Harvard Business Review recently spoke to the CEOs of several major companies on their perspectives on sustainability.

Below, we highlight the very interesting comments from three of them.

Andrew Liveris is the Executive Chairman of the new DowDuPont, observes that "the world started to figure out that the community fence is not literally your physical fence line - but it's actually the planet - and sustainability meant the management of finite resources."

The Green Supply Chain Says:
Polman says that to truly accelerate progress, companies need science-based targets, to disclose exposure and mitigation plans in their business models, and that there needs to be a true price on carbon.

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When it comes to regulations, Liveris says "Our mojo and motto is always comply with the highest standard, no matter which country we're operating in."

Liversis notes, however, that when it comes to climate change the financial community would really prefer that companies don't invest in it, "because the cost is intangible - unless there's some tangible way of measuring it, like a price on carbon."

He says that former Dow overcame this by doing full life-cycle analysis on what it called its footprint and handprint - the footprint being Dow facilities and the handprint being the products it sells across the globe.

"When we do the full life-cycle analysis and look at the cost our products have in society versus the benefit they bring, we need to have a benefit that outweighs the cost," Liversis says.

For example, Liveris says Dow invested $1 billion in energy efficiency, water, waste, and emissions reduction projects from 1995 to 2005, and can tangibly show investors how those investments saved the company $5 billion.

Paul Polman is the CEO of consumer packaged goods giant Unilever, and one of the most outspoken CEOs in terms of sustainability.

In why he drove Unilever down the aggressive sustainability path, Polman says "The financial crisis of 2007 and 2008 brought to life that a global economic growth model based on high levels of debt, overconsumption, and leaving too many people behind was not sustainable. We needed a new economic model; we also needed a different business model. Not one based on being "less bad" or on occasional acts of benevolence, but one where business has a positive impact on society in all it does."

In 2010 the company launched the Unilever Sustainable Living Plan (USLP), which aims to decouple the company's growth from its environmental footprint and to increase its overall social impact. Polman says over half of the new employees that its hires joined because of the USLP.

And Polman adds that big changes need to be made in the business environment.

"Like all businesses, we are impacted by the increasingly short-term focus of financial markets and political systems," Polman says. "We need a reform of the financial system, with greater focus on serving the long-term needs of society."

Along the same lines of thinking, Polman says "This goes right to the heart of the transformational - not incremental - change we need to see. Not more projects, but system change. Not CSR, but whole new business models."

Polman says that to truly accelerate progress, companies need science-based targets, to disclose exposure and mitigation plans in their business models (as per Bloomberg's Task Force on Climate-Related Financial Disclosures), and that there needs to be a true price on carbon.

Next we hear from Doug McMillon, CEO of Walmart. He says that early on in Walmart's sustainability journey there were many internal doubters.

How did Walmart get the skeptics on board?

"The doubters got on board quickly when they saw that our P&L could benefit while we were doing good work for the environment," McMillon says. "A constant theme for us in engaging our associates and stakeholders has been shared value: the need to integrate sustainability into business, not treat it as a separate effort, and to ensure we deliver business value as well as value for the environment and society."

With its Project Gigaton, Walmart pledged to remove 1 billion tons of greenhouse gas emissions from its supply chain by 2030.

What has Walmart learned about working with thousands of suppliers and other partners on sustainability?

"To encourage suppliers' participation, Walmart is sharing the business case for why suppliers should pursue reducing emissions - increasing competitive advantage, spurring technological innovation, inspiring brand loyalty, and increasing employee engagement, McMillon said.

He adds that "We are also helping suppliers set and achieve emissions-reduction plans with a comprehensive tool kit. The tool kit is a manual for suppliers to use as they set their emissions reduction targets, track their progress, and report their savings."

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