Playing the game: the why and how of making sustainable business the new norm

11 Oct 2018
SOURCE:
Abbie Reynolds, SBC Executive Director

Abbie Reynolds, SBC's Executive Director, gave this speech to about 200 people at the Climate Change and Business Conference in Auckland on Tuesday 9th October, 2018:

Ngā mihi mahana ki a koutou i runga i te kaupapa nei

E te whare e tū mai nei

E ngā mana

E ngā iwi

E ngā reo

Tēnā koutou, tēnā koutou, tēnā tātou katoa

Story about leadership

Around June 2017, I pounced on Mike Bennetts, the CEO of Z Energy, who was endeavouring to leave an event he’d just spoken at.  It was a premeditated act on my part.

Let me give you some background.  The previous year, at SBC, we’d experimented with some system change collaboration approaches to try and generate cross-sectoral activity on climate change action.  It would be fair to say that we learned more about what not to do, than what to do.

But one of things we did learn was that our sustainability managers and others working inside business to reduce carbon emissions didn’t feel like they had the clear, unambiguous mandate they needed to go further faster, and with the urgency they saw was needed.

And at the same time, we were seeing a lot of fantastic individual business leadership happening, and some really ambitious goals. But somehow that wasn’t enough. So we started to wonder if a collective business voice led by senior business leaders was what was needed.

It was with this in mind that I pounced on Mike.

He was gracious about being waylaid.  And indeed a little bit interested.  We had a follow up call, and decided there was something in it.

He invited 13 other CEOs to dinner.  They were all leading large corporates and had taken ambitious or visible steps on climate change.  The invitation was for them to meet to discuss what they might be able to do together to help NZ navigate climate change.

They met last October after the election and before the announcement of the new government.  A lot of their conversation was about politics.  But in the end they decided that the most powerful thing they could do was to publicly state what they would commit to.

Which is where the 2017 Climate Change Statement came from.

They also decided that it would look a bit lame if it was only their 14 businesses making the statement.  So they invited key partners, customers and suppliers to be involved.  We invited SBC members and it was presented to the CEO Forum of the Major Companies Group.

It quickly grew to around 35 signatories.  Then in March this year they met with Climate Change Minister James Shaw and secretary for the Environment, Vicky Robertson.  At that dinner they decided that to target 50 signatories representing 50% of NZ’s emissions – which included scope 3.  Once they’d reached that they would go public with it.

On 12 July the Climate Leaders Coalition of 60 business leaders, representing nearly 50% of New Zealand’s emissions announced itself, and announced the commitments that had been made.

As far as we know there is nowhere else in the world where a voluntary commitment by business has represented such a significant share of a countries emissions.

I know lots of you here today are part of the Coalition and attended the launch.  Can we get some hands up for whose companies have signed, and who was at the launch.

Hands up anyone who has signed up but wants to?

There’s a reason I wanted to talk about that today. Not just to encourage more people to sign up – though obviously we’d welcome that.  Just go to the Climate Leaders Coalition website.

Rather I wanted to talk about it because transitioning to a low carbon economy, is going to require a lot of change.  It requires our economy to change, our ways of life, the way we live, move and work.  All of which means people are going to have to change – and that’s not something the human brain likes very much.

That’s why so much of the conversation and focus is on policy – regulations, rules, signals, settings and prices. It’s about how we make people do stuff differently.

But the last 20 years has seen a huge increase in our knowledge of human behaviour and how and why we act the way we do.  Think about how much we now hear of behavioural economics, tipping points, system change theory.  And we can and should be using this type of insight to help people make the transition.

And that’s why I want to talk about something other than policy.  Policy is important.  Don’t get me wrong.  We really need good, long term, predictable policy settings.

But policy sets the rules of the game.  It tells us what we can and can’t do out on the field, where we can and can’t go.  It might create incentives and disincentives for how we play but they don’t tell us how to play, or what a great game would even look like.

The game will be played by business.  It’s business that creates the emissions, so we’re the ones on the field of play following the rules and competing like crazy.

I can’t imagine any team ever being inspired by what the rules said.  Our pace, our enthusiasm, our ability to go faster or further than we thought possible was entirely dictated by how inspired we were, how well we worked together as a team, and how well we communicated.

So policy matters, but to switch metaphors unhelpfully, it will set a floor.  Our ambition, our ability to play a quality game, will be determined by other factors which will set the ceiling.

I’ve got some ideas about what some of those factors are, based on what I’m already seeing from business.

Collaboration & fellowship

One of the things that I’ve heard from the CEOs involved in the Climate Leaders Coalition is that they value coming together.  That fellowship in trying to solve these big crunchy issues really matters.  It’s much easier to be brave when you’re not having to be brave alone.

And building skills to collaborate is really important. I’ve seen some really cool examples – AirNZ and Ngati Porou have worked together on a mutually beneficial partnership that lets AirNZ offset emissions and improve biodiversity, while supporting increased tourism and employment for the iwi.

Vector and NZPost got together to workshop what they could do together to find solutions.  And I know various businesses are starting to talk about hydrogen as a low emissions fuel.

Changing mindsets

One of the biggest challenges we face is that climate change is really a ‘no more business as usual’ scenario for most businesses. The challenge is that most business leaders don’t know that yet. At the very least it requires them to figure out how to completely remove carbon from their business by 2050, or it requires a fundamental shift to their business model.

Again, our human brain isn’t well set to think in this way.  It’s especially difficult when business leaders look around, and it doesn’t seem like anyone is taking it as seriously as the science seems to be telling us we should be, and the investment decisions required are sub-optimal. Acting then requires courage. And that’s made harder again if Directors aren’t on board.

The Climate Leaders Coalition has helped with that because a large bunch of businesses have had to understand what a target aligned with 2 degrees means – and they’ve done the work to understand.  The fellowship and conversations also help.  One of the CEOs in the Climate Leaders Coalition started his journey with thinking about his product could reduce emissions for others. The last time I saw him, he’d developed a 30 year plan to completely decarbonise his business too – and was starting to think about the investment decisions needed and by when.

And we’re seeing some of that – Z’s purchase of a big chunk of Flick Electric.

Storytelling & celebrating

One of the most important opportunities to change mindsets is through story-telling.  If we’re trying to normalise planning for climate change in our businesses, then we need to keep sharing the stories of those businesses that are, and how they are being successful.  How does something become a norm – as a result of people seeing it and hearing it over and over again?

We also need the positive stories that show that action is being taken.  Too much of our climate change story-telling is based on fear and pesimism. It gives us a short sharp shock, but fear channels blood to our fight, flight, freeze response, not to our big clever creative brains which are going to find the solutions.

So we need more story-telling about the positive steps being taken.  Our businesses are pretty average at this – many fear that if they don’t have it all sorted all they will attract is criticism if they speak publicly about the good things they are doing.

Businesses are full of human beings, whose creative capacity to find solutions will be more usefully triggered if they are celebrated for what they are doing, rather than criticised for not doing enough.

Leadership

And when it comes down to it, what I’ve described here are the ingredients of good leadership.

No reira, tena koutou, tena koutou, tena koutou katoa

Noho ora mai