tag:theconversation.com,2011:/fr/topics/sustainable-business-5007/articlesSustainable business – The Conversation2023-07-19T12:23:14Ztag:theconversation.com,2011:article/2061642023-07-19T12:23:14Z2023-07-19T12:23:14ZJust in time for back-to-school shopping: How retailers can alter customer behavior to encourage more sustainable returns<figure><img src="https://images.theconversation.com/files/537504/original/file-20230714-29-iem14i.jpg?ixlib=rb-1.1.0&rect=62%2C0%2C2726%2C1818&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Retail returns have become big business for UPS.
</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EarnsUPS/9fd54604385d4aa0b1122e018b5323da/photo">AP Photo/Toby Talbot</a></span></figcaption></figure><p>Back-to-school sales are underway, and people across the country will be shopping online to fill up backpacks, lockers and closets – and they’ll be taking advantage of free returns.</p>
<p>Making it easy for customers to return items at no cost started as a retail strategy to <a href="https://www.theatlantic.com/technology/archive/2023/05/free-online-shopping-returns-retailer-policy-changes/673975/">entice more people to shop online</a>. But it’s getting expensive, for <a href="https://theconversation.com/inside-the-black-box-of-amazon-returns-206551">both retailers and the planet</a>.</p>
<p>In 2022, retail returns added up to more than <a href="https://nrf.com/research/2022-consumer-returns-retail-industry">US$800 billion in lost sales</a>. The <a href="https://theconversation.com/inside-the-black-box-of-amazon-returns-206551">transportation, labor, and logistics</a> involved raised retailers’ costs even higher. Product returns also increase pollution, greenhouse gas emissions and waste in landfills, where many returned products now end up.</p>
<p>So how can retailers fix this problem and still provide quality customer service?</p>
<p><a href="https://scholar.google.com/citations?user=bqBiAJQAAAAJ&hl=en">We conduct</a> <a href="https://www.ivybusiness.iastate.edu/directory/cfaires/">research</a> in reverse logistics, focusing primarily on the intersection of retail returns and customer behavior. Here are some insights that can help <a href="https://www.retailtouchpoints.com/topics/customer-experience/how-retailers-can-minimize-returns-focus-on-convenience-communication-and-personalization">reduce the abuse of free returns</a> and lower costs without losing quality.</p>
<p><iframe id="V7yOA" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/V7yOA/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Nudging: In-store vs. shipped returns</h2>
<p>Where a product is returned makes a difference. Items returned to the store can be restocked an average of 12 to 16 days faster than those that are mailed. Mailed returns also cost companies more: The difference between the most expensive shipped returns and least expensive in-store returns is <a href="https://www.mckinsey.com/industries/retail/our-insights/returning-to-order-improving-returns-management-for-apparel-companies">$5 to $6</a> per item. That adds up quickly.</p>
<p>Studies show that customers may be willing to change their return behavior – <a href="https://thehill.com/opinion/energy-environment/3890170-moving-the-needle-on-supply-chain-sustainability/">with a little help</a>.</p>
<p><a href="https://www.thedrum.com/opinion/2023/02/23/how-brands-can-nudge-consumers-positive-behavior-change-sustainability">Behavioral nudges</a> are a technique used in decision-making to steer a person toward a specific behavior. Putting candy at eye-level at the grocery store checkout counter to encourage impulse purchases is an example, or making employee participation in a <a href="https://news.uchicago.edu/explainer/what-is-behavioral-economics#nudge">401(k) savings program the default</a> option. Another type of nudge involves <a href="https://doi.org/10.1016/j.jeem.2018.06.009">providing more information</a>.</p>
<p>If you’ve ever shopped online and seen statements like “10 out of 10 customers recommend this product” or “Only 2 items left in stock,” you have experienced the use of information to influence your decision. Nudges emphasizing sustainability may also appeal to customers and have a positive impact on return behavior.</p>
<figure class="align-center ">
<img alt="A man hands a slip of paper to a woman a returns desk at Saks Fifth Avenue." src="https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/537505/original/file-20230714-23-j763kq.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Returning items to a store can avoid extra transportation, shipping and packaging, saving money and avoiding waste and emissions.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/VirusOutbreakNewYork/a1f251980fd140dbb26a82fa97746807/photo">AP Photo/Mark Lennihan</a></span>
</figcaption>
</figure>
<p>In a recent survey, 94% of merchants said customers were concerned about sustainability, according to a <a href="https://happyreturns.com/merchant-survey-2023">report from Happy Returns</a>, a logistics firm that works with retailers.</p>
<p>However, a much lower percentage of customers actually make sustainable return decisions. That suggests that customers do not fully understand the environmental impact of their return choices – and it offers a way for retailers to help.</p>
<p>Our research found that when customers were given information about the environmental impact of the different return options, they were nearly 17 times more likely to choose an in-store return rather than returning an item by mail. Nudges like this offer a simple and inexpensive way for retailers to alter customer behavior in favor of sustainability.</p>
<h2>Picking up returns to speed up the process</h2>
<p>Some customers request to return an item but then wait weeks before mailing it. It’s known as customer procrastination, and it also has a cost. The longer these products remain unprocessed, <a href="https://wwd.com/business-news/business-features/innovation-in-online-returns-why-online-merchants-are-embracing-box-free-returns-as-the-new-default-return-method-1235197019/">the more value they can lose</a>.</p>
<p>High-priced electronics, such as laptops and tablets, have short product life cycles and lose value quickly, sometimes at a rate of 1% per week. Seasonal items, such as back-to-school supplies or winter coats, become more difficult to resell if retailers get them back on shelves after demand has bottomed out. A returned item’s resale value <a href="https://www.wsj.com/articles/what-stores-do-with-90-billion-in-merchandise-returns-1518777000">determines its destination</a>: It can end up back on store shelves, sold to liquidators for pennies on the dollar or sent to a landfill.</p>
<figure class="align-center ">
<img alt="A worker carries an Amazon box as another checks over a box and address." src="https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/537506/original/file-20230714-17-ha7ae5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Transportation is a large expense for retail returns, for both companies and the planet.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/EarnsUPS/fcdaf7a62f184d56bd7ac52aa069d83d/photo">AP Photo/Mark Lennihan</a></span>
</figcaption>
</figure>
<p>A home pickup service for time-sensitive returns could reduce delays in a way that is also useful to the customer. A small number of pickup vehicles collecting returns from customers could avoid multiple shipments, <a href="https://chainstoreage.com/survey-returns-cost-online-retailers-21-order-value">reducing total miles traveled</a> and cutting vehicle emissions, while also avoiding the need for each return to be individually packaged.</p>
<p>Our research found that a pickup service could help retailers collect returns faster and reduce product value loss, particularly for high-priced products and products that lose value quickly, such as consumer electronics.</p>
<h2>How to change policies without losing customers</h2>
<p>While several retailers have <a href="https://www.theatlantic.com/technology/archive/2023/05/free-online-shopping-returns-retailer-policy-changes/673975/">stopped offering free returns</a> or changed their return policies over the past year, our research suggests that changes affecting all customers might not be the best choice.</p>
<p>Broad policy changes that affect everyone might involve limiting the number of returns per customer, charging a fee for returns or shortening the window for returns. An alternative is a targeted return policy that applies only to people who abuse the system. For example, retailers can restrict free returns for people who repeatedly buy more items than they intend to keep, knowing they can return the rest.</p>
<figure class="align-center ">
<img alt="A woman standing a computer terminal checks boxes on an assembly line." src="https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=387&fit=crop&dpr=1 600w, https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=387&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=387&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=486&fit=crop&dpr=1 754w, https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=486&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/537507/original/file-20230714-25-ahjkkr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=486&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Offering free returns carries a cost for retailers, but ending return policies can also turn off customers.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/woman-works-at-a-distrubiton-station-at-the-855-000-square-news-photo/1124819753">Johannes Eisele / AFP via Getty Images</a></span>
</figcaption>
</figure>
<p><a href="https://doi.org/10.1016/j.jbusres.2022.07.011">We conducted two studies</a> to explore how customers would view changes to a retailer’s return policies.</p>
<p>In the first study, 460 participants were significantly more likely to speak negatively about the retailer – a fictitious company, in this case – when the retailer’s returns policy change applied to everyone and affected everyone equally.</p>
<p>Our follow-up study asked 100 online customers about their thoughts regarding generalized versus targeted policy changes. When the return policy change targeted customers who abused returns, 44% of the participants expressed positive emotions, and only 13% expressed negative emotions.</p>
<p>Those positive emotions included comments like, “I would feel proud of the company for taking action against people who try to cheat the system.” Such responses indicated that participants understood that cheaters were increasing the price paid by everyone. </p>
<p>But when the return policy change applied to everyone, 64% of the participants expressed negative emotions. Nearly half indicated they would speak negatively about the policy change to family and friends, and 42% said they would shop at another store.</p>
<h2>Other ways to help customers make better decisions</h2>
<p>Retailers can also change the online shopping experience before the customer makes a purchase <a href="https://www.insiderintelligence.com/content/6-creative-ways-retailers-prevent-returns">to avoid the need for returns</a>.</p>
<p>One way is to obtain detailed <a href="https://www.zenstores.com/tutorials/prevent-returns-your-online-shop/">customer feedback</a> on returns and use that to provide better product descriptions to customers. Another is to avoid incentivizing the wrong behavior. Well-intentioned <a href="https://www.insiderintelligence.com/content/6-creative-ways-retailers-prevent-returns">free shipping on orders over a set dollar amount</a> could encourage customers to overpurchase and later return products.</p>
<p>Posting videos of items for sale can help buyers spot problems that photos might hide. <a href="https://www.news.iastate.edu/news/2023/04/13/virtual-fitting-rooms">Virtual fitting rooms</a> that use an avatar of the customer to try on clothes virtually can help customers choose the right size the first time.</p>
<p>There is no doubt that managing retail returns is a <a href="https://www.mckinsey.com/industries/retail/our-insights/returning-to-order-improving-returns-management-for-apparel-companies">difficult task</a>. To make the process more sustainable, retailers need to help customers make choices that limit the need for a return or that minimize the impact of a return on the environment and, of course, the retailer’s bottom line.</p><img src="https://counter.theconversation.com/content/206164/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Returns cost companies billions of dollars in lost sales. They also generate emissions and packaging waste. Two logistics experts offer some tips from psychology for more sustainable returns.Christopher Faires, Postdoctoral Researcher in Supply Chain Management, Iowa State UniversityRobert Overstreet, Assistant Professor of Supply Chain Management, Iowa State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2046602023-05-15T12:33:13Z2023-05-15T12:33:13ZHow corporations use greenwashing to convince you they are battling climate change<figure><img src="https://images.theconversation.com/files/523328/original/file-20230427-660-vi0wh8.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C5493%2C3171&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Consumers must do their homework before determining whether a company is actually green.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/greenwashing-of-the-coal-industry-conceptual-image-royalty-free-image/1386003375?phrase=greenwashing&adppopup=true">Victor de Schwanberg/Science Photo Library via Getty Images</a></span></figcaption></figure><p><em>Many corporations claim their products are “green-friendly.” But how do you know if what they’re selling is truly eco-safe? SciLine interviewed <a href="https://seas.umich.edu/research/faculty/thomas-lyon">Thomas Lyon</a>, professor of sustainable science, technology and commerce at the University of Michigan, on how to buy environmentally sustainable products, whether carbon credits actually work and the prevalence of greenwashing.</em></p>
<figure>
<iframe src="https://player.vimeo.com/video/819562009" width="500" height="281" frameborder="0" webkitallowfullscreen="" mozallowfullscreen="" allowfullscreen=""></iframe>
<figcaption><span class="caption">Dr. Thomas Lyon discusses the impact of corporate sustainability initiatives.</span></figcaption>
</figure>
<p><em>Below are some highlights from the discussion. Answers have been edited for brevity and clarity.</em></p>
<p><strong>What is greenwashing?</strong></p>
<p><strong>Thomas Lyon:</strong> <a href="https://doi.org/10.1177/10860266231168905">Greenwashing</a> is any communication that leads the listener to adopt an overly favorable impression of a company’s greenness.</p>
<p><strong>How can the consumer avoid falling for it?</strong></p>
<p><strong>Thomas Lyon:</strong> I still love the old concept of the <a href="https://www.ul.com/insights/sins-greenwashing">seven sins of greenwashing</a>. The first and most common is what’s called the sin of the hidden trade-off, where an organization tells you something good they do but neglects to tell you the bad things that go along with it. </p>
<p>For example, when you see an electric hand dryer in a public restroom, it may say on it: This dryer protects the environment. It saves trees from being used for paper. </p>
<p>But it neglects to tell you that, of course, it’s powered with electricity, and that electricity may have been generated from coal-fired power, which might <a href="https://ec.europa.eu/environment/biodiversity/business/assets/pdf/case-studies/Case%20study%2016_ReCiPe%20Hand%20drying%20systems_final.pdf">actually be more damaging than using a tree</a>, which is a renewable resource. That’s the most common of the seven deadly sins. </p>
<p>Other ones include the sin of irrelevance. For example, telling people that “this ship has an onboard wastewater recycling plant,” when all ships that go to Alaska are required by law to have exactly that kind of equipment. It’s no reflection of the company’s quality. </p>
<p>The sin of fibbing is actually the least common. Companies don’t usually actually lie about things. After all, it’s <a href="https://gbr.pepperdine.edu/2010/08/businesspersons-beware-lying-is-a-crime/">against the law</a>.</p>
<p>One of the increasingly common forms of greenwashing … is a hidden trade-off between the company’s market activities and its political activities. </p>
<p>You may get a company that says: Look at this, we invested US$5 million in renewable energy last year. They may not tell you that they spent $100 billion drilling for oil in a sensitive location. And they may not tell you that they spent $50 million <a href="https://www.forbes.com/sites/niallmccarthy/2019/03/25/oil-and-gas-giants-spend-millions-lobbying-to-block-climate-change-policies-infographic/?sh=7baf6f97c4fb">lobbying against climate legislation</a> that would have made a real difference. </p>
<p><strong>What are carbon credits (or offsets)?</strong></p>
<p><strong>Thomas Lyon:</strong> I think the easiest way to understand these may be to step back a little bit and think about <a href="https://www.c2es.org/content/cap-and-trade-basics/#:">cap-and-trade systems</a> … under which the government will set a cap on the aggregate amount of, say, carbon emissions. And within that, each company gets a right to emit a certain amount of carbon. </p>
<p>But that company can then trade permits with other companies. Suppose the company finds it’s going to be really expensive for it to reduce its carbon emissions. But there’s some other company next door that could do it really cheaply. </p>
<p>The company with the expensive reductions could pay the other company to do the reductions for it, and it then buys one of the permits – or more than one permit – from the company that can do it cheaply. </p>
<p>That kind of trading system has been <a href="https://www.economist.com/finance-and-economics/2022/05/26/carbon-markets-are-going-global">recommended by economists for decades</a>, because it lowers the overall cost of achieving a given level of emissions reduction. And that’s a clean, well-enforced, reliable system. </p>
<p>Now the place where things get confusing for people is that a lot of times the offsets are not coming from within a cap-and-trade system. Instead they’re coming from a voluntary offset that’s offered by some free-standing producer that’s not included in a cap. </p>
<p>Now it’s necessary to ask a whole series of additional questions. Perhaps the foremost among them is: Is this offset actually producing a reduction that was not going to happen anyway? </p>
<p>It may be that the company claims, “Oh, we’re saving this forest from being cut down.” But maybe the forest was in a protected region in a country where there was no chance it was going to be cut down anyway. So that offset is not what is called in the offset world “additional.” </p>
<p><strong>What should consumers make of companies that offer programs such as planting a tree for every widget they sell?</strong></p>
<p><strong>Thomas Lyon:</strong> Overall, it’s better that they’re trying to do something than just ignoring the issue. But this is where you, the consumer, <a href="https://theconversation.com/greenwashing-corporate-tree-planting-generates-goodwill-but-may-sometimes-harm-the-planet-103457">have to start doing your homework</a> … and look for a provider that has a strong reputation and that is making claims validated by external sources. </p>
<p><strong>Which rating schemes can people trust?</strong></p>
<p><strong>Thomas Lyon:</strong> There’s a cool little app that I like a lot. You can download it. It’s called <a href="https://www.ewg.org/apps/">EWG Healthy Living</a>. EWG stands for <a href="https://www.ewg.org/">Environmental Working Group</a>. It’s a group of scientists who get together and draw on science to assess which products are environmentally friendly, and which ones aren’t. And they have something like 150,000 products in their database. </p>
<p>You can scan the UPC code when you go to the store, and you just immediately get this information up on your phone that rates the quality of the company’s environmental claims and performance. That’s a really nice little way to verify things on the fly.</p>
<p><strong>Are there any examples of business practices that really do benefit the environment?</strong></p>
<p><strong>Thomas Lyon:</strong> Building is one big area. <a href="https://support.usgbc.org/hc/en-us/articles/4404406912403-What-is-LEED-certification-">LEED building standards</a> or <a href="https://www.energystar.gov/buildings/building_recognition/building_certification">Energy Star building standards</a> reduce environmental impact. They improve the quality of the indoor environment for employees. They actually <a href="https://nilskok.typepad.com/nils-kok/2020/05/green-building-has-a-strong-business-case.html">produce higher rents</a> because people are more willing to work in these kinds of buildings. </p>
<p>You can look at the whole movement toward renewable energy and companies that produce solar or wind energy. They’re doing something that really is good for the environment. </p>
<p>The move toward electric vehicles – that really will be good for the environment. It does raise trade-offs. There are going to be issues around certain <a href="https://www.npr.org/2022/03/13/1085707854/how-a-handful-of-metals-could-determine-the-future-of-the-electric-car-industry">critical mineral inputs into producing batteries</a>, and we’ve got to figure out good ways to reuse batteries and then dispose of them at the end of their life. </p>
<p><em>Watch the <a href="https://www.sciline.org/tech/corporate-sustainability/">full interview</a> to hear more.</em></p>
<p><em><a href="https://www.sciline.org/">SciLine</a> is a free service based at the nonprofit American Association for the Advancement of Science that helps journalists include scientific evidence and experts in their news stories.</em></p><img src="https://counter.theconversation.com/content/204660/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Lyon does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Look for hidden trade-offs, political contributions and what businesses are not telling you.Tom Lyon, Professor of Sustainable Science, Technology and Commerce and Business Economics, University of MichiganLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1978722023-03-06T22:10:35Z2023-03-06T22:10:35ZA new UN report offers businesses a template for achieving true sustainability<figure><img src="https://images.theconversation.com/files/513020/original/file-20230301-1707-v9hpo3.jpg?ixlib=rb-1.1.0&rect=50%2C10%2C6659%2C4406&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In order for corporate sustainability approaches to actually work, they need to be genuine and authentic.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/a-new-un-report-offers-businesses-a-template-for-achieving-true-sustainability" width="100%" height="400"></iframe>
<p>Not a day goes by without hearing about the fragility of our natural ecosystems and the <a href="https://doi.org/10.1111/conl.12713">repercussions that extractive economic activity are having</a> on them.</p>
<p>This state of affairs is not recent — it has been ongoing at the very least since <a href="https://www.clubofrome.org/publication/the-limits-to-growth/">the Club of Rome non-profit warned us back in 1972</a> that infinite economic growth and rapid demographic development are incompatible with life on Earth.</p>
<p>The situation today is even worse. Despite <a href="https://unfccc.int/process/bodies/supreme-bodies/conference-of-the-parties-cop">numerous historical conferences</a> and <a href="https://www.washingtonpost.com/opinions/2022/04/04/new-ipcc-climate-report-on-averting-catastrophe/">countless promises</a> to make economic activity more compatible with the capacities of our planet, the environmental progress of the last three decades is not enough to meet the challenges posed by climate change.</p>
<p>While the focus of climate action has often been on greenhouse gas emissions into the atmosphere, we are finally starting to <a href="https://theconversation.com/biodiversity-treaty-un-deal-fails-to-address-the-root-causes-of-natures-destruction-196905">realize the impact of human and industrial activities on biodiversity loss</a>. </p>
<p>Earth’s diminishing biodiversity is exacerbating climate change by inhibiting Earth’s ability to protect and regenerate itself. The services <a href="https://ipbes.net/assessing-knowledge">biodiversity provides us are countless</a>, and the situation remains clear: nature does not need us, but we need it.</p>
<p>We believe a paradigm shift is possible, and that part of this shift will involve the integration of a true sustainability approach in business. But for this approach to work, it needs to be two things: genuine and authentic.</p>
<h2>A landmark report</h2>
<p><a href="https://cdn.unrisd.org/assets/legacy-files/301-info-files/B70382A13E0AE0BDC125841F003C46AC/SDPI---Allen-White-Keynote-Speech.pdf">A true “Brundtland moment”</a> — in reference to the <a href="https://www.britannica.com/topic/Brundtland-Report">landmark 1987 report on sustainable development</a> — is how Global Reporting Initiative co-founder Allen White described the <a href="https://cdn.unrisd.org/assets/library/reports/2022/manual-sdpi-2022.pdf">United Nations’ Authentic Sustainability Assessment report</a>.</p>
<p>White argues that historians will look back on this publication a decade from now as a great historical moment in the trajectory of sustainability. Many other leaders and experts in the sustainability ecosystem agree on <a href="https://sustainablebrands.com/read/new-metrics/un-releases-manual-for-companies-to-conduct-authentic-context-based-sustainability-assessments">the importance and relevance of this report</a>.</p>
<figure class="align-center ">
<img alt="A monarch butterfly, with orange wings and black veins, spreads its wings on the stalk of a plant" src="https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=367&fit=crop&dpr=1 600w, https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=367&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=367&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=461&fit=crop&dpr=1 754w, https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=461&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/513018/original/file-20230301-16-tq9bgn.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=461&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Earth’s diminishing biodiversity is exacerbating climate change by inhibiting Earth’s ability to protect and regenerate itself.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Paul Chiasson</span></span>
</figcaption>
</figure>
<p>Released in November 2022, this report represents the first comprehensive guide to using planetary limits as a reference point in business-oriented sustainability reporting. <a href="https://doi.org/10.1126/science.1259855">Planetary limits</a> set boundaries that humanity can safely develop and live within, without depleting Earth’s resources.</p>
<p>The report is the <a href="https://r3dot0.medium.com/unrisd-ushers-in-a-new-era-of-authentic-sustainability-assessment-with-the-release-of-its-84a1d6761927">culmination of more than four years of research</a>, consultation and advocacy for a new generation of accountability tools. It is, at its simplest, a commitment to bring organizational sustainability assessment into a new era of authenticity. </p>
<p>At its core, the report argues that current business practices are inauthentic and insufficient for achieving true sustainability.</p>
<h2>Sustainability indicators</h2>
<p>Central to the Authentic Sustainability Assessment report is the concept of <a href="https://sdpi.unrisd.org/platform/">Sustainable Development Performance Indicators (SDPIs)</a>. These indicators measure the sustainability performance of businesses, non-profits and other economic organizations using a new and improved approach.</p>
<p>These indicators move away from the old disclosure approach that relies on the idea of extracting infinite resources from a finite planet. Reports that contain this outdated approach include the <a href="https://www.globalreporting.org/">Global Reporting Initiative</a>, <a href="https://www.sasb.org/">Sustainability Accounting Standards Board</a> and the more recent <a href="https://www.ifrs.org/groups/international-sustainability-standards-board/">International Sustainability Standards Board</a>. </p>
<p>SDPIs take a new approach — one that addresses the underlying conditions that compromise sustainable development. It does this by respecting all planetary limits, whether social, economic or environmental.</p>
<p>Conventional disclosure involves comparing peers in the same industry or geography and disclosing one’s “good” performance in comparison to previous years. </p>
<p>SDPIs, on the other hand, involve comparing companies against a scientifically established, context-based sustainability threshold. </p>
<h2>Sustainability thresholds</h2>
<p>An organization’s sustainability performance is expressed in terms of the organization’s impact on vital assets, like planetary limits and social thresholds, compared to sustainability standards. This ensures the well-being of all stakeholders — human and nature alike — that contribute to social, economic and environmental balance.</p>
<figure class="align-center ">
<img alt="A crowd of people in suits look at a large screen that says 'S&P TSX composite index' on it" src="https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=401&fit=crop&dpr=1 600w, https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=401&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=401&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/513019/original/file-20230301-16-sfctap.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Stock markets are increasingly requiring publicly traded companies to disclose their sustainability performance.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/ Tijana Martin</span></span>
</figcaption>
</figure>
<p>According to the report, it is by comparing <em>actual</em> impacts with <em>normative</em> impacts that true sustainability can be assessed.</p>
<p>Take water, <a href="https://theconversation.com/ipcc-report-half-the-world-is-facing-water-scarcity-floods-and-dirty-water-large-investments-are-needed-for-effective-solutions-175578">an increasingly scarce commodity</a>, for example. An organization reducing its water consumption by 35 per cent or saving the most water compared to its competitors does not actually tell us anything about the sustainability of that water consumption.</p>
<p>An organization could be the best at saving water in its industry and still perform poorly in terms of sustainability. Sustainability is not measured by effort, but by the capacity of ecosystems — like planetary limits, pollution and biodiversity — to avoid jeopardizing the resilience of the planet.</p>
<p>Instead, SDPIs recommend comparing water consumption to the capacity of ecosystems and to the actual water needs of living species. It is this balance between actual consumption and resource availability, in light of ecosystem capacity, that will determine the true sustainability of an organization.</p>
<h2>Achieving true sustainability</h2>
<p>As time goes on, businesses will be increasingly required to disclose their sustainability impacts. This will be the case for large European companies starting in 2024, following the enactment of the <a href="https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en">Corporate Sustainability Reporting Directive</a>. </p>
<p>Stock markets are also moving in this direction, forcing publicly traded companies to disclose their sustainability performance in the <a href="https://sseinitiative.org/esg-disclosure/">United States</a> and <a href="https://www.cpacanada.ca/en/business-and-accounting-resources/financial-and-non-financial-reporting/sustainability-environmental-and-social-reporting/publications/a-primer-for-environmental-social-disclosure">Canada</a>. </p>
<p>The widespread and concerted adoption of SDPIs around the world can, as part of this growing momentum of disclosure of sustainability performance, foster authentic sustainability that will bring us closer to meeting the magnitude of the challenges ahead.</p>
<p>We must be collectively ambitious and take advantage of the relevance and originality of these new indicators, which offer a new trajectory towards achieving authentic sustainability.</p>
<p><em>Ghani Kolli, Managing Partner at Credo Impact, co-authored this article.</em></p><img src="https://counter.theconversation.com/content/197872/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sofiane Baba's research projects are regularly funded by MITACS, the Fonds de recherche du Québec – Société et culture (FRQSC) and The Social Sciences and Humanities Research Council (SSHRC).</span></em></p>Recent advancements in the ways organizations measure sustainability performance could lead to a truly authentic approach to sustainability in the business sector.Sofiane Baba, Professeur adjoint en management stratégique, Université de Sherbrooke Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1976752023-02-01T22:29:29Z2023-02-01T22:29:29ZBusiness owners see cutting carbon emissions as ‘the right thing to do’, despite the challenges of making change<figure><img src="https://images.theconversation.com/files/507456/original/file-20230131-11-tzldbi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">GettyImages</span> </figcaption></figure><p>An increasing number of businesses in Aotearoa New Zealand are changing how they operate to reduce their overall climate impact. These measures, which include reducing carbon emissions, are largely voluntary outside of specific sectors, such as the <a href="https://www.mpi.govt.nz/funding-rural-support/environment-and-natural-resources/emissions-trading-scheme/about-the-emissions-trading-scheme">fuel, energy and waste industries</a>. </p>
<p>So, what motivates businesses to take climate action when they do not have to?</p>
<p>As part of <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/csr.2283">my research</a>, I interviewed 13 businesses in Aotearoa New Zealand to better understand their climate mitigation efforts and experiences. </p>
<p>All of the businesses had made a voluntary commitment to reduce their emissions. Many of these businesses had reduced their carbon footprints by changing how they approached freight, business travel, energy use and waste. </p>
<p>Understanding the drivers and challenges businesses face when implementing climate-friendly measures is important as we consider how to accelerate the fight against climate change.</p>
<h2>Driven by values</h2>
<p>Underlying values were one of the key reasons for the introduction of voluntary climate mitigation measures. Climate action was often framed as simply the “right thing to do”. </p>
<p>My work found that more traditional economic considerations did not appear to explain the initial decision to reduce the carbon footprint of the business. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/plastic-pollution-in-nigeria-whose-job-is-it-to-clean-up-the-mess-196020">Plastic pollution in Nigeria: whose job is it to clean up the mess?</a>
</strong>
</em>
</p>
<hr>
<p>That said, many interviewees reported benefiting financially thanks to cost savings – for example, from improved energy efficiency or lower business travel and freight-related costs. These types of activities could be framed as “win-win” situations, where environmental and financial goals aligned. </p>
<p>Many of the interviewees also believed that climate action contributed to their brand image and reported positive feedback from customers or employees.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1620484806260756492"}"></div></p>
<h2>Barriers to climate-friendly action</h2>
<p>On the flip-side, most businesses also reported challenges that limited further sustainability efforts.</p>
<p>Many of those interviewed did not think there was sufficient customer willingness to pay the price premium for climate-friendly products or services in New Zealand.</p>
<p>Furthermore, interviewees felt customer expectations meant lower-carbon practices were not always possible. Most customers expected to receive their products as soon as possible, for example, making it difficult to choose slower transport modes that would have a lower carbon footprint.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/davos-three-ways-leaders-can-use-these-summits-to-create-a-more-sustainable-world-197938">Davos: three ways leaders can use these summits to create a more sustainable world</a>
</strong>
</em>
</p>
<hr>
<p>The businesses also identified specific issues around infrastructure in New Zealand as a barrier to increasing their sustainability efforts. </p>
<p>These issues included the limited availability of e-vehicle charging stations and limited rail infrastructure. Also the lack of available or affordable low carbon technology was mentioned as a barrier.</p>
<p>In addition to issues with infrastructure, small and medium-sized businesses reported struggling to have any real influence on their supply chains. </p>
<p>Finally, many of those interviewed believed that both public and private sector procurement processes failed to sufficiently take into account climate-friendly practices. </p>
<h2>A way forward?</h2>
<p>Besides reducing the carbon footprint of their own operations, many of the businesses interviewed attempted to influence their peers. They actively talked about the importance of climate action to others. This included suppliers and distributors, other businesses, industry networks and local communities. </p>
<p>Considering the looming climate crisis, the voluntary sustainability measures of these companies are laudable. These businesses have shown leadership by mitigating their own emissions and influencing others.</p>
<p>But if we want more businesses to introduce and embrace sustainability measures, we need to promote the “win-win” elements of making the change – such as efficiency and savings. </p>
<p>Small and medium sized businesses often have limited resources and knowledge of how to get started with accounting and reducing their emissions. Low-cost and easily accessible resources, <a href="https://www.tools.business.govt.nz/climate/?utm_source=sbn&utm_medium=website&utm_campaign=climateaction">emission calculators</a> and other support is important in the beginning of the climate journey. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/boys-will-be-boys-why-consumers-dont-punish-big-polluters-for-greenwashing-lies-194902">'Boys will be boys': why consumers don't punish big polluters for greenwashing lies</a>
</strong>
</em>
</p>
<hr>
<p>At national and regional level further investment in low-carbon infrastructure – such as rail and e-vehicle charging stations – would make climate friendly choices easier. </p>
<p>Large businesses and national and local governments should encourage further low-carbon transformations by requiring and using emission data in their procurement processes. </p>
<p>The interviews provided some evidence of emerging climate-friendly business ecosystems, in which firms prefer to purchase from – and work with – other businesses that are also taking climate action. The impact of these ecosystems will increase as they grow in size.</p>
<h2>Call for action</h2>
<p>Considering the emerging impact of climate change, all businesses should start considering their emissions and finding ways to reduce their footprint. </p>
<p>The challenges faced and solutions offered will differ somewhat between industries. To accelerate this transition, customers and employees can make their low-carbon preferences clear.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1394230748559945729"}"></div></p>
<p>It is unlikely that all businesses are interested in taking climate action on a voluntary basis and in the current business-as-usual mindset financial gains are prioritised over climate considerations. Therefore, it is likely that further government regulation will be required if New Zealand and other countries are to meet their zero carbon pledges. </p>
<p>Current policies and actions are <a href="https://climateactiontracker.org/global/temperatures/">not compatible</a> with the science-based climate targets. <a href="https://www.ipcc.ch/report/ar6/wg3/">The IPCC report</a> published last year highlighted the urgency of rapid and decisive action. </p>
<p>That means that a more radical transformation of our economies is needed if we are to reduce emissions to achieve the set climate targets. It is important that businesses involved in climate mitigation are actively part of that discussion and share their own practices and insights.</p><img src="https://counter.theconversation.com/content/197675/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Pii-Tuulia Nikula is co-founder and a board member of Climate Action Network for International Educators (CANIE).</span></em></p>The cost of sustainability is no longer a deal breaker for some business owners, but more can be done to encourage decarbonisation efforts.Pii-Tuulia Nikula, Principal Academic, Eastern Institute of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1819222022-05-15T10:44:48Z2022-05-15T10:44:48ZTo reduce corporate emissions, CEOs need to be bold risk takers<figure><img src="https://images.theconversation.com/files/462893/original/file-20220512-23-kmtyni.jpg?ixlib=rb-1.1.0&rect=8%2C24%2C5504%2C3644&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Carbon-emitting companies are significant contributors to the climate crisis.</span> <span class="attribution"><span class="source">(AP Photo/Charlie Riedel)</span></span></figcaption></figure><p>Climate change is widely recognized as one of the most profound challenges ever to face the human race and life on Earth. Among the different factors identified by climate scientists, greenhouse gas emissions — <a href="https://www.epa.gov/ghgemissions/global-greenhouse-gas-emissions-data">which have doubled since 1990</a> — are the main contributors to global climate change.</p>
<p>As <a href="https://www.theguardian.com/environment/2019/oct/09/revealed-20-firms-third-carbon-emissions">significant contributors to the climate crisis</a>, carbon-emitting companies are under <a href="https://www2.deloitte.com/us/en/insights/topics/strategy/impact-and-opportunities-of-climate-change-on-business.html">increasing regulatory and social pressure</a> to reduce their carbon footprints. Long-term climate change results can only be achieved by identifying why certain firms are still emitting <a href="https://www.canada.ca/en/environment-climate-change/services/climate-change/causes.html">such high amounts of greenhouse gases</a> and addressing those underlying causes.</p>
<p>As a society, we are prone to reactionary, not preventative, approaches when it comes to addressing the environmental harms done by corporations. The Canadian federal government’s proposed <a href="https://thenarwhal.ca/carbon-capture-credit-ipcc/">tax credit for investing in carbon capture, storage and removal</a> is one recent reactionary example. If we want to meet our climate goals, we need to use more preventative approaches.</p>
<figure class="align-center ">
<img alt="A man sitting at a table with technological equipment on it" src="https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462898/original/file-20220512-20-6krkt7.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The federal government is a supporter of carbon capture technology, like the foam bioreactor pictured here alongside Carlo Montemagno, the former director of the University of Alberta’s Ingenuity Lab.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Jason Franson</span></span>
</figcaption>
</figure>
<h2>Risk taking and climate change</h2>
<p>In a <a href="https://doi.org/10.1007/s10551-021-05031-8">recently published paper</a>, my colleagues and I examined whether a CEO’s risk aversion influenced corporate carbon emissions. Risk aversion is the extent to which CEOs “play it safe” when it comes to decision-making. A risk-averse CEO, for example, will not make risky investments — even if those investments have the potential to be profitable in the long term.</p>
<p>Our research confirmed our initial hypothesis that risk-averse CEOs were more likely to lead firms with higher carbon emissions. They were unwilling to take the bold steps necessary to invest in greener projects to reduce their carbon footprints. Instead, they usually made immoral, yet rational, decisions that prioritized profit over sustainability.</p>
<figure class="align-right ">
<img alt="Office building with Maple Leaf logo on the front" src="https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462896/original/file-20220512-14-wig8qc.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Maple Leaf Foods president and CEO Michael McCain committed to taking the company carbon neutral in 2019.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>From an economic perspective, it’s rational for CEOs to invest in sectors that increase carbon emissions, if those sectors make them money. However, investing in those sectors is also immoral because of the <a href="https://www.canada.ca/en/environment-climate-change/services/environmental-indicators/greenhouse-gas-emissions-drivers-impacts.html">detrimental impacts carbon emissions have</a> on the environment and people’s lives.</p>
<p>Ultimately, bold and risk-seeking CEOs are the ones responsible for the drastic changes needed to reduce corporate emissions. For example, Maple Leaf Foods president and CEO Michael McCain <a href="https://www.saltwire.com/nova-scotia/business/sylvain-charlebois-behind-maple-leaf-foods-bold-call-to-become-carbon-neutral-374081/">made the bold move take his company carbon neutral</a> in 2019. Other CEOs should follow suit.</p>
<h2>Enticing CEOs with better pay</h2>
<p>CEOs are the strategic leaders of corporations and, often, their pay is the only leverage their companies have on them. Because of this, one of the most effective ways to reduce a firm’s carbon footprint over the long run is to <a href="https://www.cnn.com/2021/08/12/perspectives/climate-carbon-emissions-ceo-pay/index.html">entice CEOs with monetary compensation</a>.</p>
<p>While there may be <a href="https://financialpost.com/investing/climate-change-the-opportunities-and-risks-for-investors">short-term repercussions for investing in carbon footprint reductions</a>, such as lower profitability, cash depletion or increased debt, this should not impact CEO pay. Instead of punishing CEOs for implementing environmentally friendly policies, they should be compensated. </p>
<p>There is a chance that corporations and investors might have to take the hit in the short-term, but <a href="https://www.forbes.com/sites/forbesbusinessdevelopmentcouncil/2021/10/04/how-sustainability-can-be-profitable-for-your-business/?sh=5484ae56592a">in the long run it will pay off</a>. Consumers share the same environment as corporations, which means that doing right by the environment results in buy-in from sustainability minded consumers — now the <a href="https://f.hubspotusercontent20.net/hubfs/4783129/An%20EcoWakening_Measuring%20awareness,%20engagement%20and%20action%20for%20nature_FINAL_MAY%202021%20(1).pdf">majority of the consumer base</a>. </p>
<figure class="align-center ">
<img alt="Man opening an envelope at a desk" src="https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/462894/original/file-20220512-21-f7jbk8.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">One of the most effective ways to reduce a firm’s carbon footprint over the long run is to entice CEOs with monetary compensation.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Similarly, CEOs should be penalized for not achieving certain carbon reduction goals. Naysayers may state that some of those <a href="https://fortune.com/2020/12/03/climate-change-nestle-ceo-net-zero-carbon-emissions/">carbon emissions are not within the control of the CEO</a> and they cannot change it overnight. While this is correct, CEOs can still take steps to lower emissions in the long run, without pay cuts and job losses.</p>
<h2>CEOs need to take risks</h2>
<p>Our findings illustrate that not only are overly risk-averse CEOs hesitant to take steps to reduce carbon emissions, but that <a href="https://www.theguardian.com/environment/2022/feb/16/oil-firms-climate-claims-are-greenwashing-study-concludes">carbon-emitting firms use greenwashing</a> to cover up their environmental harms. Greenwashing corporations have large carbon footprints but portray themselves as environmentally friendly to investors.</p>
<p>To effectively reduce carbon emissions, CEOs and their companies must take bold, risky steps, like divesting from current profitable ventures that have higher carbon emissions, <a href="https://doi.org/10.1016/j.enpol.2010.06.064">in favour of investing in green technology</a>, which may or may not succeed.</p>
<p>Policymakers at all levels of government, industry regulators and institutional investors like the <a href="https://www.otpp.com/en-ca/about-us/news-and-insights/2021/ontario-teachers-pension-plan-commits-to-net-zero-emissions-by-2050/">Ontario Teachers’ Pension Plan</a> must team up and mandate that corporations provide CEOs with financial compensation for reducing carbon footprints. CEOs will listen carefully when their bread and butter is at stake.</p><img src="https://counter.theconversation.com/content/181922/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ashrafee Tanvir Hossain receives funding from Social Sciences and Humanities Council of Canada. </span></em></p>Policymakers, industry regulators and investors must team up to mandate that corporations provide CEOs with financial compensation for reducing carbon footprints.Ashrafee Tanvir Hossain, Associate Professor, Faculty of Business Administration, Memorial University of NewfoundlandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1734762021-12-15T14:49:17Z2021-12-15T14:49:17ZIf companies want net-zero carbon offices,
they need to focus on building materials<figure><img src="https://images.theconversation.com/files/437351/original/file-20211213-19-fi1vel.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">An office building made with cross-laminated timber in Tokyo, Japan.</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/harumi-tokyo-japan-april-22-2020-1711624732">(Shutterstock)</a></span></figcaption></figure><p>In 2020, the extraction, transport and manufacturing of materials for the building sector accounted for <a href="https://www.unep.org/resources/report/2021-global-status-report-buildings-and-construction">10 per cent</a> of global greenhouse gas emissions. If buildings are to make meaningful contributions to keeping <a href="https://www.theguardian.com/environment/2021/oct/11/cop26-jargon-buster">global temperature rise to 1.5 C</a> above pre-industrial levels, limiting emissions from building materials <a href="https://www.worldgbc.org/news-media/WorldGBC-embodied-carbon-report-published">is crucial</a>. </p>
<p>To achieve this objective, engineered versions of age-old building technologies, like wood, straw or bamboo, are critical. These bio-based building materials generally demand <a href="https://doi.org/10.1038/s41467-021-26212-z">less energy</a> in manufacturing and have the ability to <a href="https://doi.org/10.1038/s41893-019-0462-4">capture and store carbon</a> through photosynthesis. </p>
<p>This is why experts in green building policy, climate science and architecture increasingly tout the benefits of transforming buildings from a giant source of carbon into a large <a href="https://www.bloomberg.com/news/articles/2021-11-11/future-buildings-could-turn-cities-into-carbon-sinks">carbon sink</a>. </p>
<p>As scholars of business sustainability and bio-products markets, we closely observe the trends in green building and construction industries, and the reactions these provoke in sectors of the economy looking to cut emissions. With corporate announcements on the rise that publicize natural materials like wood as “the new concrete” in company offices and warehouses, we believe it’s time to take a closer look at the opportunities and limitations of making building materials part of a company’s net-zero carbon pledges. </p>
<h2>The rise of net-zero carbon offices</h2>
<p>The past two decades have seen the use of green buildings as an <a href="https://hbr.org/2006/06/building-the-green-way">explicit tool to reduce the carbon footprint of companies</a>. It is now commonplace for business offices to feature the latest in engineering and building operations, from energy efficiency and on-site heating and cooling, to waste reduction and recycling.</p>
<p>Bloomberg’s European headquarters, for instance, has earned the <a href="https://www.bloomberg.com/company/press/bloomberg-most-sustainable-office-building/">title of the world’s most sustainable office building</a> for combining all these measures. From a company perspective, going <a href="https://www.ukgbc.org/ukgbc-work/net-zero-carbon-buildings-a-framework-definition/">beyond operational efficiency</a>, to also focus on building materials, is a logical step.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/4_SA6mtXTcM?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Bloomberg’s London HQ has the ‘most sustainable office building.’</span></figcaption>
</figure>
<p>Walmart offers one prominent example of the use of bio-based building materials. The retail giant is set to finish its new home office in Bentonville, Ark., by 2025. It is the <a href="https://www.bdcnetwork.com/walmarts-new-home-office-largest-mass-timber-campus-project-us">largest corporate campus project in the U.S.</a> that uses mass timber, a group of large engineered structural wooden panels that have gained market acceptance following changes in <a href="https://www.nrcan.gc.ca/our-natural-resources/forests/industry-and-trade/forest-products-applications/mass-timber-construction-canada/23428">building codes</a>, for the construction of multi-storey and tall wood buildings.</p>
<p>Structurlam, a Canadian company that delivers mass timber, opened a fully automated facility in Walmart’s home state where it procures lumber from <a href="https://www.woodbusiness.ca/structurlam-expands-to-us-with-90m-arkansas-plant-in-the-works/">forests in the region</a> to complete the project. Similarly, <a href="https://sfyimby.com/2021/11/facade-rising-on-googles-first-sunnyvale-mass-timber-office-building-at-1265-borregas-avenue.html">Google</a> will soon finish its first mass timber office complex.</p>
<p><a href="https://www.archpaper.com/2020/02/wrns-studio-designs-largest-timber-project-in-north-america-microsoft/">Microsoft</a> already opened a building on its Silicon Valley campus that uses over 2,100 tonnes of cross-laminated timber (CLT), a wood panel system that is projected to reach a global market size of more than <a href="https://www.globenewswire.com/en/news-release/2021/06/24/2252306/0/en/Cross-Laminated-Timber-Market-to-reach-USD-3-562-6-Million-by-2027-Report-by-Market-Research-Future-MRFR.html">$3 billion</a> within the next five years. </p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1128403704837656576"}"></div></p>
<p>Some European firms like the German retail chain Alnatura are using <a href="https://www.detail-online.com/article/a-loam-structure-on-a-large-scale-alnatura-office-building-in-darmstadt-34849/">prefabricated loam</a> in their headquarters, and automaker BMW is about to open an electric vehicle showroom in California that has flooring made from <a href="https://www.hempbuildmag.com/home/us-hemp-buildingsummit">hemp wood</a>.</p>
<h2>Green construction meets prefab</h2>
<p>What unites these technologies is a potential to combine climate benefits with the <a href="https://www.bcg.com/publications/2019/offsite-revolution-construction">shift</a> towards off-site construction and prefabrication, where the planning, design, manufacturing and partial assembly of building elements occurs at a location other than the final building site. </p>
<p>Many of the manufacturers that offer buildings made from bio-based materials are, in fact, a new class of <a href="https://tracxn.com/d/trending-themes/Startups-in-Modular-Housing">technology start-ups</a> that are <a href="https://www.wsj.com/articles/warren-buffett-to-offer-a-new-spin-on-modular-construction-11621339201">backed by large investors</a>. </p>
<p>Prefabrication helps optimize material use and model adaptive structures that can be deconstructed, modified and reassembled, thereby reducing <a href="https://doi.org/10.1016/j.clet.2021.100239">the need</a> for virgin resources. </p>
<p>This provides companies with immense flexibility in planning for the long-term use of their office buildings, sales stores, warehouses and factories, without having to think about demolishing a structure.</p>
<h2>Limitations of bio-based building material</h2>
<p>Bio-based building materials have their limitations. Harnessing their environmental potential requires that they are sourced from sustainable supply chains. From a climate perspective, building wooden office towers with timber <a href="https://iopscience.iop.org/article/10.1088/1748-9326/abc5e6">can be counterproductive</a> if large amounts of carbon dioxide are emitted in the logging, transport and manufacture of wood products.</p>
<figure class="align-center ">
<img alt="A harvester transporting logged woof from a forest area." src="https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=502&fit=crop&dpr=1 600w, https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=502&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=502&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=630&fit=crop&dpr=1 754w, https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=630&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/437577/original/file-20211214-19-2qun6a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=630&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Logging, transporting and manufacturing wooden products could give rise to massive carbon dioxide emissions, making the process of creating wooden buildings counterproductive.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>A company may also ask <a href="https://theconversation.com/we-cant-afford-to-just-build-greener-we-must-build-less-170570">whether new buildings are needed</a> in the first place. After all, the lowest carbon footprint is that of a building that is never constructed. </p>
<p>Companies may consider using bio-based building materials in retrofitting and remodelling existing offices or factories instead of building new ones. Serial retrofit initiatives, of the kind <a href="https://energiesprong.org/about/">spearheaded by governments in Europe</a> and <a href="https://canada.constructconnect.com/dcn/news/projects/2021/07/missing-sauce-for-retrofit-market-is-innovation-oriented-approach-report">suggested for Canada</a>, already funnel capital into the scale-up of industries for prefabricated building technologies, like facades made from <a href="https://tradewithestonia.com/news/berlin-solutions-from-estonia-for-serial-renovation-with-wood/">wood</a> and <a href="https://www.architectsjournal.co.uk/buildings/old-into-new-recycled-bricks-form-facade-of-copenhagen-housing-project">recycled materials</a>.</p>
<p>Ultimately, as with all corporate environmental strategies, simply introducing bio-based products and materials to the company, be it in office buildings or elsewhere, <a href="https://www.greenbiz.com/article/sustainability-teams-need-forestry-and-natural-resource-experts">without having resources in place</a> to monitor their environmental efficacy (for example, in procurement, installation and use) can backfire.</p>
<h2>The future of bio-based building materials</h2>
<p>Building materials can play a key role, when considered as a part of a broader strategy in companies’ efforts to reach net-zero emissions. Over <a href="https://www.gfanzero.com/press/amount-of-finance-committed-to-achieving-1-5c-now-at-scale-needed-to-deliver-the-transition/">450 firms around the world have already pledged</a> to finance the transition to net-zero emissions by 2050. </p>
<p>The issue of materials in construction is gaining attention at the global scale as well. With <a href="https://buildingtocop.org/2021/11/19/building-ambition-high-level-diplomacy-at-cop26-and-the-built-environment/">more than 130 events</a> focused on the built environment at the COP26 summit in November, buildings <a href="https://theconversation.com/cop26-experts-react-to-the-un-climate-summit-and-glasgow-pact-171753">received more attention than ever</a>. </p>
<p>That being said, bio-based products and materials will require even more attention going forward. A likely bottleneck in assessing when and how to use bio-based building materials, will be just how quickly industries normalize the use of life cycle costing tools, such as <a href="https://www.wbcsd.org/Programs/Cities-and-Mobility/Sustainable-Cities/Transforming-the-Built-Environment/Decarbonization/news/Construction-industry-needs-whole-life-carbon-understanding-to-hit-net-zero-new-report-shows">whole life carbon</a> accounting. </p>
<p>Progress on the adoption of these tools has been slow, but the recent signing of <a href="https://www.architectmagazine.com/practice/at-cop26-44-businesses-sign-net-zero-carbon-buildings-commitment_o">whole life carbon requirements</a> by 44 large companies offers hope that the time for net-zero carbon buildings may indeed be ripe.</p><img src="https://counter.theconversation.com/content/173476/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Meike Siegner is a founding committee member of the International Association for Mass Timber Construction, where she provides research expertise in areas pertaining to environmental social governance (ESG) and forest sector sustainability. She does not work for, consult, own shares in or receive funding from any company that would benefit from this article.
</span></em></p><p class="fine-print"><em><span>Cory Searcy receives funding from the Natural Sciences and Engineering Research Council of Canada (NSERC). He does not work for, consult, own shares in or receive funding from any company that would benefit from this article, and has disclosed no relevant affiliations beyond his academic appointment.</span></em></p>As more companies feature wood and other bio-based products in their offices, what are opportunities and limitations of making corporate net-zero carbon pledges about building materials?Meike Siegner, Post-Doctoral Research Fellow, Department of Mechanical and Industrial Engineering, Toronto Metropolitan UniversityCory Searcy, Professor, Mechanical and Industrial Engineering, & Vice-Provost and Dean of Graduate Studies, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1717322021-12-06T02:02:08Z2021-12-06T02:02:08ZThe crisis of a career in culture: why sustaining a livelihood in the arts is so hard<figure><img src="https://images.theconversation.com/files/434363/original/file-20211129-21-1qxmant.jpg?ixlib=rb-1.1.0&rect=6%2C6%2C2038%2C1355&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">La Boite's artists company is embedding Queensland creatives in the theatre company for 18 months.</span> <span class="attribution"><span class="source">Markus Ravik</span></span></figcaption></figure><p>In the arts in Australia, <a href="https://cultureunbound.ep.liu.se/article/view/2199">precarious employment</a>, <a href="https://journals.sagepub.com/doi/full/10.1177/1360780419895291">unpaid work</a> and <a href="https://www.jstor.org/stable/41064887?seq=2#metadata_info_tab_contents">short-lived careers</a> are the norm.</p>
<p>Many artists and arts workers have “<a href="https://journals.sagepub.com/doi/10.1177/0950017004045551">portfolio careers</a>”, piecing together a mixture of jobs while competing for limited funding and career opportunities in the arts.</p>
<p>COVID-19 shone a glaring spotlight on <a href="https://www.tandfonline.com/doi/full/10.1080/09548963.2020.1770577">this precarity</a>, exposing the <a href="https://apo.org.au/node/313299">lack of permanent jobs</a> in the sector. Some 81% of artists work as <a href="https://australiacouncil.gov.au/advocacy-and-research/making-art-work/">freelancers or on a self-employed basis</a>, without access to sick leave or other entitlements many Australians take for granted.</p>
<p>But the unsustainability of creative careers was already well known to <a href="https://www.eurekastreet.com.au/article/is-it-too-hard-to-have-a-career-in-the-arts">artists</a>, <a href="https://journals.sagepub.com/doi/10.1177/1035304613500601">academics</a> and <a href="https://australiacouncil.gov.au/wp-content/uploads/2021/07/do_you_really_expect_to_get_pa-54325a3748d81.pdf">governments</a>.</p>
<h2>Career sustainability</h2>
<p>In 2019, I set out to understand what “<a href="https://www.sciencedirect.com/science/article/pii/S0304422X21000644?dgcid=author">sustainability</a>” means to Australia’s arts and culture sector. I analysed 564 annual reports published between 2010 and 2018 and over 2,700 submissions in the 2014 and 2015 <a href="https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Legal_and_Constitutional_Affairs/Arts_Funding">Senate Inquiry</a> into arts funding. I also interviewed 33 artists and arts managers representing all parts of the performing arts sector.</p>
<p>One interviewee defined a “sustainable career” as:</p>
<blockquote>
<p>one in which you’re employed in your practice to the extent that you can live. For a lot of artists that’s just about a roof over their head and feeding themselves. […] I think we should be able to have mortgages and raise kids […] I look at some of the singers that I work with and that’s really hard for them to do.</p>
</blockquote>
<p>Even artists who are successful in multiple facets of their career – including some of our most celebrated theatre directors – can feel like these careers are not sustainable.</p>
<p>One contributor to the Senate Inquiry observed:</p>
<blockquote>
<p>Artists can have successful exhibitions, be collected by national and international institutions, and still not make a sustainable living.</p>
</blockquote>
<p>Interestingly, I observed significant differences in how different arts companies wrote about sustainability in their annual reports. Career sustainability was mentioned more often by theatre companies than other art forms. Opera and circus tied in second place. While comparable data is not available for Australia, findings from the UK suggest a <a href="https://www.standard.co.uk/culture/theatre/freelancers-make-theatre-work-interview-coronavirus-shutdown-a4476396.html">high percentage of freelancers working in theatre</a> might explain this difference. </p>
<h2>Inherent demands</h2>
<p>Working in the performing arts involves both physical demands and mental strain. Artists described to me how they have to maintain “the body of an elite athlete” and how the “obsessive requirement to be excellent all the time” leads to “consistent performance-related anxiety.” </p>
<p>The inevitable long hours and extensive travel also make this a family-unfriendly career. Artists explained the expectation they work outside of ordinary business hours, the need to “travel where the work is” and feeling like they needed to leave the arts if they wanted to raise a family. </p>
<p>These pressures arise from both the limited opportunities and <a href="https://theconversation.com/cut-throat-competition-corporate-speak-and-dark-ironies-two-new-five-year-arts-plans-122943">intense competition</a> within the arts and culture sector, which make many people feel they have to accept any opportunity – and work under any conditions – <a href="https://www.artshub.com.au/news/career-advice/why-we-are-burning-out-in-the-arts-249582-2350136/">in order not to be left behind</a>.</p>
<p>In my research, I found all of these issues became compounded when measures of diversity were considered. </p>
<p>Gender inequity presents one barrier to career sustainability. Interviewees also told me First Nations artists, deaf and disabled artists, regional and remote artists, and artists from lower socio-economic backgrounds face even greater challenges. <a href="https://www.australiacouncil.gov.au/research/wp-content/uploads/2021/06/Towards-Equity-Report.pdf">Recent research by the Australia Council for the Arts</a> reveals the same is true for culturally and linguistically diverse artists.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-problem-with-arts-funding-in-australia-goes-right-back-to-its-inception-138834">The problem with arts funding in Australia goes right back to its inception</a>
</strong>
</em>
</p>
<hr>
<h2>Financial constraints</h2>
<p>In the interviews taken as part of my research, I repeatedly found financial constraints underpin three problems causing career unsustainability in the arts. </p>
<p><strong>1. Low incomes:</strong></p>
<blockquote>
<p>being brutal about it […] I have as good a freelance load as anyone probably going around Australia […] and my wife needs to be working full-time for us to be financially sustainable.</p>
</blockquote>
<p><strong>2. Unpaid work:</strong> </p>
<blockquote>
<p>you really only get paid if you’re performing and if you’re lucky enough, you might get paid for the rehearsals beforehand</p>
</blockquote>
<p><strong>3. Excessive workloads:</strong> </p>
<blockquote>
<p>the level of burnout in this industry is pretty shocking […] we’re all overworked and constantly tired.</p>
</blockquote>
<p>The obvious solution is more abundant and ongoing <a href="https://theconversation.com/the-problem-with-arts-funding-in-australia-goes-right-back-to-its-inception-138834">public</a> and <a href="https://www.theage.com.au/culture/art-and-design/the-donor-dilemma-philanthropy-and-the-arts-20191204-p53gnt.html">philanthropic</a> support. As one interviewee explained: </p>
<blockquote>
<p>Increased government funding for the arts is […] the first and most important step in the career sustainability of artists because it flows through everything else.</p>
</blockquote>
<p>But other creative solutions are also needed to make artistic careers more sustainable. These include: increasing <a href="http://diversityarts.org.au/app/uploads/Shifting-the-Balance-DARTS-small.pdf">diversity within arts sector leadership</a>; teaching student artists to develop an “<a href="https://journals.sagepub.com/doi/full/10.1177/1474022212465725">adaptive entrepreneurial identity</a>”; and <a href="https://journals.sagepub.com/doi/full/10.1177/0730888413505229">fostering community and collective support</a> among artists and arts managers. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/nz-budget-2021-we-need-the-arts-to-live-but-artists-need-to-earn-a-living-160761">NZ Budget 2021: we need the arts to live, but artists need to earn a living</a>
</strong>
</em>
</p>
<hr>
<h2>Moving towards ‘decent work’ for all</h2>
<p>The <a href="https://sdgs.un.org/goals/goal8">United Nations’ Sustainable Development Goal 8</a> calls for “full and productive employment and decent work for all.”</p>
<p>In 2019, the <a href="https://www.ilo.org/sector/Resources/publications/WCMS_661953/lang--en/index.htm">International Labour Organization</a> began exploring what “decent work” means for arts and culture. Australian politicians, policymakers, and sector leaders need to do the same.</p>
<p>These three steps will help.</p>
<p><strong>1. Recognise <a href="https://www.artshub.com.au/news/news/labor-articulates-its-guiding-arts-principles-2513356/">artists are workers</a>.</strong> </p>
<p>This would mean <a href="https://autonomy.work/wp-content/uploads/2021/11/artists-as-workers-final2.pdf">paying serious attention to the conditions of contemporary artistic labour</a>, which would pave the way to addressing both precarity and structural inequalities within the arts and culture sector.</p>
<p><strong>2. Accept <a href="https://journals.sagepub.com/doi/full/10.1177/2158244016649580">decent work is a human right</a>.</strong> </p>
<p>This would mean acknowledging artists and arts managers (like all people) are entitled to gain a living from their work, then developing policies to prioritise <a href="https://www.ilo.org/newyork/speeches-and-statements/WCMS_229015/lang--en/index.htm">the creation of good jobs</a> within the arts and culture sector.</p>
<p><strong>3. Implement <a href="https://www.ilo.org/global/topics/decent-work/lang--en/index.htm">decent work</a> for artists.</strong> </p>
<p>For artists, this means rejecting any expectation creatives might “<a href="https://www.theguardian.com/education/2018/jul/09/creative-careers-is-it-ever-worth-working-for-exposure">work for exposure</a>.” For arts companies, it means <a href="https://www.artshub.com.au/news/news/artkeeper-program-puts-artists-on-payroll-2515622/">putting artists on payroll</a>, embedding <a href="https://australiainstitute.org.au/wp-content/uploads/2021/07/Creativity_in_Crisis-_Rebooting_Australias_Arts___Entertainment_Sector_-_FINAL_-_26_July.pdf">fair pay and conditions</a> within all arts organisations, and supporting <a href="https://www.artshub.com.au/news/opinions-analysis/why-the-arts-sector-must-commit-to-real-cultural-change-257376-2362321/">cultural change across the sector</a>.</p><img src="https://counter.theconversation.com/content/171732/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kate Power receives funding from The Advance Queensland Industry Research Fellowships program.</span></em></p>Low incomes, unpaid work and excessive workloads: Australian artists are facing a crisis.Katherine (Kate) Power, Lecturer in Management, School of Business, The University of QueenslandLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1665392021-10-12T12:08:08Z2021-10-12T12:08:08ZHow the climate crisis is transforming the meaning of ‘sustainability’ in business<figure><img src="https://images.theconversation.com/files/425776/original/file-20211011-15-uby0hp.jpg?ixlib=rb-1.1.0&rect=443%2C84%2C1645%2C1048&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Businesses tend to value profit over people and planet. Climate change is forcing them to evolve.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/illustration/business-profit-and-human-rights-royalty-free-illustration/1189915921">elenabs via Getty Images</a></span></figcaption></figure><p>In his <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter">2021 letter to CEOs</a>, Larry Fink, the CEO and chairman of BlackRock, the world’s largest investment manager, wrote: “No issue ranks higher than climate change on our clients’ lists of priorities.”</p>
<p>His comment reflected a growing unease with how the climate crisis is already disrupting businesses.</p>
<p>Companies’ concerns about climate change have typically been focused on their <a href="https://www2.deloitte.com/global/en/pages/risk/articles/2021-climate-check-business-views-on-environmental-sustainability.html">operational, financial and reputational risks</a>, the latter associated with the <a href="https://www2.deloitte.com/content/dam/Deloitte/global/Documents/2021-deloitte-global-millennial-survey-report.pdf">growing importance of the issue among young people</a>. Now, climate change is calling into question the traditional paradigm of corporate sustainability and how companies address their impacts on society and the planet overall.</p>
<p>As a <a href="https://scholar.google.com/citations?user=sS3D_o0AAAAJ&hl=en">professor working in strategic design, innovation, business models and sustainability</a>, I’ve been tracking how climate change is transforming the meaning of “sustainability” in business, and I’m starting to see early signs of change.</p>
<h2>The sustainability gap</h2>
<p>Over the past few decades, many companies came to embrace sustainability. It became the corporate norm to seek ways to reduce a company’s negative impacts on society and the planet and operate more responsibly.</p>
<p>Sustainability reporting is probably the clearest evidence of this trend. In 2020, 96% of the world’s largest companies by revenue, known as the G250, <a href="https://assets.kpmg/content/dam/kpmg/uk/pdf/2020/12/the-time-has-come-kpmg-survey-of-sustainability-reporting-2020.pdf">released details about their sustainability efforts</a>. But that rise in sustainability reporting <a href="https://hbr.org/2021/05/overselling-sustainability-reporting">was not accompanied by actual improvement</a> in key environmental and social issues. Global greenhouse gas emissions <a href="https://www.co2.earth/">continued to grow</a>, as did the <a href="https://www.epi.org/publication/ceo-compensation-surged-14-in-2019-to-21-3-million-ceos-now-earn-320-times-as-much-as-a-typical-worker/">pay gap between CEOs and employees</a>, for example.</p>
<p>As I suggest in my 2021 book, “<a href="https://www.palgrave.com/us/book/9783030773175">Rethinking Corporate Sustainability in the Era of Climate Crisis – A Strategic Design Approach</a>,” this gap between companies’ growing attention to sustainability and the minimal change produced is driven by their approach, which I call “sustainability-as-usual.” </p>
<p>Sustainability-as-usual is the slow and voluntary adoption of sustainability in business, where companies commit to changes they feel comfortable making. It’s not necessarily the same as <a href="https://www.ipcc.ch/report/ar6/wg1/">what science shows is needed</a> to slow climate change, or what the <a href="https://sdgs.un.org/goals">United Nations recommends</a> for an equitable society. Businesses’ response to both will be drawing global attention in November when world leaders gather for the annual <a href="https://theconversation.com/what-is-cop26-heres-how-global-climate-negotiations-work-and-whats-expected-from-the-glasgow-summit-169434">U.N. climate conference</a>. </p>
<h2>The problem with sustainability-as-usual</h2>
<p>Companies have taken this incremental approach because while they have paid more attention to social and environmental issues, their <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3899421">first priority has remained maximizing profit for their shareholders</a>.</p>
<p>Take, for example, companies’ focus on improving <a href="https://news.pg.com/news-releases/news-details/2020/Crest-Oral-B-and-Blend-a-med-Announce-the-Launch-of-Their-First-Ever-Recyclable-HDPE-Toothpaste-Tubes-in-North-America-and-Europe/default.aspx">the recyclability of single-use products</a> instead of considering new business models that could have <a href="https://www.pbl.nl/sites/default/files/downloads/pbl-2016-circular-economy-measuring-innovation-in-product-chains-2544.pdf">greater positive impact</a>, such as shifting to <a href="https://zerowasteeurope.eu/wp-content/uploads/2020/12/zwe_reloop_report_reusable-vs-single-use-packaging-a-review-of-environmental-impact_en.pdf.pdf_v2.pdf">reusable packaging</a> or eliminating it altogether.</p>
<p>One notable example is <a href="https://ir.kraftheinzcompany.com/news-releases/news-release-details/heinz-tomato-ketchup-introduces-first-100-recyclable-cap">Heinz</a>. The ketchup maker announced a cap for its ketchup bottle that is 100% recyclable. It was the outcome of $1.2 million invested and 185,000 hours of work over eight years, according to the company.</p>
<h2>Climate change requires a new approach</h2>
<p>While companies appear to grasp the magnitude of the climate crisis, they have been trying to address it mainly in a sustainability-as-usual fashion – one ketchup bottle cap at a time.</p>
<p>Consider emissions reductions. Companies have been slow to commit to reducing their emissions to zero no later than mid-century, a target that the <a href="https://www.ipcc.ch/sr15/">Intergovernmental Panel on Climate Change</a> considers necessary to limit global warming to 1.5 degrees Celsius – roughly 2.7 degrees Fahrenheit – and avoid the worst effects of climate change. Only <a href="https://racetozero.unfccc.int/15-sectors-of-global-economy-shift-the-dial-on-climate/">about one-fifth</a> of the major companies have 2030 goals that are in line with reaching net-zero goals by 2050 at the latest.</p>
<p>The companies that do set <a href="https://theconversation.com/why-corporate-climate-pledges-of-net-zero-emissions-should-trigger-a-healthy-dose-of-skepticism-156386">net-zero targets</a> often do so in ways that <a href="https://ca1-eci.edcdn.com/reports/ECIU-Oxford_Taking_Stock.pdf">lack the necessary robustness</a> and allow them to <a href="https://www.climatechangenews.com/2021/05/18/shells-net-zero-plan-will-judged-science-not-spin/">continue emitting greenhouse gases</a>, as <a href="https://www.corporateaccountability.org/wp-content/uploads/2021/06/The-Big-Con_EN.pdf">recent reports</a> point out. One concern, for example, is their <a href="https://globalecoguy.org/the-world-needs-better-climate-pledges-4c3d969790d3">dependence on carbon offsets</a>, which allow them to pay for potential carbon reductions elsewhere without making any real changes in their own value chain. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-corporate-climate-pledges-of-net-zero-emissions-should-trigger-a-healthy-dose-of-skepticism-156386">Why corporate climate pledges of ‘net-zero’ emissions should trigger a healthy dose of skepticism</a>
</strong>
</em>
</p>
<hr>
<h2>How to transform business sustainability</h2>
<p>Companies have tried to rebrand their efforts in ways that sound more sophisticated, moving from terms like “corporate social responsibility (CSR)” to “environmental, social and governance (ESG),” “purposeful companies” and “carbon-neutral products.” </p>
<p>But when companies don’t put actions with their words, they increasingly meet resistance from <a href="https://www.sierraclub.org/sierra/many-banks-committing-climate-goals-are-engaging-greenwashing-banking-on-climate-chaos">activists</a>, <a href="https://www.climatechangenews.com/2021/05/18/shells-net-zero-plan-will-judged-science-not-spin/">investors</a> and <a href="https://gizmodo.com/netherlands-officials-tell-shell-to-stop-its-ads-greenw-1847613583">governmental</a> and <a href="https://www.bloomberg.com/news/articles/2021-09-01/regulatory-scrutiny-of-esg-greenwashing-is-intensifying">regulatory</a> bodies. One example is <a href="https://popular.info/p/six-corporations-that-talk-green">the growing scrutiny of companies</a> that promote themselves as climate leaders but at the same time donate money to politicians opposing climate policies. Public relations and advertising employees called out their own industry in <a href="https://cleancreatives.org/learn">a report exposing 90 agencies working with fossil fuel companies</a>.</p>
<p>Business is at a strategic inflection point, which <a href="https://www.penguinrandomhouse.com/books/72469/only-the-paranoid-survive-by-andrew-grove/">Andy Grove</a>, the former CEO of computer chip-maker Intel, described as “a time in the life of a business when its fundamentals are about to change.” </p>
<p>This transformation could evolve in different ways, but as I suggest in my book, fighting climate change effectively requires a new mindset that shifts the relationships between profit maximization and sustainability to prioritize sustainability over profit. </p>
<h2>Early signs of evolution</h2>
<p>There are early signs of evolution, both within companies and from the forces that shape the environment in which companies operate.</p>
<p>One example is how other industries are reassessing their relationship with fossil fuel companies. Some newspapers, including The Guardian, have <a href="https://www.theguardian.com/media/2020/jan/29/guardian-to-ban-advertising-from-fossil-fuel-firms-climate-crisis">banned advertising from fossil fuel companies</a>. A growing number of <a href="https://www.businessinsurance.com/article/20210312/NEWS06/912340421/Zurich-Insurance-stops-insuring-thermal-coal">insurance companies</a> and <a href="https://www.reuters.com/business/sustainable-business/bank-china-stop-financing-new-coal-mining-power-projects-overseas-q4-2021-09-24/">banks</a> have stopped financing coal projects. The French bank Crédit Mutuel said it saw the impact of climate change on its customers and <a href="https://www.cnbc.com/2021/04/22/which-banks-are-increasing-decreasing-fossil-fuel-financing-.html">was willing to lose money “in the short term”</a> to respond to the risk. </p>
<p>Another example is changes in companies’ relationships with suppliers – for example, the business software company Salesforce added <a href="https://www.salesforce.com/content/dam/web/en_us/www/documents/legal/sustainability-exhibit.pdf">a sustainability clause</a> to its contracts requiring suppliers to set carbon reduction goals. </p>
<p>And investors are moving for the first time from just <a href="https://www.greenbiz.com/article/investors-high-impact-companies-set-your-science-based-climate-goals">urging companies to take bolder action on climate change</a> to using sticks. Fidelity announced that it would <a href="https://www.ft.com/content/bef5cf2f-cee3-4380-b14c-47a06a621b6e">vote against corporate directors</a> whose companies don’t disclose their emissions or have a policy on climate change.</p>
<p>Add to these bright spots changes in regulation and policy worldwide that aim to put in place <a href="https://www.vice.com/en/article/z3vavw/half-the-country-is-now-considering-right-to-repair-laws">key sustainability principles</a> and push to <a href="https://apnews.com/article/europe-business-government-and-politics-climate-environment-and-nature-3df2a86ea7491cf2fdff98960cf30bb3">cut emissions at a faster pace</a>, plus the changing expectations of young job seekers when it comes to environmental and social issues, such as <a href="https://www.washingtonpost.com/business/2021/02/18/millennial-genz-workplace-diversity-equity-inclusion/">inclusion and diversity</a>, and you can start to see how the end of sustainability-as-usual may be closer than many people think. Due to climate change, the question is more “when” than “if” it will happen.</p><img src="https://counter.theconversation.com/content/166539/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Raz Godelnik does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Publicly, companies have been paying more attention to social and environmental issues, but their priority remains profit. Climate change is forcing an evolution, a business strategy expert writes.Raz Godelnik, Assistant Professor of Strategic Design & Management, The New SchoolLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1599832021-05-26T19:40:41Z2021-05-26T19:40:41ZEngine No. 1’s big win over Exxon shows activist hedge funds joining fight against climate change<figure><img src="https://images.theconversation.com/files/402897/original/file-20210526-15-ashpln.jpeg?ixlib=rb-1.1.0&rect=55%2C14%2C2404%2C1611&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Engine No. 1 wants Exxon to focus less on fossil fuels. </span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/YellowstoneOilSpill/a538d2e6d2ab408192caf4be3b868ccb/photo?Query=Exxon&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=963&currentItemNo=113">AP Photo/Matthew Brown</a></span></figcaption></figure><p>One of the <a href="https://www.reuters.com/article/us-exxon-mobil-proxy-activist-idCAKBN2C22SO">most expensive Wall Street shareholder battles</a> on record could signal a big shift in how hedge funds and other investors view sustainability. </p>
<p>Exxon Mobil Corp. has been fending off a so-called <a href="https://www.investopedia.com/terms/p/proxyfight.asp">proxy fight</a> from a hedge fund known as Engine No. 1, which <a href="https://reenergizexom.com/wp-content/uploads/2021/05/Investor-Presentation-Summary-May-2021.pdf">blames the energy giant’s</a> <a href="https://www.nytimes.com/2021/02/02/business/exxon-mobil-lost-22-billion-in-2020-its-worst-performance-in-four-decades.html">poor performance</a> in recent years on its failure to transition to a “decarbonizing world.” In a May 26, 2021 vote, Exxon shareholders <a href="https://www.cnbc.com/2021/05/26/engine-no-1-gets-at-least-2-candidates-elected-to-exxons-board-in-win-for-the-activist.html">approved at least two of the four board members</a> Engine No. 1 nominated, dealing a major blow to the oil company. The vote is ongoing, and more of the hedge fund’s nominees may also soon be appointed. </p>
<p>While its focus has been on shareholder value, Engine No. 1 says it was also doing this to <a href="https://www.washingtonpost.com/climate-environment/2021/05/21/exxon-faces-shareholder-revolt-over-climate-change/">save the planet</a> from the ravages of climate change. It has been <a href="https://www.wsj.com/articles/exxon-vs-activists-battle-over-future-of-oil-and-gas-reaches-showdown-11621950967">pushing for a commitment</a> from Exxon to carbon neutrality by 2050. </p>
<p>As <a href="https://scholar.google.com/citations?user=U96ThnoAAAAJ&hl=en&oi=ao">business sustainability scholars</a>, <a href="https://scholar.google.com/citations?user=37AiB_kAAAAJ&hl=en&oi=ao">we can’t</a> recall another time that an energy company’s shareholder – particularly a hedge fund – has been so effective and forceful in showing how a company’s failure to take on climate change has eroded shareholder value. That’s why we believe this vote marks a turning point for investors, who are well placed to nudge companies toward more sustainable business practices.</p>
<h2>Hedge funds to the rescue?</h2>
<p>Climate strategies aimed at saving the planet are an odd play for a hedge fund. Such investment firms are better known for getting companies to stop investing in this type of thing so they can collect quick profits. </p>
<p>Recent research undertaken by one of us found that activist hedge funds <a href="http://www.doi.org/10.5465/amj.2019.0238">tend to target companies</a> that spend more of their resources on these types of sustainability initiatives. That is, they buy shares of a company to gain influence and then convince other investors to join them in demanding efficiency enhancements and cost-cutting protocols to return more cash to shareholders. A follow-up study found that companies <a href="https://doi.org/10.1002/smj.3126">cut spending</a> on sustainability initiatives within five years of a hedge fund getting involved. </p>
<p>In other words, hedge funds focus on short-term returns – not long-term concerns such as climate change or even a company’s own future profitability. And this is because of how hedge funds fundamentally operate. </p>
<p>Hedge funds usually charge their investors – often wealthy individuals and institutional investors – <a href="http://dx.doi.org/10.1561/109.00000003">a 1% to 2% management fee in addition to a 20% cut of any gain in their investments</a>. In return, these clients <a href="http://dx.doi.org/10.1561/109.00000003">expect quick and substantial returns that substantially outperform the market</a>. </p>
<h2>Engine No. 1, a new type of hedge fund?</h2>
<p>This is what makes Engine No. 1’s fight so interesting. </p>
<p>It began in early December 2020, shortly after tech investor Chris James launched Engine No. 1 with two other hedge fund industry veterans. The firm said it was “<a href="https://engine1.com/">purpose-built to create long-term value</a> by harnessing the power of capitalism.”</p>
<p>Engine No. 1’s first order of business was to pick a fight with one of the world’s largest energy companies, Exxon Mobil. It <a href="https://www.reuters.com/article/exxon-shareholders-engine-no-1/exxon-faces-proxy-fight-launched-by-new-activist-firm-engine-no-1-idUSKBN28H1IO">sent a letter to the company’s board</a> on Dec. 7, 2020, urging it to focus on clean energy and shake up its board of directors – a bold move for an upstart investment firm with just a 0.02% stake in the <a href="https://finance.yahoo.com/quote/XOM/">nearly US$250 billion company</a>. </p>
<p>But Exxon was an obvious target for this strategy. It <a href="https://www.bloomberg.com/news/articles/2021-03-24/u-s-oil-companies-lag-far-behind-greener-europe-rivals-green-insight">has been a laggard</a> on developing <a href="https://theconversation.com/oil-companies-are-thinking-about-a-low-carbon-future-but-arent-making-big-investments-in-it-yet-122365">low-carbon fuels</a> for years and <a href="https://www.scientificamerican.com/article/exxon-knew-about-climate-change-almost-40-years-ago/">has promoted misinformation</a> about the human impact on climate change for decades. </p>
<p>After Exxon refused to commit to a transition to carbon neutrality, Engine No. 1 <a href="https://reenergizexom.com/wp-content/uploads/2021/03/Engine-No.-1-3.15-Definitive-Proxy-Statement-XOM.pdf">formally launched</a> its proxy battle in March to force a change of strategy at the company, which traces its history back to 1870, when <a href="https://exxonenergy.com.theyesmen.org/html/ourcoAboutHistory.htm">John D. Rockefeller founded the Standard Oil Company</a>. </p>
<p>A proxy battle is when a group of shareholders tries to garner enough support from other investors – in the form of votes – to <a href="https://www.investopedia.com/terms/p/proxyfight.asp">force a company to do what it wants</a>, whether it’s to cut costs or change strategy.</p>
<p>Exxon said it <a href="https://www.reuters.com/article/us-exxon-mobil-proxy-activist-idCAKBN2C22SO">expected to spend $35 million</a> more than its usual costs to deal with the proxy battle; unfortunately, by increasing Exxon’s expenses, these are costs that are actually footed by investors. Engine No. 1 put its expenses at $30 million. The total cost, by some estimates, has exceeded $100 million. </p>
<p>Engine No. 1 was hoping to replace a third of the <a href="https://corporate.exxonmobil.com/About-us/Who-we-are/Corporate-governance/ExxonMobil-board-of-directors#ExxonMobilCorporationBoardofDirectors">oil giant’s board of directors</a> with four individuals who have more clean energy experience. The hedge fund was also seeking corporate governance reforms, a review of Exxon’s climate action plan – and its impact on the company’s finances – and greater public disclosure of its environmental and lobbying activities. </p>
<p>Even before the vote, the campaign was already changing the way Exxon does business. In the past few months, Exxon has proposed a <a href="https://www.reuters.com/business/sustainable-business/exxon-proposes-massive-carbon-capture-storage-project-houston-2021-04-19/">$100 billion carbon capture project in Houston</a> and <a href="https://corporate.exxonmobil.com/News/Newsroom/News-releases/2021/0201_ExxonMobil-Low-Carbon-Solutions-to-commercialize-emission-reduction-technology">committed $3 billion to low-emission technologies through a new venture</a>. </p>
<p>Though Exxon denies any of these investments were due to pressure from Engine No. 1, it’s hard to believe the hedge fund wasn’t a catalyst. These are some of the <a href="https://corporate.exxonmobil.com/Sustainability/Sustainability-Report">biggest investments Exxon has proposed in sustainability in recent years</a>, and they came right after pressure from the hedge fund – as well as the election of a new U.S. president <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/">who has made fighting climate change a priority</a>.</p>
<p>Another likely reason for the new initiatives is that Engine No. 1’s campaign was enlisting significant support from other major Exxon investors, such as the California Public Employees’ Retirement System and the New York State Common Retirement Fund, which laid <a href="https://www.reuters.com/business/energy/calpers-back-activists-four-director-nominees-exxon-board-fight-2021-04-26/">additional pressure on Exxon to do something about its lagging sustainability strategy</a>. </p>
<p>So despite its pushback against Engine No. 1 and its proposed climate plan, clearly Exxon Mobil’s attention to its sustainability plans has been piqued. </p>
<h2>What it all means</h2>
<p>So why is Engine No. 1 really doing this – and do its motives matter? </p>
<p>While the firm is pushing hard for more investment in sustainability and clean energy, the focus in its statements on what’s driving this fight is mostly about shareholder value. And <a href="https://reenergizexom.com/wp-content/uploads/2021/03/Engine-No.-1-3.15-Definitive-Proxy-Statement-XOM.pdf">many of its demands</a>, such as better long-term capital allocation strategy, a plan to enhance shareholder value and a “misaligned” management compensation, are straight out of a <a href="https://corpgov.law.harvard.edu/2019/01/25/dealing-with-activist-hedge-funds-and-other-activist-investors-2/">typical hedge fund’s playbook</a>. </p>
<p>What we see as fundamentally different here is the emphasis the hedge fund is putting on the connection between sustainability and long-term profits. It makes a strong case that the reason Exxon’s <a href="https://www.fool.com/investing/2021/02/14/im-not-in-love-with-exxon-mobils-low-carbon-strate">financial position has been deteriorating</a> is because of its failure to invest in low-carbon technologies. </p>
<p>Or, like a hedge fund, Exxon has been focusing on the short-term gains from fossil fuels at the expense of its long-term future in a global economy that <a href="https://doi.org/10.1177/1476127013520265">puts a premium on sustainability</a> and a penalty on carbon-intensive activities. </p>
<p>Moreover, the readiness of so many major investors – including the <a href="https://www.washingtonpost.com/climate-environment/2021/05/21/exxon-faces-shareholder-revolt-over-climate-change/">three largest U.S. pension funds</a> and <a href="https://www.reuters.com/business/energy/exclusive-blackrock-backs-three-director-nominees-challenging-exxons-board-2021-05-25/">BlackRock</a>, the world’s biggest investment manager with $7.4 trillion in assets under management – in joining Engine No. 1 shows which way the winds are blowing, which Exxon seems to now also realize. </p>
<p>So the vote itself isn’t the story here. It’s that the weight of activist hedge funds – the <a href="https://doi.org/10.5465/amp.2018.0059">most potent form of shareholder activism</a> – seems to be shifting in favor of sustainability. As we see it, this means companies and executives that don’t invest in the transition low-carbon energy will increasingly risk incurring their wrath. </p>
<p>[<em>Over 100,000 readers rely on The Conversation’s newsletter to understand the world.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=100Ksignup">Sign up today</a>.]</p><img src="https://counter.theconversation.com/content/159983/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Engine No. 1 convinced other shareholders to support at least two of its nominees to join the company’s board as part of its push for a stronger sustainability strategy at Exxon.Mark DesJardine, Assistant Professor of Strategy and Sustainability, Penn StateTima Bansal, Canada Research Chair in Business Sustainability, Western UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1585322021-04-29T02:32:59Z2021-04-29T02:32:59ZRisky business: 54% of Australian companies plan to slow ‘green’ initiatives due to COVID<figure><img src="https://images.theconversation.com/files/397478/original/file-20210428-14-1qebyuk.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4827%2C3300&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>More than half of Australian companies plan to scale back environmental initiatives to weather the financial harm caused by the COVID pandemic, a <a href="https://www.theaustralian.com.au/nation/coronavirus-pandemic-forces-business-to-slow-green-reforms/news-story/1edbc653a1127f0cb81d804c5dbcde85">report released</a> this month suggests. But such a move would be bad for business, and the planet. </p>
<p>Over the past few decades, regulatory and societal pressures have prompted businesses to adopt <a href="https://www.researchgate.net/publication/257408737_Corporate_environmental_responsiveness_in_India_Lessons_from_a_developing_country">environmental initiatives</a> at a growing rate. The measures may involve divesting from fossil fuels, preventing pollution, developing eco-friendly products or even <a href="https://journals.sagepub.com/doi/abs/10.1177/0001839218778018">collaborating with competitors</a> to help other organisations in their supply chains, such as distributors and retailers, become sustainable. </p>
<p>My research focuses on social and environmental sustainability issues confronting organisations. Environmental initiatives require a long-term focus, and in my view, businesses would be unwise to scale back these measures in response to the pandemic. <a href="https://www.researchgate.net/publication/328821854_How_nation-level_background_governance_conditions_shape_the_economic_payoffs_of_corporate_environmental_performance">Research</a> by myself and colleagues suggests most firms with good environmental performance also do well financially. And firms that ignore environmental issues face enormous risk.</p>
<p>Renowned US economist Milton Friedman <a href="https://www.nytimes.com/1970/09/13/archives/a-friedman-doctrine-the-social-responsibility-of-business-is-to.html">famously argued</a>, “the only social responsibility of business is to make profits”. But even Friedman suggests firms are better off dealing with environmental issues when they become a risk. </p>
<figure class="align-center ">
<img alt="Albert Perez/AAP" src="https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397727/original/file-20210429-17-10sl4pt.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Climate change and extreme weather, such as heavy rainfall, is a business risk.</span>
<span class="attribution"><span class="source">Flooded supermarket carpark</span></span>
</figcaption>
</figure>
<h2>Business can be a force for good</h2>
<p>Sustainability measures by business are crucial in helping <a href="https://hbr.org/2014/04/resilience-in-a-hotter-world">mitigate and adapt</a> to climate change. Production processes creating fewer greenhouse gas emissions help slow global warming. And when firms make products that require fewer natural resources (such as by using recycled materials), this lowers stress on global ecosystems.</p>
<p>In fact, <a href="https://unisa.edu.au/Enterprise-Magazine-Home/issue-1-2020/a-coup-against-capitalism--how-fire-and-pestilence-have-changed-our-world-view/">our research</a> shows businesses can be one of society’s most powerful actors in bringing about fast and furious change on environmental and social sustainability.</p>
<p>However a recent <a href="https://www2.deloitte.com/au/en/pages/about-deloitte/articles/2021-climate-check-business-views-on-environmental-sustainability.html">international survey</a> by Deloitte found 54% of 75 surveyed Australian companies were downgrading sustainability initiatives during the pandemic. </p>
<p>This is a troubling figure, but below the global average of 65%. And, it should be noted, no surveyed organisation planned to stop their efforts completely and not resume, indicating the changes will not be permanent. </p>
<p>The results are not necessarily representative of the entire Australian business sector. But as a general rule, slowing the momentum on environmental initiatives increases business exposure to climate risk – and may affect future profitability. A firm’s environmental capabilities can take decades to hone. They can involve complex strategies and <a href="https://journals.sagepub.com/doi/abs/10.1177/0001839218778018">years of consultations</a> inside and outside the company. Stopping or slowing these actions can undo hard-earned gains. </p>
<figure class="align-center ">
<img alt="Composite image of man in business suit and tree branches" src="https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397479/original/file-20210428-19-15wpizh.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Slowing the momentum on environmental initiatives increases business exposure to climate risk.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>In recent years, the business community has increasingly recognised how climate change and other environmental damage poses a risk to their returns. These <a href="https://www.business.qld.gov.au/running-business/protecting-business/risk-management/environment-climate">risks include</a>:</p>
<ul>
<li>extreme weather which disrupts operations, damages infrastructure and increases insurance costs </li>
<li>increased business costs due to scarcer resources</li>
<li>lower consumer demand for unsustainable products</li>
<li>stranded assets (those that can’t make a financial return due to changes in technology, regulation or the market)</li>
<li>reputation damage and shareholder backlash.</li>
</ul>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/cyclone-seroja-just-demolished-parts-of-wa-and-our-warming-world-will-bring-more-of-the-same-158769">Cyclone Seroja just demolished parts of WA – and our warming world will bring more of the same</a>
</strong>
</em>
</p>
<hr>
<p>Rio Tinto experienced the latter last year after its disastrous decision to blow up two ancient rock shelters at Juukan Gorge. The move prompted public outrage and <a href="https://www.theguardian.com/australia-news/2021/jan/28/rio-tinto-juukan-gorge-native-title-mining-company-executive-reshuffle-mainly-pr">enraged shareholders</a> forced the resignation of Rio’s chief executive, Jean-Sébastien Jacques.</p>
<p>And shareholders in Australian energy giant AGL have <a href="https://www.smh.com.au/business/companies/blackrock-turns-up-the-heat-on-agl-s-coal-exit-plans-20201007-p562vz.html">urged its board</a> to hasten the closure of its coal-fired power stations. </p>
<p>Sustainable business activities need not damage a business’ financial returns. This month it was <a href="https://www.newyorker.com/news/daily-comment/the-powerful-new-financial-argument-for-fossil-fuel-divestment">reported</a> that BlackRock, the world’s largest asset manager, had examined divestment by hundreds of funds and concluded the portfolios experienced “modest improvement in fund return”.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/373808/original/file-20201209-15-1vzb3gb.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Protesters rally outside the Rio Tinto office in Perth earlier this year.</span>
<span class="attribution"><span class="source">RICHARD WAINWRIGHT/AAP</span></span>
</figcaption>
</figure>
<h2>Flattening the climate curve</h2>
<p>Rather than abandoning environmental initiatives, governments, businesses and societies should use the pandemic to reset our collective response to climate change. </p>
<p>For businesses, the pandemic presents a unique opportunity to rethink how they engage with their workforce. Do businesses really need all their <a href="https://www.gbca.org.au/uploads/97/36449/Mid-Tier%20Commercial%20Office%20Buildings%20Pathway%20report.pdf?_ga=2.53787744.957501805.1572935090-604356587.1538523608">energy-guzzling</a> office buildings? Do their employees need to commute to work every day? Is international travel necessary? Can they pool scarce resources and <a href="https://www.nbs.net/articles/guide-collaborating-with-competitors-to-advance-sustainability">work with competitors</a> to gain traction on environmental issues?</p>
<p>For governments, this is a good time to seriously consider <a href="https://theconversation.com/carbon-pricing-works-the-largest-ever-study-puts-it-beyond-doubt-142034">pricing carbon</a>, which financially penalises high-emitting companies. Renewable energy is becoming <a href="https://www.ucsusa.org/resources/renewable-energy-reliable">more reliable</a> each year – strengthening the case to move to a low-carbon economy. </p>
<p>Governments should also consider earmarking a decent fraction of further stimulus payments to encourage business action on climate change. After the global financial crisis in 2007-09, many national governments issued financial stimulus to kickstart economies. Pioneering electric carmaker Tesla <a href="https://www.latimes.com/business/story/2020-07-24/tesla-elon-musk-stimulus">emerged</a> from one such stimulus loan in the United States. </p>
<p>And more broadly, as a capitalist society, must we continue on the path of incessant economic growth that is making our planet sick? Or can we use the pause caused by this pandemic to take a more sustainable route?</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/ive-seriously-tried-to-believe-capitalism-and-the-planet-can-coexist-but-ive-lost-faith-131288">I've seriously tried to believe capitalism and the planet can coexist, but I've lost faith</a>
</strong>
</em>
</p>
<hr>
<figure class="align-center ">
<img alt="Crowds in shopping precinct" src="https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397480/original/file-20210428-13-c7xuxy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The pandemic is a time to question the mantra of endless economic growth.</span>
<span class="attribution"><span class="source">Dean Lewins/AAP</span></span>
</figcaption>
</figure>
<h2>A dry run</h2>
<p>The COVID-19 pandemic can be viewed as a dry run for the impending climate crisis. But the size and scale of climate change demands much more sustained commitment and action than the pandemic. Successfully flattening the emissions curve will take decades, not months. </p>
<p>And the pain from climate change, while slower to arrive, will last much longer, and perhaps forever change civilisation as we know it.</p>
<p>Businesses have long been a big part of the climate problem. They, along with governments and society, cannot continue their uncoordinated, piecemeal response to climate change. This includes not dumping environmental initiatives when it all feels too hard. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/spot-the-difference-as-world-leaders-rose-to-the-occasion-at-the-biden-climate-summit-morrison-faltered-159295">Spot the difference: as world leaders rose to the occasion at the Biden climate summit, Morrison faltered</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/158532/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Sukhbir Sandhu has received funding from the Australian Research Council and the European Union. She is a member of the Academy of Management.</span></em></p>Businesses have long been a big part of the climate problem. They shouldn’t scale back environmental initiatives when it all feels too hard.Sukhbir Sandhu, Associate Professor in Sustainability and Ethics, University of South AustraliaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1573202021-03-31T11:20:45Z2021-03-31T11:20:45Z5 ways fungi could change the world, from cleaning water to breaking down plastics<figure><img src="https://images.theconversation.com/files/391874/original/file-20210326-15-1w9lypa.jpg?ixlib=rb-1.1.0&rect=114%2C114%2C5349%2C3522&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Fungi — a scientific goldmine? Well, that’s what a <a href="https://doi.org/10.1016/j.tibtech.2021.03.002">review</a> published today in the journal Trends in Biotechnology indicates. You may think mushrooms are a long chalk from the caped crusaders of sustainability. But think again. </p>
<p>Many of us have heard of fungi’s role in creating more sustainable leather substitutes. <a href="https://en.wikipedia.org/wiki/Amadou">Amadou</a> vegan leather crafted from fungal-fruiting bodies has been around for some 5,000 years. </p>
<p>More recently, <a href="https://www.nature.com/articles/s41893-020-00606-1">mycelium leather substitutes</a> have taken the stage. These are produced from the root-like structure mycelium, which snakes through dead wood or soil beneath mushrooms.</p>
<p>You might even know about how fungi help us make many fermented food and drinks such as beer, wine, bread, soy sauce and tempeh. Many popular vegan protein products, including <a href="https://www.healthline.com/health/mycoprotein">Quorn</a>, are just flavoured masses of fungal mycelium. </p>
<p>But what makes fungi so versatile? And what else can they do?</p>
<h2>Show me foamy and flexible</h2>
<p>Fungal growth offers a cheap, simple and environmentally friendly way to bind agricultural byproducts (such as rice hulls, wheat straw, sugarcane <a href="https://www.britannica.com/technology/bagasse">bagasse</a> and molasses) into biodegradable and carbon-neutral foams.</p>
<p>Fungal foams are becoming increasingly popular as sustainable packaging materials; <a href="https://www.globalcitizen.org/fr/content/mushroom-fungi-packaging-ikea-decompose-ecovative/">IKEA</a> is one company that has indicated a commitment to using them. </p>
<p>Fungal foams can also be used in the construction industry for insulation, flooring and panelling. <a href="https://www.sciencedirect.com/science/article/pii/S0264127519308354">Research</a> has revealed them to be strong competitors against commercial materials in terms of having effective sound and heat insulation properties.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=389&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=389&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=389&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=489&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=489&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390362/original/file-20210318-21-92brk8.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=489&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Rigid and flexible fungal foams have several construction applications including (a) particle board and insulation cores, (b) acoustic absorbers, (c) flexible foams and (d) flooring.</span>
<span class="attribution"><span class="source">Jones et al</span></span>
</figcaption>
</figure>
<p>Moreover, adding in industrial wastes such as glass fines (crushed glass bits) in these foams can improve their fire resistance.</p>
<p>And isolating only the mycelium can produce a more flexible and spongy foam suitable for products such as facial sponges, artificial skin, ink and dye carriers, shoe insoles, lightweight insulation lofts, cushioning, soft furnishings and textiles.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/scientists-create-new-building-material-out-of-fungus-rice-and-glass-98153">Scientists create new building material out of fungus, rice and glass</a>
</strong>
</em>
</p>
<hr>
<h2>Paper that doesn’t come from trees? No, chitin</h2>
<p>For other products, it’s the composition of fungi that matters. Fungal filaments contain chitin: a remarkable polymer also found in crab shells and insect exoskeletons.</p>
<p>Chitin has a fibrous structure, similar to cellulose in wood. This means fungal fibre can be processed into sheets the same way paper is made. </p>
<p>When <em>stretched</em>, <a href="https://pubs.acs.org/doi/abs/10.1021/acs.biomac.9b01141">fungal papers</a> are stronger than many plastics and not much weaker than some steels of the same thickness. We’ve yet to test its properties when subject to different forces.</p>
<p>Fungal paper’s strength can be substituted for <a href="https://www.sciencedirect.com/science/article/pii/S0266353820311738">rubbery flexibility</a> by using specific fungal species, or a different part of the mushroom. The paper’s transparency can be customised in the same way.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=255&fit=crop&dpr=1 600w, https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=255&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=255&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=321&fit=crop&dpr=1 754w, https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=321&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/390364/original/file-20210318-19-cs3uup.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=321&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Paper sheets with varying transparency derived from the brown crab’s shell <em>(C. pagurus)</em> (column 1), fungi <em>Daedaleopsis confragosa</em> (column 2) and the mushroom <em>Agaricus bisporus</em> (column 6). Columns 3, 4 and 5 show fungal papers of varying transparencies based on mixtures of the two species.</span>
<span class="attribution"><span class="source">Wan Nawawi et al</span></span>
</figcaption>
</figure>
<p>Growing fungi in mineral-rich environments results in inherent <a href="https://pubs.acs.org/doi/abs/10.1021/acs.biomac.9b00791">fire resistance</a> for the fungus, as it absorbs the inflammable minerals, incorporating them into its structure. Add to this that water doesn’t wet fungal surfaces, but rolls off, and you’ve got yourself some pretty useful paper.</p>
<h2>A clear solution to dirty water</h2>
<p>Some might ask: what’s the point of fungal paper when we already get paper from wood? That’s where the other interesting attributes of chitin come into play — or more specifically, the attributes of its derivative, chitosan. </p>
<p>Chitosan is chitin that has been chemically modified through exposure to an acid or alkali. This means with a few simple steps, fungal paper can adopt a whole new range of applications.</p>
<p>For instance, chitosan is electrically charged and can be used to <a href="https://www.sciencedirect.com/science/article/pii/S1381514819308867">attract heavy metal ions</a>. So what happens if you couple it with a mycelium filament network that is intricate enough to prevent solids, bacteria and even viruses (which are much smaller than bacteria) from passing through?</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="White-button mushroom" src="https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/391319/original/file-20210324-19-1hy6i88.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Fungal chitin paper derived from white-button mushrooms is an eco-friendly alternative to standard filter materials.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>The result is an environmentally friendly membrane with impressive <a href="https://www.dw.com/en/german-scientists-use-fungi-to-clean-soil-water/a-15894506">water purification</a> properties. In our research, my colleagues and I found this material to be stable, simple to make and useful for <a href="https://www.sciencedirect.com/science/article/pii/S0144861720314466">laboratory filtration</a>. </p>
<p>While the technology hasn’t yet been commercialised, it holds particular promise for reducing the environmental impact of synthetic filtration materials, and providing safer drinking water where it’s not available.</p>
<h2>Mushrooms in modern medicine</h2>
<p>Perhaps even more interesting is chitosan’s considerable biomedical potential. Fungal materials have been used to create <a href="https://www.mdpi.com/1660-3397/18/1/64">dressings</a> with active wound healing properties.</p>
<p>Although not currently on the market, these have been proven to have antibacterial properties, stem bleeding and support cell proliferation and attachment. </p>
<p>Fungal enzymes can also be used to combat bacteria active in tooth decay, enhance bleaching and destroy compounds responsible for bad breath. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/vegan-leather-made-from-mushrooms-could-mould-the-future-of-sustainable-fashion-143988">Vegan leather made from mushrooms could mould the future of sustainable fashion</a>
</strong>
</em>
</p>
<hr>
<p>Then there’s the well-known role of <a href="https://cosmosmagazine.com/biology/a-deep-dive-into-the-genomes-of-penicillin-fungi-reveals-a-trove-of-potential-drugs/">fungi in antibiotics</a>. Penicillin, made from the <a href="https://mycology.adelaide.edu.au/descriptions/hyphomycetes/penicillium/"><em>Penicillium</em> fungi</a>, was a scientific breakthrough that has saved millions of lives and become a staple of modern healthcare. </p>
<p>Many antibiotics are still produced from fungi or soil bacteria. And in an age of increasing antibiotic resistance, genome sequencing is finally enabling us to identify fungi’s <a href="https://www.sciencedaily.com/releases/2017/04/170420090038.htm">untapped potential</a> for manufacturing the antibiotics of the future.</p>
<h2>Mushrooms mending the environment</h2>
<p>Fungi could play a huge role in sustainability by remedying existing environmental damage. </p>
<p>For example, they can help clean up contaminated industrial sites through a popular technique known as <a href="https://en.wikipedia.org/wiki/Mycoremediation">mycoremediation</a>, and can break down or absorb oils, pollutants, toxins, dyes and heavy metals.</p>
<p>They can also compost some synthetic plastics, such as <a href="https://www.manchester.ac.uk/discover/news/your-old-sofa---and-much-more---could-be-composted-say-scientists/">polyurethane</a>. In this process, the plastic is buried in regulated soil and its byproducts are digested by specific fungi as it degrades. </p>
<p>These incredible organisms can even help <a href="https://www.bbc.com/news/science-environment-35612554">refine bio fuels</a>. Whether or not we go as far as using <a href="https://www.theguardian.com/society/2020/sep/15/first-funeral-living-coffin-made-mushroom-fibre-netherlands">fungal coffins</a> to decompose our bodies into nutrients for plants — well, that’s a debate for another day. </p>
<p>But one thing is for sure: fungi have the undeniable potential to be used for a whole range of purposes we’re only beginning to grasp. </p>
<p>It could be the beer you drink, your next meal, antibiotics, a new faux leather bag or the packaging that delivered it to you — you never know what form the humble mushroom will take tomorrow.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/the-secret-life-of-fungi-how-they-use-ingenious-strategies-to-forage-underground-156610">The secret life of fungi: how they use ingenious strategies to forage underground</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/157320/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mitchell P. Jones does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Forgot tempeh. The humble shroom has the potential to be used across industries, in ways we’re only beginning to grasp.Mitchell P. Jones, Postdoctoral researcher, TU WienLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1527292021-01-25T17:51:53Z2021-01-25T17:51:53ZFinancial professions must pivot to stave off technological extinction<figure><img src="https://images.theconversation.com/files/380334/original/file-20210124-23-1475qga.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C4928%2C3260&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The accounting profession and others in the financial services industry are at risk of extinction due to technological advances. </span> <span class="attribution"><span class="source">(Adeolu Eletu/Unsplash)</span></span></figcaption></figure><p><a href="https://hbr.org/2017/03/how-blockchain-is-changing-finance">Blockchain technology threatens</a> to upend the financial sector. While this presents an opportunity to reduce costs for businesses and consumers alike, it may also make some professions, like accounting, obsolete. </p>
<p>What can financial professionals do to reposition and rebrand themselves in the face of potential extinction?</p>
<p>They’re not the first to be replaced by technology, after all. Over the past two decades, travel agents have been <a href="https://www.expedia.ca/">replaced by sites like Expedia</a> <a href="https://www.priceline.com/?vrid=5dacfeb1b7a72633bf47e0412cbb04ec">and Priceline</a>, while taxi drivers are being supplanted <a href="https://www.uber.com/ca/en/">by Uber</a>. </p>
<p>What’s different here is that accounting and finance are considered <a href="https://doi.org/10.1177%2F0950017015621480">elite professions</a>. These vocations are highly paid and require high levels of education and training, raising questions about how other professions might fare in the face of technological disruption.</p>
<p>How do professions at risk of extinction reassert their value in order to stand a chance at survival?</p>
<h2>What do they do best?</h2>
<p>The first thing professions need to do is reassess their value proposition. What does their profession do better than anyone else? How can this expertise be repackaged in order to appeal to new clients or customers, or develop new service lines?</p>
<p>As an example, accountants have long been aware that technology has the potential to disrupt their profession. Some are suggesting that blockchain <a href="https://www.aicpa.org/content/dam/aicpa/interestareas/frc/assuranceadvisoryservices/downloadabledocuments/blockchain-technology-and-its-potential-impact-on-the-audit-and-assurance-profession.pdf">may replace</a> auditing altogether. However, auditors have been able to successfully repackage their expertise to expand into new areas like <a href="https://www.emerald.com/insight/content/doi/10.1108/AAAJ-03-2013-1252/full/html">awards ceremonies</a>, <a href="https://doi.org/10.1016/j.aos.2008.02.003">business school rankings</a> or even <a href="https://doi.org/10.1111/j.1911-3846.2011.01108.x">sustainability reports</a>. </p>
<p>To do this, the accounting profession had to figure out where its strengths lie and how these might be combined with other forms of expertise to create something new.</p>
<p>One place auditors are doing so is in the area of <a href="https://doi.org/10.1016/S0361-3682(96)00037-2">sustainability assurance</a>, which <a href="https://www.icaew.com/-/media/corporate/files/technical/audit-and-assurance/assurance/sustainability-assurance-your-choice.ashx?la=en">involves auditing</a> a client’s social, economic and environmental performance. This could mean, for instance, assessing and verifying an industrial client’s reported greenhouse gas emissions. </p>
<figure class="align-center ">
<img alt="Four smokestacks against a blue sky." src="https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380446/original/file-20210125-21-yplnvd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">One area of promise for accountants is sustainability assurance that involves auditing a company’s sustainability claims. An example is ensuring a business is truly cutting back its greenhouse gas emissions.</span>
<span class="attribution"><span class="source">(Leon Gao/Unsplash)</span></span>
</figcaption>
</figure>
<p>Some auditors are recognizing that while they don’t possess the scientific know-how to validate the science behind sustainability reports, they are able to engage experts from those areas so that, together, they can create a new business line.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-blockchain-can-democratize-green-power-87861">How blockchain can democratize green power</a>
</strong>
</em>
</p>
<hr>
<p>While accountants have been unable to entirely eliminate the threat of technological extinction, some have been able to revive their position in the market by finding new buyers for their services. </p>
<h2>If you can’t beat ’em, join ’em</h2>
<p>Blockchain technology poses a unique challenge because it was designed to upend the traditional financial order. The cryptocurrency <a href="https://link.springer.com/chapter/10.1007/978-3-030-17740-9_3">Bitcoin is created, distributed, traded and stored with the use of blockchain, essentially a decentralized, peer-to-peer ledger system</a> that is changing the way money is exchanged.</p>
<p>More recently, a new blockchain use called <a href="https://academy.binance.com/en/articles/the-complete-beginners-guide-to-decentralized-finance-defi">decentralized finance</a> (also referred to as “DeFi”) has introduced financial applications that aim to <a href="https://www.coindesk.com/what-is-defi">eliminate traditional financial intermediaries</a> like banks. </p>
<p>Although the probability of banks being replaced by blockchain-based applications is unlikely in the short term, the trend could take hold in the long run. As a result, <a href="https://www.coindesk.com/the-big-banks-riding-bitcoins-bull-run">several banks</a> have developed platforms that allow their clients to trade cryptocurrencies like Bitcoin, Ether or Ripple.</p>
<p>Global financial services company <a href="https://www.jpmorgan.com/solutions/cib/news/digital-coin-payments">J.P. Morgan</a> has developed a digital coin that provides instantaneous payments between institutional clients. The high-profile financial institution’s embrace of blockchain-based products represents an abrupt departure from comments made by the company’s CEO in 2017, when he called Bitcoin <a href="https://money.cnn.com/2017/09/12/investing/jamie-dimon-bitcoin/index.html">a fraud</a>. </p>
<p>This <a href="https://cryptonews.com/news/us-banks-offering-crypto-custody-is-insanely-bullish-and-ris-7205.htm">change in sentiment</a> reflects a broader shift in regulators’ and bankers’ attitudes towards cryptocurrencies — and blockchain, more broadly. </p>
<figure class="align-center ">
<img alt="A sign advertises a Bitcoin ATM." src="https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=440&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=440&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=440&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=553&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=553&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380329/original/file-20210124-15-180x2dz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=553&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A sign advertises a Bitcoin ATM in Halifax in February 2020.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Andrew Vaughan</span></span>
</figcaption>
</figure>
<p>Recognizing that blockchain technology isn’t going away, bankers are instead looking for ways to leverage their status as trusted financial brokers to provide confidence to customers wishing to experiment with cryptocurrencies. Like the accountants expanding into sustainability assurance, bankers are leveraging their strongest advantage — their reputation as trusted intermediaries — to create a new product for the digital age. </p>
<h2>Upskilling needed</h2>
<p>However, the shift to providing services in the blockchain sector requires a high degree of upskilling in the area of information technology. <a href="https://doi.org/10.2308/ISYS-19-007">My research</a> on auditing suggests that many accountants are refraining from taking on clients in the blockchain sector because they feel they lack the technological competence to do so.</p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A person works on their laptop." src="https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=434&fit=crop&dpr=1 600w, https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=434&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=434&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=546&fit=crop&dpr=1 754w, https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=546&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/380331/original/file-20210124-17-1ae2o5.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=546&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Some accountants feel unprepared to take on blockchain clients.</span>
<span class="attribution"><span class="source">(Unsplash)</span></span>
</figcaption>
</figure>
<p>Professional groups like <a href="https://www.cpacanada.ca/en">Chartered Professional Accountants (CPA) Canada</a> (the national organization representing the Canadian accounting profession) have called on the next generation of CPAs to become <a href="https://www.cpacanada.ca/foresight-report/en/index.html#page=1">data masters</a>. This may not be realistic. Becoming data experts while maintaining an accountant’s foundational knowledge in tax, financial reporting and auditing may end up producing a generation of jacks-(and janes)-of-all trades who are masters of none. </p>
<p>The reality is that technological disruption threatens all professions and the prospect of extinction is real. The best way to fight back is to focus on what a profession does best — and get even better at it. </p>
<p>While it may be tempting to try to turn finance professionals into data scientists, this could do more harm than good by detracting from what profession’s key areas of expertise, making it even more likely that a profession will become an endangered species. Instead, financial professionals need to focus on finding new uses for their skills.</p><img src="https://counter.theconversation.com/content/152729/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Erica Pimentel receives funding from the Social Science and Humanities Research Council of Canada (SSHRC) and the CPA Québec Foundation. </span></em></p>In the face of technological threats, it may be tempting to turn finance professionals into data scientists. This isn’t the way forward. Instead, they need to find new uses for their expertise.Erica Pimentel, PhD Candidate in Accounting, Concordia Public Scholar, Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1484032020-11-16T13:23:02Z2020-11-16T13:23:02ZSecondhand clothing sales are booming – and may help solve the sustainability crisis in the fashion industry<figure><img src="https://images.theconversation.com/files/366278/original/file-20201028-19-e5h27q.jpg?ixlib=rb-1.1.0&rect=6%2C12%2C4084%2C2809&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A ThredUp sorting facility in Phoenix.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/OntheMoneyOnlineThriftStores/a798350880324bd1a02320db7bbfd2de">Matt York/AP</a></span></figcaption></figure><p>A massive force is reshaping the fashion industry: secondhand clothing. According to a new report, the U.S. secondhand clothing market is <a href="https://www.thredup.com/resale/">projected to more than triple in value in the next 10 years</a> – from US$28 billion in 2019 to US$80 billion in 2029 – in a U.S. <a href="https://www.statista.com/forecasts/758683/revenue-of-the-apparel-market-worldwide-by-country">market currently worth $379 billion</a>. In 2019, secondhand clothing <a href="https://www.thredup.com/resale/2019?tswc_redir=true">expanded 21 times faster</a> than conventional apparel retail did.</p>
<p>Even more transformative is secondhand clothing’s potential to dramatically alter the prominence of fast fashion – a business model <a href="https://en.wikipedia.org/wiki/Fast_fashion">characterized by cheap and disposable clothing</a> that emerged in the early 2000s, epitomized by brands like H&M and Zara. Fast fashion has grown exponentially over the last two decades, significantly altering the fashion landscape by producing more clothing, distributing it faster and encouraging consumers to buy in excess with low prices. </p>
<p>While fast fashion is expected to <a href="https://www.thredup.com/resale/">continue to grow 20% in the next 10 years</a>, <a href="https://www.thredup.com/resale/">secondhand fashion is poised to grow 185%</a>.</p>
<p><a href="https://scholar.google.com/citations?hl=en&user=IoRKq14AAAAJ">As researchers</a> <a href="https://scholar.google.com/citations?user=IasJfmIAAAAJ&hl=en">who study</a> clothing consumption and sustainability, we think the secondhand clothing trend has the potential to reshape the fashion industry and mitigate the industry’s detrimental environmental impact on the planet. </p>
<h2>The next big thing</h2>
<p>The secondhand clothing market is composed of two major categories, <a href="https://doi.org/10.1080/20932685.2019.1684831">thrift stores and resale platforms</a>. But it’s the latter that has largely fueled the recent boom. Secondhand clothing has long been perceived as worn out and tainted, <a href="https://doi.org/10.1080/0959396032000101372">mainly sought by bargain or treasure hunters</a>. However, this perception has changed, and now many consumers consider secondhand clothing to be of <a href="https://doi.org/10.1080/20932685.2019.1576060">identical or even superior quality</a> to unworn clothing. A <a href="https://www.cosmopolitan.com/style-beauty/fashion/a31085526/how-to-sell-clothes/">trend of “fashion flipping”</a> – or buying secondhand clothes and reselling them – has also emerged, particularly among young consumers.</p>
<p>Thanks to <a href="https://doi.org/10.1080/17543266.2017.1346714">growing consumer demand and new digital platforms</a> like Tradesy and Poshmark that facilitate peer-to-peer exchange of everyday clothing, the digital resale market is quickly becoming the next big thing in the fashion industry. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Ten smiling people in business attire pose together and clap their hands." src="https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=374&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=374&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=374&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=470&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=470&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366280/original/file-20201028-21-1jcetfg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=470&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Julie Wainwright, center, CEO of The RealReal, celebrates her company’s IPO at the NASDAQ opening bell, Friday, June 28, 2019.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/FinancialMarketsRealRealIPO/3f120d547bf7473fb4da7cf6d2cf5e62">Mark Lennihan/AP</a></span>
</figcaption>
</figure>
<p>The market for secondhand luxury goods is also substantial. Retailers like The RealReal or the Vestiaire Collective provide a digital marketplace for authenticated luxury consignment, where people buy and sell designer labels such as Louis Vuitton, Chanel and Hermès. The market value of this sector <a href="https://www.retail-insider.com/retail-insider/2020/3/the-rise-of-pre-owned-luxury-fashion-marks-shift-amid-sustainability-movement">reached $2 billion in 2019</a>.</p>
<p>The secondhand clothing trend also appears to be driven by affordability, <a href="https://www.marketwatch.com/story/covid-19-propels-an-already-surging-secondhand-clothing-market-2020-06-23">especially now, during the COVID-19 economic crisis</a>. Consumers have not only <a href="https://www2.deloitte.com/us/en/insights/economy/spotlight/economics-insights-analysis.html">reduced their consumption of nonessential items like clothing</a>, but are buying <a href="https://www.mckinsey.com/%7E/media/McKinsey/Industries/Retail/Our%20Insights/The%20State%20of%20Fashion%202019%20A%20year%20of%20awakening/The-State-of-Fashion-2019-final.ashx">more quality garments</a> over cheap, disposable attire.</p>
<p>For clothing resellers, the ongoing economic contraction combined with the increased interest in sustainability has proven to be <a href="https://www.marketwatch.com/story/covid-19-propels-an-already-surging-secondhand-clothing-market-2020-06-23">a winning combination</a>.</p>
<h2>More mindful consumers?</h2>
<p>The fashion industry has long been associated with <a href="https://www.ellenmacarthurfoundation.org/publications/a-new-textiles-economy-redesigning-fashions-future">social and environmental problems</a>, ranging from poor treatment of garment workers to pollution and waste generated by clothing production. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/366287/original/file-20201028-13-gr8mgs.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Textile factory waste drains into a tributary of the Citarum River outside Bandung, Java, Indonesia, 2018.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/factory-waste-including-dyes-from-the-many-textile-news-photo/1025003060">Ed Wray/Stringer via Getty Images News</a></span>
</figcaption>
</figure>
<p>Less than 1% of materials used to make clothing are currently recycled to make new clothing, a <a href="https://www.ellenmacarthurfoundation.org/publications/a-new-textiles-economy-redesigning-fashions-future">$500 billion annual loss for the fashion industry</a>. The textile industry produces <a href="https://www.unenvironment.org/news-and-stories/story/putting-brakes-fast-fashion">more carbon emissions than the airline and maritime industries combined</a>. And approximately <a href="https://www.unenvironment.org/news-and-stories/story/putting-brakes-fast-fashion">20% of water pollution across the globe</a> is the result of wastewater from the production and finishing of textiles.</p>
<p><a href="https://www.forbes.com/sites/solitairetownsend/2018/11/21/consumers-want-you-to-help-them-make-a-difference/#efe999c69547">Consumers have become more aware</a> of the ecological impact of apparel production and are more frequently demanding apparel businesses <a href="https://www.forbes.com/sites/pamdanziger/2020/05/10/coronavirus-will-force-fashion-to-a-sustainable-future/#6973567f5292">expand their commitment to sustainability</a>. Buying secondhand clothing could provide consumers a way to push back against the fast-fashion system. </p>
<p>Buying secondhand clothing increases the number of owners an item will have, extending its life – something that has been <a href="https://doi.org/10.1111/ijcs.12354">dramatically shortened in the age of fast fashion</a>. (Worldwide, in the past 15 years, <a href="https://www.ellenmacarthurfoundation.org/publications/a-new-textiles-economy-redesigning-fashions-future">the average number of times a garment is worn before it’s trashed</a> has decreased by 36%.) </p>
<p>High-quality clothing traded in the secondhand marketplace also <a href="https://doi.org/10.1111/ijcs.12354">retains its value over time</a>, unlike cheaper fast-fashion products. Thus, buying a high-quality secondhand garment instead of a new one is theoretically an environmental win. But some critics argue the secondhand marketplace actually <a href="https://www.businessoffashion.com/articles/professional/is-resale-actually-good-for-the-planet">encourages excess consumption by expanding access to cheap clothing</a>.</p>
<p>[<em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>.]</p>
<p>Our <a href="https://doi.org/10.20900/jsr20200017">latest research supports this possibility</a>. We interviewed young American women who regularly use digital platforms like Poshmark. They saw secondhand clothing as a way to access both cheap goods and ones they ordinarily could not afford. They did not see it as an alternative model of consumption or a way to decrease dependence on new clothing production. </p>
<p>Whatever the consumer motive, increasing the reuse of clothing is a big step toward a new normal in the fashion industry, though its potential to address sustainability woes remains to be seen.</p><img src="https://counter.theconversation.com/content/148403/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Fast fashion is far from green. But the rapid expansion of online clothing resale platforms could help shrink the garment industry’s negative impact on the environment.Hyejune Park, Associate Professor of Fashion Merchandising, Oklahoma State UniversityCosette Marie Joyner Martinez, Associate Professor of Fashion Merchandising, Oklahoma State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1439882020-09-07T20:11:33Z2020-09-07T20:11:33ZVegan leather made from mushrooms could mould the future of sustainable fashion<figure><img src="https://images.theconversation.com/files/353527/original/file-20200819-25336-k8lpjy.jpg?ixlib=rb-1.1.0&rect=36%2C183%2C4867%2C3081&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Seven millennia since its <a href="https://www.britannica.com/topic/leather">invention</a>, leather remains one of the most durable and versatile natural materials. However, some consumers question the <a href="https://www.theguardian.com/fashion/2016/mar/13/is-it-time-to-give-up-leather-animal-welfare-ethical-lucy-siegle">ethical ramifications</a> and <a href="https://www.ethicalgallery.com.au/blogs/ethical-gallery-blog/the-environmental-impact-of-animal-leather-vs-faux-leather">environmental sustainability</a> of wearing products sourced from animals.</p>
<p>This shift in social standards is the main reason we’re seeing a wave of synthetic substitutes heading for the market.</p>
<p>Leather alternatives produced from synthetic polymers fare better in terms of <a href="https://www.ethicalgallery.com.au/blogs/ethical-gallery-blog/the-environmental-impact-of-animal-leather-vs-faux-leather">environmental sustainability</a> and have achieved considerable <a href="https://leatherpanel.org/content/future-trends-and-expected-status-world-leather-and-leather-products-industry-and-trade-2010">market share</a> in recent years. </p>
<p>But these materials face the same disposal issues as any synthetic plastic. So, the leather market has begun to look to other innovations. As strange as it might sound, the latest contender is the humble fungus.</p>
<p>Research by my colleagues and I, published today in <a href="https://www.nature.com/articles/s41893-020-00606-1">Nature Sustainability</a>, investigates the history, manufacturing processes, cost, sustainability and material properties of fungus-derived renewable leather substitutes – comparing them to animal and synthetic leathers.</p>
<h2>How unsustainable is animal leather, actually?</h2>
<p>How sustainable leather is depends on how you look at it. As it uses animal skins, typically from cows, leather production is correlated with animal farming. Making it also requires environmentally toxic chemicals. </p>
<p>The livestock sector’s <a href="https://www.bbc.com/future/article/20190806-how-vaccines-could-fix-our-problem-with-cow-emissions">sustainability issues</a> are well known. <a href="http://www.fao.org/news/story/en/item/197623/icode/">According to</a> the United Nations Food and Agriculture Organisation, the sector is responsible for about 14% of all greenhouse emissions from human activity. Cattle rearing alone represents about 65% of those emissions. </p>
<p>Still, it’s worth noting the main product of cattle rearing is meat, not leather. Cow hides account for just 5-10% of the market value of a cow and about 7% of the animal’s weight. </p>
<p>There’s also no proven correlation between the demand for red meat and leather. So a reduction in the demand for leather may have no effect on the number of animals slaughtered for meat.</p>
<figure class="align-center ">
<img alt="Cattle looking at the camera" src="https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=402&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=402&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=402&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=505&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=505&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353392/original/file-20200818-14-12ze6ih.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=505&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">According to 2019 figures from the Australian Bureau of Statistics, about 49% of all Australian farms carry beef cattle and these manage more than 79% of all agricultural land.</span>
<span class="attribution"><span class="source">freestocks.org/Pexels</span></span>
</figcaption>
</figure>
<p>That said, leather tanning is still energy- and resource-intensive and produces a lot of <a href="https://leatherpanel.org/sites/default/files/publications-attachments/leather_carbon_footprint_p.pdf">sludge waste</a> during processing. </p>
<p>This gives leather a higher environmental impact than other minimally processed animal products such as blood, heads and organs (which can be sold as meat products or animal feed).</p>
<h2>From spore to mat</h2>
<p>Fungus-derived leather technologies were first patented by US companies <a href="https://www.mycoworks.com/">MycoWorks</a> and <a href="https://ecovativedesign.com/">Ecovative Design</a> about five years ago.</p>
<p>These technologies take advantage of the root-like structure of mushrooms, called <a href="https://blogs.scientificamerican.com/observations/the-mycelium-revolution-is-upon-us/">mycelium</a>, which contains the same polymer found in crab shells.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A root-like mycelium structure grows underground." src="https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353524/original/file-20200819-42876-4aie85.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Mycelium is the vegetative body for fungi that produces mushrooms. Fungal colonies made of mycelium can be found in and on soil and wood.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>When mushroom roots are grown on sawdust or agricultural waste, they form a thick mat that can then be treated to resemble leather. </p>
<p>Because it’s the roots and not the mushrooms being used, this natural biological process can be carried out anywhere. It does not require light, converts waste into useful materials and stores carbon by accumulating it in the growing fungus.</p>
<figure class="align-center ">
<img alt="A petri dish with fungal spores on the left and a natural fungal mat on the right." src="https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=378&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=378&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=378&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=475&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=475&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353396/original/file-20200818-20-k4jqvk.JPG?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=475&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Going from fungal spores on a Petri dish (left) to a natural fungal mat (right) takes just a couple of weeks.</span>
<span class="attribution"><span class="source">Antoni Gandia</span></span>
</figcaption>
</figure>
<p>Going from a single spore to a finished “fungi leather” (or “mycelium leather”) product takes a couple of weeks, compared with years required to raise a cow to maturity.</p>
<p>Mild acids, alcohols and dyes are typically used to modify the fungal material, which is then compressed, dried and embossed. </p>
<p>The process is quite simple and can be completed with minimal equipment and resources by artisans. It can also be industrially scaled for mass production. The final product looks and feels like animal leather and has <a href="https://www.madewithreishi.com/">similar durability</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Mycelium-derived leather hanging from wire" src="https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353525/original/file-20200819-42876-ikr13l.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">MOGU is one company producing materials and products from fungal mycelium.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/arselectronica/42706992340/in/photolist-284SuW9-2aPHL5V-26SBgCj-2j3jYqF/">Ars Electronica/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<h2>Mushroom for progress</h2>
<p>It’s important to remember despite years of development, this technology is still in its infancy. Traditional leather production has been refined to perfection over thousands of years. </p>
<p>There are bound to be some teething problems when adopting fungal leather. And despite its biodegradability and low-energy manufacturing, this product alone won’t be enough to solve the sustainability crisis.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/will-we-soon-be-growing-our-own-vegan-leather-at-home-68498">Will we soon be growing our own vegan leather at home?</a>
</strong>
</em>
</p>
<hr>
<p>There are wider environmental concerns over animal farming and the proliferation of plastics – both of which are independent of leather production.</p>
<p>Nonetheless, using creativity to harness new technologies can only be a step in the right direction. As the world continues its gradual shift towards sustainable living, perhaps seeing progress in one domain will inspire hope for others.</p>
<h2>Will I be wearing it anytime soon?</h2>
<p>Commercial products made with fungi-derived leather are expected to be on sale soon – so the real question is whether it will cost you an arm and a leg. </p>
<p>Prototypes were released last year in the <a href="https://boltthreads.com/technology/mylo">US</a>, <a href="http://pura.mogu.bio/">Italy</a> and <a href="https://mycl.bio/mylea">Indonesia</a>, in products including watches, purses, bags and shoes.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A black and brown mycelium leather bag." src="https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=778&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=778&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=778&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=977&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=977&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353800/original/file-20200820-14-1vgpe5j.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=977&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">US-based startup Bolt Threads has used myceliym leather to successfully create products such as this bag.</span>
<span class="attribution"><a class="source" href="https://boltthreads.com/technology/mylo/">Bolt Threads</a></span>
</figcaption>
</figure>
<p>And while these fundraiser items were a little pricey – with one designer bag selling for US$500 – manufacturing cost estimates indicate the material could become economically competitive with traditional leather once manufactured on a larger scale. </p>
<p>The signs are promising. MycoWorks raised US$17 million in venture capital <a href="https://vcnewsdaily.com/mycoworks/venture-capital-funding/sgvptckpch">last year</a>. </p>
<p>Ultimately, there’s no good reason fungal leather alternatives couldn’t eventually replace animal leather in many consumer products. </p>
<p>So next time you pass the mushrooms at the supermarket, make sure you acquaint yourself. You may be seeing a whole lot more of each other soon.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/could-fungi-save-the-fashion-world-122894">Could fungi save the fashion world?</a>
</strong>
</em>
</p>
<hr>
<img src="https://counter.theconversation.com/content/143988/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Mitchell P. Jones does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Going from a single spore to a finished fungi-derived leather product takes a couple of weeks. But raising a cow to maturity for bovine leather can take several years.Mitchell P. Jones, Postdoctoral researcher, TU WienLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1390862020-06-16T13:44:46Z2020-06-16T13:44:46ZA greener economy: how we make sustainability central to business <figure><img src="https://images.theconversation.com/files/342151/original/file-20200616-23227-1tzc5ms.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/golden-coins-soil-young-plant-money-195762092">Shutterstock</a></span></figcaption></figure><p>The coronavirus pandemic could change the world in ways that were unimaginable only a few short months ago. While the climate crisis has been temporarily knocked off the front pages, there is a silver lining in the unprecedented decline in economic activity that has been a casualty of measures to battle the virus. We are now presented with the opportunity to think about how to rebuild greener, more sustainable economies when business activity resumes.</p>
<p>Currently, the approach and commitment to sustainability from business varies dramatically. Most companies now accept the rhetoric of sustainability, if only for PR reasons, and many have adopted strategies to “be less bad” – such as reducing emissions, decreasing resource use and addressing poor working conditions in supply chains. But it is also the case that very few companies have committed to integrate sustainability principles such as the <a href="https://theconversation.com/explainer-what-is-a-circular-economy-29666">circular economy</a> into the core of their business strategy – that is, to contribute to a sustainable society.</p>
<p>At a time when we need to reduce greenhouse gas (GHG) emissions to zero and stop plundering the earth’s resources, throwaway culture is the backbone of many business models in industries from <a href="https://theconversation.com/we-know-how-food-production-needs-to-change-if-crisis-is-to-be-avoided-so-why-isnt-this-happening-92903">food</a> and <a href="https://theconversation.com/why-you-should-stop-buying-new-clothes-123881">fashion</a> to <a href="https://theconversation.com/three-ways-making-a-smartphone-can-harm-the-environment-102148">technology</a> and <a href="https://www.wired.com/2014/11/end-throw-away-appliance/">household appliances</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=438&fit=crop&dpr=1 600w, https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=438&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=438&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=550&fit=crop&dpr=1 754w, https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=550&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/342145/original/file-20200616-23221-kmhzcn.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=550&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">The circular economy.</span>
<span class="attribution"><a class="source" href="https://www.wrap.org.uk/about-us/about/wrap-and-circular-economy">WRAP</a>, <span class="license">Author provided</span></span>
</figcaption>
</figure>
<p>But what role can individuals within businesses play in actually achieving a more profound change? How can just one person help turn what has been a traumatic period in human history, into one that future generations will benefit from, and create a more sustainable world?</p>
<p>We <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/bse.2487">studied</a> 44 heads of sustainability at companies around the world, exploring what they did to build sustainability into their organisation. Most were responsible for the environmental and social impacts of their companies, and were tasked with addressing these specific areas. Crucially, we wanted to know what was special about those who are able to reach – and alter – the strategic heart of their business. That is, how can individual people contribute to making sustainability a central plank in business?</p>
<h2>Three approaches to sustainability</h2>
<p>We found that people adopt three distinct approaches: assimilation; mobilisation; and transition. Each approach is characterised by distinct micro-strategies individuals employ to scale up sustainability across their company.</p>
<p><strong>1.</strong> Those adopting an assimilation approach focused simply on conforming to the existing organisational mindset focused on profit: examining how sustainability contributed to costs savings, efficiencies or sales. With this approach, sustainability remained peripheral to the organisation’s core strategy. </p>
<p><strong>2.</strong> People who adopted a mobilisation approach continued to conform to the existing mindset in some ways, but also began leveraging pockets of the organisation, such as “warming up” specific senior executives, exciting interested departments like research and development, or initiating pilot sustainability projects. They achieved greater integration of sustainability than the assimilation approach, but still not wholesale transformation. </p>
<p><strong>3.</strong> Those adopting a transition approach continued to conform to some elements of the existing mindset and leverage specific pockets, but also focused on shaping policies, processes and attitudes towards sustainability principles. They did this through organisation-wide training, communication and recruitment. These individuals achieved a high level of integration of sustainability within their organisations. In other words, they ensured sustainability became a central element of their business model and approach, affecting key decisions and future direction of the company – they made it mainstream.</p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/A5Je3eCwrpA?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
</figure>
<h2>A pattern of progression</h2>
<p>Some built complexity into their approach as they went along – starting with just conforming to the existing mindset in the assimilation approach, then adding leveraging, and finally adding shaping to actually change aspects of the organisation such as the drivers for bonuses or promotion, to form the transition approach. So, rather than finding three distinct approaches, we found a pattern of progression through the three approaches.</p>
<p>While assimilation may seem unambitious, it can be an important first step for the individual to gain “insider” status and for the sustainability strategy to gain credibility in a business. This is important because it demonstrates that sustainability leaders need a long-term plan to achieve proper integration. </p>
<p>We also identified the factors that enabled people to progress, and not remain stuck in the early approaches. The most significant factor was support of top leadership, which stymied progress when absent and facilitated progress when present.</p>
<p>To progress beyond an assimilation approach, introducing outside influences and drivers was key. This included pointing to competitor strategies or actions, and customer expectations or plans. And to progress beyond a mobilisation approach, embedding sustainability into internal company policies and metrics became the focus, such as key performance indicators (KPIs), and recruitment expectations.</p>
<h2>Lessons for sustainability leaders</h2>
<p>So what are the lessons for heads of sustainability? Integrating sustainability into the strategic heart of an organisation is a long-term endeavour: it needs to be to carefully and tactically planned. Buy-in from top leadership is essential throughout the entire process: developing and maintaining their support and commitment should be the primary and ongoing focus.</p>
<p>Introducing drivers from the external environment is key: leaders should be on the lookout for ways to bring competitor behaviour or client expectations into play, and not be afraid to embrace them opportunistically.</p>
<p>Ultimately, internal policies and metrics are essential in integrating sustainability to the strategic heart of an organisation. Working with HR on performance, recruitment expectations and remuneration/bonus criteria, as well as the finance department on adjusting internal rates of return for long-term projects, is vital to successful transformation. </p>
<p>The post-COVID world may open the door to a number of conversations about mainstreaming sustainability in business. Our research provides a roadmap for those keen to take advantage of this, and to see business become a serious contributor to a more sustainable and just world.</p>
<p>What the coronavirus crisis has shown us is that humanity has the capacity to rise swiftly to global challenges when they are urgent. But it is also the courage and actions of individuals that, in the end, combine to make the difference.</p><img src="https://counter.theconversation.com/content/139086/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>New research examines the effectiveness of sustainability leaders making the climate crisis central to their business model and ethos.Sarah Birrell Ivory, Lecturer in Climate Change and Business Strategy, The University of EdinburghBrad MacKay, Professor of Strategy, School of Management, University of St AndrewsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1359642020-04-16T13:12:09Z2020-04-16T13:12:09ZFive ways businesses can contribute to a more balanced post-coronavirus future<figure><img src="https://images.theconversation.com/files/328354/original/file-20200416-192689-bqeeii.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/woman-hanging-open-sign-by-glass-634282571">Shutterstock</a></span></figcaption></figure><p>The coronavirus pandemic highlights the very real imperfections in coordination among global governments and international organisations, many of which were already suffering from <a href="https://www.oecd.org/gov/trust-in-government.htm">low levels of public trust</a>. Responsible leadership from the private sector is needed more than ever. The way that business leaders respond will have an important influence on the state of our post-coronavirus world. </p>
<p>Employers are the most trusted institutions over government and media during this crisis, according to the 2020 <a href="https://www.edelman.com/research/edelman-trust-covid-19-demonstrates-essential-role-of-private-sector">Edelman Trust Barometer</a>. The majority of the public expect business to adapt operations to protect their employees and the local community. And, with many governments providing significant support to businesses, now is the time for their leaders to step up and act responsibly. </p>
<p>In a world where short-term market performance often drives decision making, some businesses have already committed to a new way of doing things. By moving <a href="https://theconversation.com/the-rise-fall-and-rise-again-of-businesses-serving-more-than-just-their-shareholders-124618">beyond shareholder primacy</a>, they are addressing imbalances in our economies by involving all stakeholders in potential solutions: suppliers, partners, employees and regulators. For example, BlackRock, the world’s largest investment manager has <a href="https://www.blackrock.com/corporate/investor-relations/larry-fink-ceo-letter">switched to this approach</a> and put sustainability at the centre of its business.</p>
<p>Here are five ways responsible business executives can join them and contribute to a more balanced post-COVID world.</p>
<h2>1. Make supply chains more local</h2>
<p>In recent decades businesses have focused on maximising efficiency. To save costs and be more streamlined, manufacturers have concentrated their operations on a handful of suppliers in a few countries. These global supply chains created savings and boosted profits when all was running smoothly. But the disruption from the coronavirus pandemic has been immense.</p>
<p>For instance in the healthcare industry, <a href="https://www.finance.senate.gov/chairmans-news/grassley-urges-hhs-fda-to-implement-unannounced-inspections-of-foreign-drug-manufacturing-facilities">about 80%</a> of the basic components used in US drugs <a href="https://www.cfr.org/in-brief/coronavirus-disrupt-us-drug-supply-shortages-fda">come from China and India</a>. The impact of supply chain disruptions is evident in the gruelling <a href="https://theconversation.com/homemade-hand-sanitiser-recipes-that-could-help-protect-against-coronavirus-133668">lack of hand sanitiser</a> and <a href="https://www.nytimes.com/2020/03/25/opinion/coronavirus-face-mask.html">face masks</a>, including for health staff. Europe faces <a href="https://euobserver.com/coronavirus/147958">similar issues</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/coronavirus-inside-story-of-how-mercedes-f1-and-academics-fast-tracked-life-saving-breathing-aid-136028">Coronavirus: inside story of how Mercedes F1 and academics fast-tracked life saving breathing aid</a>
</strong>
</em>
</p>
<hr>
<p>Future markets will benefit from rebalancing their operations by bringing those that had previously been moved overseas nearer to home. Resilience will trump efficiency through a model where manufacturing is brought closer to places of consumption instead of relying on global shipments. </p>
<p>By digitising other processes companies can harness the opportunities that come from economies of knowledge, compensating for those lost in scale.</p>
<h2>2. Collaborate internationally</h2>
<p>More regional and local autonomy should not mean the end of international collaboration. In systemic challenges, collaboration is the best approach to avoid unintended consequences. </p>
<p>As countries seemingly engage in a zero-sum game that reflects the rise of populism and authoritarianism around the world, businesses should step in and call their governments to collective action and collaborative leadership through public-private partnerships. Indeed, according to <a href="https://www.edelman.com/research/edelman-trust-covid-19-demonstrates-essential-role-of-private-sector">Edelman</a>, citizens expect businesses and states to collaborate to stem the crisis and limit its health and economic impacts.</p>
<h2>3. Pivot and demonstrate societal purpose</h2>
<p>A number of companies are demonstrating their value to society by switching their operations to provide much-needed medical equipment. <a href="https://www.vogue.com/article/lvmh-to-produce-hand-sanitizer-coronavirus">LVMH</a>, the luxury conglomerate that owns brands like Louis Vuitton and Christian Dior, has adapted some of its cosmetics manufacturing facilities to produce hand sanitiser for French hospitals with resource constraints. Clothes retailer Zara is using its factories <a href="https://www.theguardian.com/business/2020/mar/21/europes-companies-retool-production-to-fight-coronavirus-fallout">to make masks and hospital gowns</a>. Cosmetics firm Nivea is turning to medical-grade disinfectants. </p>
<p>These moves testify to the ability of companies to improvise fast because they are in tune with the society around them.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/328355/original/file-20200416-192754-153ztvd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Hand sanitiser and face masks are in high demand.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/asian-people-using-alcohol-antiseptic-gel-1662324127">Shutterstock</a></span>
</figcaption>
</figure>
<h2>4. Protect their people</h2>
<p>Businesses can soften the economic blow of coronavirus pandemic for their most vulnerable employees and suppliers. For example, <a href="https://www.businessinsider.com/coronavirus-google-creates-fund-for-contractor-sick-pay-2020-3?r=US&IR=T">Google</a> established a global <a href="https://www.forbes.com/sites/shamahyder/2020/03/15/coronavirus-champions-a-running-list-of-brands-getting-it-right/">COVID-19 fund</a> that enables all temporary staff and vendors to take paid sick leave if they have any symptoms, or can’t come into work because they’re quarantined. <a href="https://www.fastcompany.com/90476917/starbucks-employees-in-the-u-s-can-get-up-to-20-therapy-sessions">Starbucks</a> has extended its <a href="https://www.forbes.com/sites/aliciakelso/2020/03/17/restaurants-will-lose-business-because-of-the-coronavirus-but-theyre-stepping-up-to-help-anyway/#32563f4d15f5">mental health benefits</a> offering staff personalised, confidential mental health care. <a href="https://www.vfc.com/news/press-release/1713/vf-corporation-provides-update-on-global-business-impact-of">VF Corp</a>, the clothes retailer behind Vans, North Face and others, is continuing to pay employees while closing all stores temporarily. </p>
<p>Companies that can afford to keep their staff during the crisis will be ready to bounce back faster once things subside.</p>
<h2>5. Promote a green recovery</h2>
<p>Instead of reverting back to business as usual, companies should consider other potential health crises in the future that could result from our continuous interference with ecosystems, or from climate change. A crisis is an opportunity to rethink things rather than patch up previous ways. </p>
<p>In the aftermath of the pandemic, growth might be relaunched by a decisive reinvention of our economies around green technology, renewable energy and natural infrastructure to develop more efficient and resilient low-carbon economies.</p>
<p>While the movement towards a multi-stakeholder approach to business has increased in recent years, the coronavirus pandemic creates an opportunity for a conscious mindset change. Responsible business leaders will recognise this moment as an opportunity to use a societal lens that contributes to stability and makes everyone better off in the long term.</p><img src="https://counter.theconversation.com/content/135964/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Responsible leadership from the private sector is needed more than ever.Stéphane J. G. Girod, Professor of Strategy & Organizational Design, International Institute for Management Development (IMD)Natalia Olynec, Head of Sustainability, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1350642020-04-02T14:58:36Z2020-04-02T14:58:36ZCoronavirus will have long-term implications for business leaders. Here are the top five<figure><img src="https://images.theconversation.com/files/324856/original/file-20200402-74895-bnq2ox.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Health of society depends on a decent social welfare system, absence of extreme poverty and inequality</span> <span class="attribution"><span class="source">Getty Images</span></span></figcaption></figure><p>As the COVID-19 crisis <a href="http://www.health.gov.za/index.php/outbreaks/145-corona-virus-outbreak/465-corona-virus-outbreak">unfolds</a>, the focus of business leaders and others has been on <a href="https://www.news24.com/SouthAfrica/News/coronavirus-crisis-companies-engineers-rally-to-sas-emergency-ventilator-cause-20200401">immediate responses</a> and short-term time horizons. This is for good reason. Yet there are initial signs of how the crisis may be shaping longer-term assumptions about business and its context. </p>
<p>The spread of the pandemic has brought to the fore the need for business leaders to recognise the crucial interdependencies between business and its environmental, social, and governance context. </p>
<p>In addition, given the massive public sector contributions to companies during the crisis, and recognising companies’ reliance on healthy societies, business leaders will need to appreciate amendments to the social contract that underlies societal support for their operations. </p>
<p>They will need to do much better in working with others in safeguarding planetary boundaries, strengthening the social immune system, and building capable and accountable states. </p>
<p>Below I set out five implications of the pandemic for business leaders.</p>
<h2>Paying attention to planetary boundaries</h2>
<p>The emergence of the virus is linked to humans’ callous treatment of wild and domesticated animals for food and dubious medicinal benefit. COVID-19 thus shows that current approaches to the trading and consumption of wild and domesticated animals are not only ethically and ecologically problematic, but also highly risky to ourselves. </p>
<p>More broadly, the risks of zoonotic diseases (those that spread to humans from animals) have risen as people increasingly squeeze wildlife into ever tighter corners. As noted by the author <a href="https://www.nytimes.com/2020/01/28/opinion/coronavirus-china.html?smtyp=cur&smid=tw-nytopinion">David Quammen</a>, as </p>
<blockquote>
<p>we disrupt ecosystems… we shake viruses loose from their natural hosts.</p>
</blockquote>
<p>Many scientists – and also an increasing number of <a href="http://www.ethicalcorp.com/wake-call-we-must-live-within-our-planetary-boundaries-avoid-future-pandemics">business leaders</a> – thus see COVID-19 as a tragic example of the broader risks to business and societies from our seeming inability to address environmental risks associated with climate change, biodiversity loss, and other “<a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1467-6486.2012.01073.x">planetary boundaries</a>.”</p>
<h2>Strengthening the ‘social immune system’</h2>
<p>COVID-19 highlights for businesses their interdependence with the social fabric in which they are embedded. One implication is that businesses are directly affected by the scope and quality of countries’ social welfare systems. Provisions of the welfare state, including sick leave, have turned out to be crucial. They not only cushion the blow to vulnerable workers, but also help reduce the spread of the disease.</p>
<p>A related concern is the vicious cycle between COVID-19 and poverty and social inequality. Poor people are particularly exposed to contracting the disease, and they are less likely to receive good medical attention if they get sick. They are also much more exposed to the negative economic impacts. </p>
<p>The health of the society on which businesses depend thus depends on the existence of a decent social welfare system and the absence of extreme poverty and inequality. This has been referred to as the “<a href="https://www.theatlantic.com/health/archive/2020/03/how-will-coronavirus-end/608719/?fbclid=IwAR32QbguQ1ugrSEKHbY4zuZZogIRxI_4u7qH_NMk07nEz5gynLBl3sFhqjQ">social immune system</a>.” Business leaders will need to recognise how vital it is for their companies’ long-term health, as well.</p>
<h2>Building capable and accountable states</h2>
<p>For the last 50 years, many business leaders inspired by <a href="https://theconversation.com/can-capitalism-solve-capitalisms-problems-130427">Milton Friedman and his doctrine</a>, or just motivated by selfishness, have chipped away at the idea that we need a strong state. The emphasis has been on reducing the role of the state and leaving more and more responsibilities to market actors. </p>
<p>But now business leaders are crying out for decisive government action in response to COVID-19. The assumption that we don’t need capable governments has been turned on its head.</p>
<p>Business leaders have also stood idly by in recent years as political leaders have self-servingly <a href="https://theconversation.com/scientists-want-to-build-trust-in-science-and-technology-the-alternative-is-too-risky-to-contemplate-116269">eroded confidence in science</a>. COVID-19 has highlighted the folly of this. </p>
<p>The US’s President Donald Trump and Brazil’s Jair Messias Bolsonaro <a href="https://www.sciencemag.org/news/2020/03/insane-many-scientists-lament-trump-s-embrace-risky-malaria-drugs-coronavirus">openly derided scientific advice</a> on the pandemic. President John Joseph Pombe Magufuli of Tanzania has urged churches to stay open because the coronavirus is “<a href="https://www.bloomberg.com/news/articles/2020-03-22/tanzanian-president-under-fire-for-worship-meetings-amid-virus">satanic</a>.” </p>
<p>COVID-19 is showing how leaders’ lack of interest in or inability to make good use of science can have disastrous consequences. It is showing up with great urgency a similar problem with other serious but more longer-term challenges, such as climate change.</p>
<p>At the same time, there are concerns that some government leaders are using the crisis as an opportunity to deepen their authoritarian grasp on societies. They are applying <a href="https://www.economist.com/leaders/2020/03/26/the-state-in-the-time-of-covid-19?cid1=cust/ednew/n/bl/n/2020/03/26n/owned/n/n/nwl/n/n/A/436254/n">surveillance mechanisms</a> to control the pandemic, but also to control people. </p>
<p>This is expressing itself in states<a href="https://www.theguardian.com/world/2020/mar/31/coronavirus-is-a-chance-for-authoritarian-leaders-to-tighten-their-grip"> known for their authoritarianism</a>, such as China and Hungary. But a much broader range of states are using technologies to monitor people in ways that would have been considered preposterous a few months ago.</p>
<p>So, on the one hand, business leaders will need to recognise the need to build capable states and evidence-based government. At the same time, they will also need to be proactive in ensuring that states remain accountable and respectful of individual freedoms. </p>
<h2>Managing crises responsibly</h2>
<p>The COVID-19 crisis is many ways unique. But it is also part of a broader pattern of increasingly frequent crises, as we push beyond planetary boundaries. </p>
<p>In South Africa, businesses were just recovering from a <a href="https://www.drought-response-learning-initiative.org">record-breaking drought</a> when the crisis hit. In Australia, people were still reeling from <a href="https://www.bloomberg.com/news/articles/2020-01-12/the-wildfire-crisis-is-starting-to-hurt-australian-companies">disastrous fires</a>. </p>
<p>Business leaders will need to recognise that crises will become less exceptional and thus their responses must become better prepared, more proactive, and more responsible. They must respond to both the synergies and tensions between business and community resilience. </p>
<p>Often, ensuring business continuity is a vital contribution that business leaders can make to the communities in which they operate. For example, in many countries pharmacies and retailers still have products in store. This isn’t an accident but the result of highly sophisticated and energetic responses that commenced already in January. </p>
<p>The news has also been full of impressive efforts by companies to <a href="https://www.weforum.org/agenda/2020/03/from-perfume-to-hand-sanitiser-tvs-to-face-masks-how-companies-are-changing-track-to-fight-covid-19/">repurpose</a> their production facilities or to make products and services <a href="https://news.sky.com/story/coronavirus-nhs-workers-offered-free-cars-and-bikes-to-keep-them-safe-during-outbreak-11964859">available</a> to medical workers.</p>
<p>Other efforts to continue with business during the crisis have been less benign. Some have sought to keep operating despite public health warnings to the contrary, such as some gyms. Others are more brazenly opportunistic, for instance by peddling questionable “<a href="https://www.forbes.com/sites/ninashapiro/2020/03/09/fda-issues-warnings-to-companies-selling-fraudulent-covid-19-therapies/#5cd9ea0e5a39">health products</a>” or through <a href="https://www.nytimes.com/2020/03/27/us/coronavirus-price-gouging-hand-sanitizer-masks-wipes.html">price gouging</a>.</p>
<p>Another form of opportunistic behaviour is for companies or associations to make use of the crisis to influence public spending or policy in their favour. For example, coal companies <a href="https://www.bloomberg.com/news/articles/2020-03-20/critics-cry-foul-at-miners-truckers-citing-virus-to-bend-rules">have lobbied hard</a> (and in the US, quite successfully) to benefit from government stimulus packages. This has been despite <a href="https://clubofrome.org/impact-hubs/climate-emergency/open-letter-to-global-leaders-a-healthy-planet-for-healthy-people/">widespread calls</a> to align such stimulus efforts with the imperative to address climate change.</p>
<p>In coming decades, business leaders will need to distinguish themselves by showing strong crisis management capabilities in maintaining business continuity, and by contributing more clearly to societal resilience.</p>
<h2>Collaborating in a new social contract</h2>
<p>The crisis is of such scope and depth that many business leaders and managers are engaging in a radical shift towards coordination and collaboration with the government and civil society organisations. In South Africa, for example, business leaders have <a href="https://www.businesslive.co.za/bt/opinion/2020-03-29-the-crisis-and-co-operation-this-time-may-indeed-be-different/">established</a> working groups interacting with national government to coordinate the crisis response in terms of public health, as well as social and economic impacts. </p>
<p>This shift is as swift, far-reaching, and seemingly natural as would have been unimaginable a few months ago. </p>
<p>The challenge for the next few years will be for a similar commitment to collaboration to address shared social and environmental problems before they manifest in crises like this one.</p><img src="https://counter.theconversation.com/content/135064/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Ralph Hamann does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>COVID-19 has brought to the fore the interdependency of business and society. It’s time for amendments to the social contract that underlies societal support for business.Ralph Hamann, Professor, University of Cape TownLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1319622020-02-27T14:31:59Z2020-02-27T14:31:59ZSustainable start-ups should consider corporate venture capital first<figure><img src="https://images.theconversation.com/files/316313/original/file-20200220-10985-vp454j.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C5760%2C3819&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Sustainable ventures can markedly contribute to Canada’s economy and employment with the right investor strategies to help them grow to medium and large size.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Urgent issues like the climate crisis, environmental degradation threatening millions of species, social inequality and other challenges mean that the <a href="https://doi.org/10.1016/j.jclepro.2015.07.133">global economy needs to immediately transform</a> itself <a href="https://doi.org/10.1016/j.jclepro.2016.03.176">to become sustainable</a>. </p>
<p><a href="https://doi.org/10.1007/s10551-010-0656-1">Sustainable start-ups</a> are showing us the way with <a href="https://doi.org/10.1016/j.jclepro.2012.08.013">smart business models</a> having economic, social and environmental value. </p>
<p>Toronto’s <a href="http://ripplefarms.ca/">Ripple Farms</a> is an example demonstrating the power of aquaponics to sustainably produce organic greens and seafood throughout the year. To connect urbanites with the land, the company’s business model combines product offerings with education on urban agriculture. </p>
<p>Similarly, <a href="https://waterlooenergy.com/about-sustainable-living-centre.html">Waterloo Energy Products</a> sells a full range of residential and commercial renewable energy designs including geothermal, solar, LED lighting equipment, water treatment solutions and much more. By offering a one-stop shop at its Sustainable Living Centre, they have made renewable energy choices much easier for consumers. </p>
<p>Both firms bundle products and services in different ways with a potential to <a href="https://doi.org/10.1080/14693062.2016.1197094">expand internationally</a>. </p>
<p><a href="https://doi.org/10.1080/24694452.2018.1523001">Many companies</a> <a href="https://doi.org/10.1016/j.eneco.2018.07.015">in Canada’s sustainable sector</a> have similar potential to export Canadian products and expertise around the world.</p>
<h2>Finding the right investor</h2>
<p>But Canada needs these <a href="https://doi.org/10.1007/s11365-018-0498-3">firms to grow rapidly and substantially</a> so they can create jobs that other unsustainable businesses are shedding as they become obsolete. <a href="https://doi.org/10.1016/j.jbusvent.2015.10.002">Investors are key</a> <a href="https://doi.org/10.1086/321301">to accelerating</a> this urgently needed start-up growth in Canada’s sustainable sector.</p>
<p>According to the United Nations’ seminal <a href="https://sustainabledevelopment.un.org/content/documents/5987our-common-future.pdf">Brundtland Report</a>, sustainable development should meet the needs of current generations without compromising the capacity of future generations, ensuring a balance between economic growth, care for the environment and social well-being.</p>
<p>These <a href="https://doi.org/10.1007/s11187-011-9401-0">three main components of sustainable development</a> are considered together, not as separate goals. <a href="https://doi.org/10.1111/acfi.12599">Good governance</a> is required to ensure and oversee all three of them.</p>
<p>In this complex business environment, finding investors to scale up new companies and, even more importantly, finding the <a href="https://doi.org/10.1016/j.frl.2019.101321">right investors</a>, is challenging. Start-up ventures burn through cash rapidly as they aim for a sale of the company — usually to other larger firms or on the stock market through an initial public offering.</p>
<p>Raising funds to grow start-up companies is an <a href="https://doi.org/10.1016/j.ejor.2015.10.051">ongoing challenge</a> that pulls management away from running the business. By finding <a href="https://doi.org/10.1016/j.jclepro.2016.08.080">knowledgeable, committed investors who understand the business</a>, a firm can ease the constant stress of raising capital while legitimizing the company to consumers, clients and stock markets.</p>
<p>Unfortunately, <a href="https://doi.org/10.1016/j.jclepro.2013.11.039">sustainable ventures face additional challenges</a> when it comes to investors compared to purely for-profit firms because they appear to have multiple competing goals. </p>
<h2>Stiff competition</h2>
<p>Sustainable firms often face powerful well-established competitors — renewable energy firms, for example, must overcome obstacles in <a href="https://www.taylorfrancis.com/books/e/9781351280204/chapters/10.4324/9781351280204-11">a world entrenched in oil and gas</a>. </p>
<p><a href="https://doi.org/10.1016/S0160-791X(02)00062-3">People are hesitant about new technology</a> even if it improves their lives. The choice between fossil fuels and renewables is not unlike trading a typewriter in for a laptop. This <a href="https://doi.org/10.1016/j.enpol.2012.06.009">fear of uncertainty</a> gives traditional firms market advantages that <a href="https://doi.org/10.1016/j.respol.2015.11.005">new companies must overcome</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316870/original/file-20200224-24690-1qhm3ep.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Renewable energy firms must often overcome obstacles in an oil-and-gas world.</span>
<span class="attribution"><span class="source">(Thomas Richter/Unsplash)</span></span>
</figcaption>
</figure>
<p>Many sustainable industries still in technological development stages are also <a href="https://doi.org/10.1016/j.jclepro.2016.08.080">capital-intensive</a>, meaning that they need a lot of capital upfront before they can demonstrate viability. </p>
<p>In addition to their unfamiliarity to potential stakeholders, some have experienced highly publicized failures, such as <a href="https://www.wired.com/2012/01/ff_solyndra/">Solyndra</a>, along the way to technological maturity. <a href="https://doi.org/10.1016/j.jclepro.2017.04.108">This can scare off investors</a>.</p>
<h2>Advice for sustainable companies</h2>
<p>My colleague Dave Valliere and I recently <a href="https://www.tandfonline.com/doi/abs/10.1080/00472778.2019.1681880">tested a quantitative model</a> using data on 184 entrepreneurial ventures. The analysis found that sustainable start-ups are better off choosing a different type of investor, one with aligned interests <a href="https://doi.org/10.1177%2F1476127004040913">who can lend it legitimacy</a> so that others will have confidence in it. </p>
<p>Perhaps surprisingly, it’s not so much <a href="https://doi.org/10.1080/136910699295965">angel investors</a> as <a href="https://doi.org/10.1016/j.jbusvent.2015.04.006">corporate venture capital</a> that can help these firms grow. In this model, the corporation usually sets up a separate division that looks for investments of interest to it.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/corporate-venture-capital-can-pay-but-only-if-you-get-the-structure-right-58215">Corporate venture capital can pay, but only if you get the structure right</a>
</strong>
</em>
</p>
<hr>
<p>The problem for most investors is that the <a href="https://www.econlib.org/library/Enc/bios/Akerlof.html">quality of a new venture is uncertain</a> until after it has grown to a point where it is steadily increasing revenues and generating healthy profits. </p>
<p>A new venture <a href="https://doi.org/10.1002/smj.2589">needs to be novel enough to have a competitive advantage while familiar enough to be understood and accepted</a>. As a result, many investors look for signs of the hidden potential of a venture. An example could be the <a href="https://doi.org/10.1287/mnsc.49.8.1003.16399">quality of existing stakeholders in the venture, such as successful, high-profile members on the board of directors</a> or the presence of professional investors. </p>
<p>Our study indicates that angel investors, venture capitalists and investment banks do not create confidence in sustainable ventures. It found that investment banks can even have adverse consequences for businesses in the sustainable sector that are seeking legitimacy. </p>
<h2>Try a different strategy</h2>
<p><a href="https://www.theguardian.com/business/2012/aug/09/financial-crisis-anniversary-trust-in-banks">A lack of confidence in bankers since the 2008 financial crisis</a> could be playing a part. Usually, new ventures begin with angel investors and move on to venture capital and other types of more sophisticated financiers who can further develop and market the firm. Instead, we advise sustainable firms to use a different strategy and seek out corporate venture capital as it is uniquely more helpful to sustainable ventures.</p>
<p>The usual investment <a href="https://doi.org/10.5465/amr.2013.0496">life cycle progression of a new venture</a> — moving from angels to venture capital and then to more sophisticated types of investors — may not always hold. </p>
<p>A venture attracts additional capital by meeting an investor’s screening criteria, but the most recent investors matter too. Current investors <a href="https://doi.org/10.1509%2Fjmkg.72.4.058">can lend legitimacy</a> to attract other investors. According to our findings, the sustainable sector gains that legitimacy with corporate venture capital over other types of investors.</p>
<p>This result suggests that the credibility of corporate venture capital plays an important role in the development of sustainable businesses.</p>
<p>A corporate venture capital firm may choose to invest in a venture with promising technology, even if the company has weak management or an unlikely strategy; sometimes, they just want to <a href="https://doi.org/10.1016/j.respol.2005.01.017">learn from another’s technology</a> to help them make strategic choices about future technological options.</p>
<h2>Positive reputation</h2>
<p>If they’re interested in the venture as a whole, a corporate venture capital firm can replace the management and/or the strategy of the new venture after acquisition. While the corporation offers its target more resources and strategic guidance, it also <a href="https://doi.org/10.1016/j.indmarman.2013.10.005">gains due to</a> the <a href="https://doi.org/10.1016/j.indmarman.2010.02.020">positive reputation</a> of the new venture.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/316876/original/file-20200224-24685-kqrfxr.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Acquiring a startup can energize an otherwise stagnant, bureaucratic company.</span>
<span class="attribution"><span class="source">(Shutterstock)</span></span>
</figcaption>
</figure>
<p>Overall, a corporate venture capital endorsement of a new venture and its potential acquisition suggests to the market that the company is poised to be a <a href="https://doi.org/10.1016/j.jbusvent.2014.07.012">disruptive winner in the industry</a>. Corporate venture capital cuts through the noise that often accompanies sustainability goals. Change is in the wind for an industry, and others want to jump on the upward trajectory.</p>
<p><a href="https://doi.org/10.1080/09654313.2019.1648385">Sustainable ventures can markedly contribute to Canada’s economy</a> <a href="https://doi.org/10.3390/su11143963">and employment</a> with the right investor strategies to help them grow to medium and large size. Some of these startups are exciting in many ways. Most significantly, they will <a href="https://yorkspace.library.yorku.ca/xmlui/handle/10315/36913">improve Canadians’ lives</a> and ensure we have a healthier environment.</p><img src="https://counter.theconversation.com/content/131962/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Deborah de Lange has received funding from SSHRC and Ryerson University.</span></em></p><p class="fine-print"><em><span>Dave Valliere has received funding from SSHRC and Ryerson University.</span></em></p>Sustainable start-ups are better off choosing an investor with aligned interests that can lend them legitimacy.Deborah de Lange, Associate Professor, Global Management Studies, Toronto Metropolitan UniversityDave Valliere, Professor, Entrepreneurship and Strategy, Toronto Metropolitan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1300262020-01-24T13:38:15Z2020-01-24T13:38:15ZWinning worker hearts and minds is key to companies achieving their green goals<figure><img src="https://images.theconversation.com/files/311777/original/file-20200124-81346-1svitz5.jpg?ixlib=rb-1.1.0&rect=12%2C162%2C3999%2C2508&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Every employee needs to embrace a company's sustainability mission if it hopes to succeed. </span> <span class="attribution"><span class="source">pcruciatti/Shutterstock.com</span></span></figcaption></figure><p>A lot of companies say they care about the environment and commit to certain goals but don’t end up doing much about it.</p>
<p>A <a href="https://corpgov.law.harvard.edu/2018/12/03/state-of-integrated-and-sustainability-reporting-2018/">whopping 78% of companies</a> in the Standard & Poor’s 500, for example, issued sustainability reports in 2018 and <a href="https://www.cbd.int/financial/2017docs/un2017-scr100.pdf">66% of all U.S. companies committed</a> to the U.N.’s Sustainable Development Goals in 2017 through either explicit statements about the goals or implicit actions that support them. </p>
<p>But <a href="https://www.mckinsey.com/business-functions/sustainability/our-insights/sustainabilitys-deepening-imprint">relatively few</a> say they’ve actually embedded the sustainability goals into their business strategies or into departments such as communications, <a href="https://www.greenbiz.com/article/why-human-resources-your-sustainability-ally">human resources</a> and <a href="https://www.supplychaindigital.com/supply-chain/sustainability-supply-chain-key-cost-saving-and-efficiency-hsbc-report-finds">supply chain management</a>, corporate functions that can play a huge role in boosting sustainability. A <a href="https://www.bain.com/insights/achieving-breakthrough-results-in-sustainability">2016 report</a> found that just 2% of companies actually achieve their sustainability goals. </p>
<p>This matters because the <a href="https://thehill.com/policy/energy-environment/411444-trump-administration-doubles-down-on-climate-skepticism">Trump administration’s skepticism</a> about the threat of climate change has made it clear that the federal government won’t be leading the charge to avert the worst of it. That means it’s up to companies to pick up the baton. </p>
<p>So what separates companies that succeed at becoming more sustainable from those that fail? </p>
<p>I spoke with over 100 CEOs, managers and regular employees at 25 multinational companies that have committed to becoming more sustainable in hopes of answering that question. My research, published in my book “<a href="https://smallactionsbigdifference.net">Small Actions, Big Difference</a>,” suggests it begins with a shared purpose – and winning over employee hearts and minds. </p>
<h2>Elevating sustainability</h2>
<p>Part of the problem is that companies have made <a href="https://www.nytimes.com/1970/09/13/archives/article-15-no-title.html">profit maximization</a> their primary purpose for decades. That has made all other aims, such as sustainability, secondary and separate from a company’s main mission.</p>
<p>The result has been that companies tend to departmentalize sustainability efforts, depriving the company of the ingenuity and passion of the employee base in addressing one of the most complex problems of our times. Since sustainability permeates every aspect of a company’s operations – from procurement to disposal – it’s vital to embed a purpose promoting it in every department. </p>
<p>Perhaps not surprisingly, companies that want to achieve goals like reducing their carbon footprint or waste tend to do better when they make sustainability an integral part of their core purpose and communicate this commitment to the entire staff. That’s clear from a recent analysis I conducted of environmental, social and governance performance data on <a href="https://my.refinitiv.com/content/dam/myrefinitiv/products/9753/en/BrochuresandF/ASSET4assetmasterExecutiveFactsheet_a4.pdf">over 3,000 companies during a 10-year period</a>. I found that companies that said they have an “overarching vision” that combines financial goals with social and environmental ones tended to perform better on a measure of their impact on the environment. They also tended to perform better financially as well.</p>
<p>Why? Because workers like a corporate purpose that trumps profit. Research has shown <a href="https://static1.squarespace.com/static/5c03c5ab96e76fd25bee4c32/t/5d6b98cfc6d43900015b3f74/1567332560551/Harvard+Business+Review+August+2019.pdf">articulating a purpose</a> beyond profit <a href="https://books.google.com/books?hl=en&lr=&id=Ls1HOwAi3lcC&oi=fnd&pg=PR1&dq=corporate+purpose+employee&ots=7pkhnQgVHX&sig=XN3ju8FMgr4e3yB8AY5KIYBL8u0#v=onepage&q=corporate%20purpose%20employee&f=false">resonates</a> with a company’s workforce. </p>
<p>For my book, I spent countless hours over a period of five years interviewing executives, middle managers and factory workers to try understand what separates the companies making successful strides in reducing their environmental impact from those still struggling. </p>
<p>What I learned from the reams of interview data that I collected and transcribed is that the successful companies endow a sense of “sustainability ownership” in their employees so that everyone – from the mailroom to the boardroom – picks up the baton as part of his or her day job. And it all starts with defining a corporate purpose, the all-important question of “why do we do what we do,” something that three companies did particularly well. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&rect=7%2C169%2C4913%2C3105&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311694/original/file-20200123-162185-kfl1ll.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Employee buy-in has been vital to Unilever’s success in becoming more sustainable.</span>
<span class="attribution"><span class="source">John Thys/AFP via Getty Images)</span></span>
</figcaption>
</figure>
<h2>Saving lives by selling soap</h2>
<p>When Paul Polman took over as consumer goods giant Unilever CEO in 2009, he realized that the company had to transition to a new business model that accounted for the environmental and social realities of today’s world in order to survive.</p>
<p>Working with his leadership team, he came up with a <a href="https://www.unileverusa.com/sustainable-living/">new purpose for Unilever</a>: “to make sustainable living commonplace,” which was widely communicated to all workers using a variety of means from company YouTube channels to embedding “sustainability ambassadors” throughout the company. </p>
<p>The effort worked. Employees I spoke with clearly internalized and appreciated the new corporate purpose and culture. One factory worker in India put it succintly: “I would rather save lives than sell soap.” </p>
<p>Corporate executives credit this integration with Unilever’s success in becoming a greener company. From 2008 to 2018, the <a href="https://www.unilever.com/Images/uslp-performance-summary-2018_tcm244-536032_en.pdf">company says it cut greenhouse gas emissions by 52%</a>, water use by 44% and waste by 97%. Like the financial results companies report, sustainability figures are audited and verified by accounting firms. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=451&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=451&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=451&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=567&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=567&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311771/original/file-20200124-81403-11nkt14.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=567&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Former British Prime Minister Tony Blair, left, and Marks & Spencer CEO Stuart Rose, far right, discuss how to fight global warming in 2007.</span>
<span class="attribution"><span class="source">Leon Neal/AFP via Getty Images)</span></span>
</figcaption>
</figure>
<h2>No plan B</h2>
<p>British retailer Marks & Spencer began incorporating sustainability into its operations in 2007 <a href="https://global.marksandspencer.com/plan-a/">under the provocative name</a> “Plan A” – because “there is no Plan B for our one planet,” the company said. </p>
<p>From my interviews I learned the company uses a variety of strategies to ensure the mission is embraced by every employee, in part by appealing to the heart. For example, Marks and Spencer sponsors trips into local communities where their stores are located to show the impact of a changing climate and organizes informal after-work drinks at local pubs to discuss the crisis in a personalized way.</p>
<p>The efforts have paid off. For example, the company says <a href="https://corporate.marksandspencer.com/documents/reports-results-and-publications/plan-a-reports/plan-a-performance-update-2019">carbon emissions have plunged</a> 75% since 2007 and waste is down 35% compared since 2009, with none being sent to a landfill. </p>
<h2>Appeals to the head</h2>
<p>At IBM, environmental goal setting has long been an integral part of the company’s sustainability strategy. In contrast to Marks and Spencer’s appeal to an employee’s heart, however, IBM primarily appeals to the head – and the bottom line – as you might expect from an information technology company. </p>
<p>When discussing proposed goals with business units, IBM’s corporate staff identifies opportunities for cost savings as well as revenue growth. This helps employees gain an understanding of the environmental drivers and objectives behind each goal as well as the business and societal benefits. </p>
<p>For example, consolidating multiple computer servers that aren’t well utilized into one larger and more energy-efficient server not only reduces energy demand and greenhouse gas emissions but also frees up space, electricity and cooling capacity to support new business. </p>
<p>Seeing this kind of data motivates workers to innovate on the sustainability front because they’re able to see how it’ll lead to more money and environmental well-being for the company – and ultimately greater financial rewards and a sense of contributing to a greater cause as well.</p>
<p>These types of initiatives helped IBM <a href="https://www.ibm.com/ibm/environment/annual/IBMEnvReport_2018.pdf">reduce its carbon emissions</a> by a third from 2005 to 2018 and its nonhazardous waste by 68% since 2014. Almost 90% of the remaining waste gets recycled. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/311773/original/file-20200124-81411-14ep985.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Amazon and other tech employees staged a walkout during the Global Climate Strike in 2019, another example that many people prefer to work for companies that have a higher purpose.</span>
<span class="attribution"><span class="source">Karen Ducey/Getty Images</span></span>
</figcaption>
</figure>
<h2>A higher purpose</h2>
<p>My interviews, <a href="https://hbr.org/2018/11/9-out-of-10-people-are-willing-to-earn-less-money-to-do-more-meaningful-work">countless surveys</a> and <a href="https://link.springer.com/article/10.1007/s10869-010-9159-4">scholarly research</a> show employees – particularly younger ones – prefer to work at companies that serve a higher purpose. </p>
<p>The good news is that companies <a href="https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans">are increasingly vowing</a> to pursue more than just profits and incorporating issues like protecting the environment and their communities into their purposes. </p>
<p>But it’s not enough to make promises. And even companies that sincerely want to do better can find it hard if they don’t bring their employees along for the ride. Small actions can lead to big difference. </p>
<p>[ <em>Deep knowledge, daily.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=deepknowledge">Sign up for The Conversation’s newsletter</a>. ]</p><img src="https://counter.theconversation.com/content/130026/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>CB Bhattacharya has previously consulted for some of the organizations he researched for "Small Actions, Big Difference." He also founded the Sustainable Business Roundtable at ESMT Berlin and the Center for Sustainable Business at the University of Pittsburgh, both of which had some organizations researched for the book as members, including IBM.
</span></em></p>Companies that want to reduce their environmental footprint need to ensure their entire workforce feels a shared sense of purpose.CB Bhattacharya, Professor of Sustainability and Ethics, University of PittsburghLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1136482019-03-19T18:48:55Z2019-03-19T18:48:55ZSuper power: why the future of Australian capitalism is now in Greg Combet’s hands<figure><img src="https://images.theconversation.com/files/264575/original/file-20190319-60986-1c70bkq.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Greg Combet wants to use his super power to free business from being hostage to short-term share-price and profit measures.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Right now Greg Combet is arguably the most powerful man in Australia.</p>
<p>Earlier this month the former trade unionist and federal politician <a href="https://www.afr.com/personal-finance/superannuation-and-smsfs/not-activism-industry-supers-plan-to-reshape-business-for-the-long-term-20190228-h1btu5">declared his intention</a> to transform Australian business. His radical idea: to promote the concept of “long-term value”.</p>
<p>Combet is chairman of Industry Super Australia, which represents 16 of Australia’s biggest industry funds and thus the vast bulk of the <a href="https://www.superannuation.asn.au/ArticleDocuments/269/SuperStats-Mar2019.pdf.aspx?Embed=Y">A$630 billion</a> saved by more than 11 million Australians.</p>
<p>These super funds would use their massive clout as investors to transform corporate culture, Combet told the Australian Financial Review. He wants business to focus on long-term sustainability, not be “hostage to the short-term share price or six-monthly profit announcements”.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/with-a-billion-reasons-not-to-trust-super-trustees-we-need-regulators-to-act-in-the-public-interest-102441">With a billion reasons not to trust super trustees, we need regulators to act in the public interest</a>
</strong>
</em>
</p>
<hr>
<p>“The energy sector is an example of where long-term thinking is needed,” he said. “We have to start making a significant transition from old coal-fired power plants to renewable energy generation and distribution.”</p>
<p>But his ambition is much broader than this one controversial issue.</p>
<h2>Not that revolutionary</h2>
<p>Not everyone is happy about the idea of industry super funds, which have strong links to trade unions, pushing companies to focus on environmental, social and governance performance. </p>
<p>This week the Australian Prudential Regulatory Authority, responding to Treasurer Josh Frydenberg’s “urgent” request for guidance on “aggressive union behaviour”, <a href="https://www.smh.com.au/politics/federal/super-funds-warned-by-regulator-over-social-activism-20190318-p5155k.html">warned super funds</a> to keep away from financial activism. </p>
<p>Heather Ridout, a former head of the Australian Industry Group who now chairs the AustralianSuper fund, has told Frydenberg to <a href="https://www.afr.com/personal-finance/superannuation-and-smsfs/stop-playing-politics-with-super-australiansupers-heather-ridout-tells-josh-frydenberg-20190304-h1byc6">stop politicising super</a>.</p>
<p>Combet says his agenda has nothing to do with “activism”.</p>
<p>He’s right. His ideas really aren’t that revolutionary. In other parts of the world they would simply be regarded as responsible investor behaviour.</p>
<p>Australian super funds have a legal obligation to manage their members’ funds for the long term. </p>
<p>Representing “retirement timeframe” interests means super funds want companies to think about how to sustain value over decades.</p>
<p>Up to now this has not necessarily translated into funds directly and consistently communicating their long-term interests to company boards. Combet’s declaration signals this is going to change.</p>
<p>There is plenty of <a href="https://hbr.org/2017/02/finally-proof-that-managing-for-the-long-term-pays-off">research</a> to suggest this will be a good thing. </p>
<p>Companies focused on the long term are more successful. They prioritise ethical behaviour, customer service, community value, environmental stewardship and other non-financial outcomes. Over the longer term they also have stronger share price growth.</p>
<p>Investors who help companies focus on the long term thus help themselves. It is a virtuous circle.</p>
<h2>But revolutionary enough</h2>
<p>According to the <a href="https://www.asx.com.au/documents/asx-compliance/cgc-principles-and-recommendations-fourth-edn.pdf">ASX Corporate Governance Council</a>, not known for revolutionary subversion, the issues that effective boards must now take into account include “culture, conduct risk, digital disruption, cyber-security, sustainability and climate change”. There are others coming.</p>
<p>In the wake of the revelations of the banking royal commission, it would be irresponsible for the heads of superannuation funds to sit by as passive observers and not direct boards to these issues.</p>
<p>Globally, institutional investors, governments and companies are working together to move beyond solving specific issues such as corporate social responsibility, sustainability reporting and ethical investment. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-is-corporate-social-responsibility-and-does-it-work-89710">What is corporate social responsibility – and does it work?</a>
</strong>
</em>
</p>
<hr>
<p>In fact, the United Nations Principles of Responsible Investment initiative, boasting more than 7,000 corporate and investor signatories, <a href="https://www.unpri.org/asset-owners/investment-strategy">exhorts</a> investors to go beyond “strictly financial benefits” and engage with companies on environmental, social and governance factors. <a href="https://corporatereportingdialogue.com/">Integrated approaches</a> are at the forefront of practice.</p>
<p>Australia has been lagging behind. So for Combet to spell out a clear ambition to harness the power of the superannuation sector for long-term thinking is significant.</p>
<p>Perhaps he senses the opportunity to lead changes to the Australian economy, and society, that were out of reach during his 19 months as federal industry minister.</p>
<p>He wields immense power in a sector with even greater latent power. Superannuation assets now total <a href="https://www.superannuation.asn.au/resources/superannuation-statistics">A$2.7 trillion</a>, and funds own about <a href="https://www.businessinsider.com.au/australian-super-funds-now-own-almost-half-of-the-australian-stock-market-2018-3">half of Australian shares</a>. If Combet can leverage Industry Super Australia’s fund bloc to get the ball rolling, the momentum could be truly ground-breaking.</p>
<p>We will now see which of Australia’s economic elite join his mission and collaborate in building global momentum. Those who want to resist, or who cannot organise themselves to participate, should know the clock is now ticking.</p><img src="https://counter.theconversation.com/content/113648/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Danny Davis is Executive Director of the Australian Institute of Performance Sciences</span></em></p>Superannuation fund supremo Greg Combet has a radical idea: to promote the business concept of ‘long-term value’.Danny Davis, Executive Director, Australian Institute of Performance Sciences, and researcher at, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1113462019-02-13T19:17:35Z2019-02-13T19:17:35ZOne-third of Australians think banks do nothing for the greater public good<figure><img src="https://images.theconversation.com/files/258639/original/file-20190213-90479-18h4036.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">In a survey of 1,000 Australians, 35.4% agreed banking and financial institutions show 'no leadership for the greater good'.</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The leaders of our banks and financial institutions are seen as the most self-serving in the nation, according to a national survey undertaken by researchers at Swinburne University of Technology.</p>
<p>More than a third (35.4%) of respondents believe banking and financial institutions show “no leadership for the greater good”. This score is slightly worse than public perceptions of the Federal Government, substantially worse than religious institutions and significantly worse than trade unions.</p>
<p>The results, from a nationally representative sample of 1,000 Australians, also repudiate the <a href="https://www.ausbanking.org.au/media/media-releases/media-release-2018/banks-making-progress-in-delivering-better-customer-outcomes">Australian Banking Association’s claim</a> a year ago that “Australians believe banks are heading in the right direction”.</p>
<p>And given this survey was done in December 2018, before the <a href="https://financialservices.royalcommission.gov.au/Pages/default.aspx">Banking Royal Commission</a> had completed its work exposing misconduct in the financial services sector, it’s likely a future poll will show even greater community distrust of bankers.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/banking-royal-commission-no-commissions-no-exemptions-no-fees-without-permission-hayne-gets-the-government-to-do-a-u-turn-110974">Banking Royal Commission: no commissions, no exemptions, no fees without permission. Hayne gets the government to do a U-turn</a>
</strong>
</em>
</p>
<hr>
<h2>Transparency and accountability are crucial</h2>
<p>Our findings come from the initial results of the Australian Leadership Index, a new quarterly survey from the Swinburne Business School that measures and tracks community perceptions and expectations of leadership for the greater good across 13 societal institutions.</p>
<p>The index won’t be officially published until later in the year. But given the important public discussion about corporate leadership in the wake of the <a href="https://treasury.gov.au/publication/p2019-fsrc-final-report/">final report</a> of the banking royal commission, we think it’s useful to share a snapshot of our findings. </p>
<hr>
<p><iframe id="fXFqO" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/fXFqO/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>Consistent with other <a href="https://www2.deloitte.com/au/en/pages/financial-services/articles/deloitte-trust-index-banking-survey.html?utm_source=wp&utm_medium=blog&utm_campaign=fsi-deloitte-trust-index-2018&utm_content=web">studies</a> that highlight the importance of transparency and accountability to perceptions of trust, our research confirms the importance of these attributes to perceptions of leadership for the public good. </p>
<p>From a community perspective, leadership for the greater good occurs when leaders demonstrate high ethical standards, when they demonstrate transparency and accountability for their positive and negative impacts, and when they seek to balance the interests of multiple stakeholders, including the wider community in which their institutions are nested.</p>
<p>So, leadership for the greater good is reflected in what value leaders create, how they create value, and for whom they create value.</p>
<p>Unhappily, banking leaders are found wanting on all counts.</p>
<h2>The importance of how value is created</h2>
<p>But other institutions are also found wanting, with our results revealing a generalised pessimism about Australian leadership.</p>
<p>Our survey results shed light on where the public think leaders are failing and what the community expects of leaders and their institutions to serve the greater good.</p>
<hr>
<p><iframe id="6MnTr" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/6MnTr/2/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<hr>
<p>Notably, creating economic value is not a highly regarded aspect of leadership for the greater good. This is not to say it is unimportant. But on its own it is insufficient.</p>
<p>What looms largest in the public mind when thinking about the greater good is the social value that institutions create, how ethically they create this value, and their transparency and accountability for positive and negative impacts.</p>
<p>Our research demonstrates that leadership for the greater good is as much about <em>how</em> leaders create value for their stakeholders — from their employees to their customers to society-at-large — as it is about <em>what</em> value they create and <em>for whom</em> they create value.</p>
<p>It’s not hugely complicated.</p>
<p>And yet, as revealed by the endless, unedifying parade of misconduct in government, business, religious, sporting and other civil society institutions, community standards and expectations are too often observed in the breach.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/what-banking-regulators-can-learn-from-deepwater-horizon-and-other-industrial-catastrophes-108989">What banking regulators can learn from Deepwater Horizon and other industrial catastrophes</a>
</strong>
</em>
</p>
<hr>
<p>In the wake of the banking royal commission, the Australian community has a golden opportunity for a thoroughgoing discussion about the leadership we need to protect and enhance the public interest.</p>
<p>We hope the Australian Leadership Index will contribute to that discussion, by making all our data freely accessible through a new data visualisation platform. This will enable easy tracking of how institutions are performing according to public perceptions of their impact on the public good.</p>
<p>Wise leaders focus on the greater good. It behoves all leaders to create this new culture of public leadership.</p><img src="https://counter.theconversation.com/content/111346/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Samuel Wilson receives philanthropic funding for the Australian Leadership Index.</span></em></p><p class="fine-print"><em><span>Jason Pallant receives philanthropic funding for the Australian Leadership Index.</span></em></p><p class="fine-print"><em><span>Timothy Colin Bednall receives philanthropic funding for the Australian Leadership Index.</span></em></p>More than a third (35.4%) of respondents surveyed by the Australian Leadership Index believe banking and financial institutions show “no leadership for the greater good”.Samuel Wilson, Senior Lecturer in Management, Swinburne University of TechnologyJason Pallant, Lecturer of Marketing, Swinburne University of TechnologyTimothy Colin Bednall, Senior Lecturer in Management, Fellow of the APS College of Organisational Psychologists, Swinburne University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1019292018-08-22T12:57:10Z2018-08-22T12:57:10ZWhy PepsiCo is splashing out US$3.2 billion on SodaStream<figure><img src="https://images.theconversation.com/files/233082/original/file-20180822-149469-8jhwt1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/background-cola-ice-bubbles-163528064?src=KODhy54GFDiPaK50Sr7axQ-1-21">Shutterstock</a></span></figcaption></figure><p>PepsiCo announced it would acquire SodaStream for <a href="https://techcrunch.com/2018/08/20/pepsi-is-buying-sodastream/">US$3.2 billion</a>, a 10% premium on SodaStream’s stock price and a 100% increase since the beginning of 2018. </p>
<p>On the surface, it could be that a large, diversified food and beverage company like PepsiCo is simply looking to go even further by expanding into related, but new markets. After all, PepsiCo is more than 100 times the size of SodaStream. As well as owning drinks like Pepsi-Cola and Gatorade, it includes Lay’s, Walkers and Doritos crisps. </p>
<p>But we believe this acquisition is much more than that. It is a bold statement by outgoing PepsiCo CEO Indra Nooyi regarding her legacy and what she wants the future of PepsiCo to be – more socially minded, with a greater emphasis on sustainability.</p>
<h2>SodaStream’s value</h2>
<p>SodaStream, headquartered in Israel, is no ordinary company. Under the leadership of Daniel Birnbaum, CEO since 2007, it has succeeded in operating by its stated values and challenging the status quo of the drinks industry.</p>
<p>Birnbaum has remained steadfast in his commitment to creating economic value through social values, not in spite of them. In many SodaStream initiatives over the past decade, he has championed the Judaic concept of <em>tikkun olam</em> (“repairing the world”), which entreats individuals to promote the welfare of society as a whole, and he has <a href="https://www.youtube.com/watch?v=KDdH_7GjW40">instilled this attitude in his employees</a>. </p>
<p>SodaStream took on soft drinks industry behemoths Coca-Cola and Pepsi, emphasising convenience, health <a href="https://www.prnewswire.com/news-releases/sodastream-wins-2017-business-intelligence-group-sustainability-award-300544035.html">and environmental sustainability</a>. By providing people with the tools to make their own carbonated drinks, it encourages them to drink sparkling water in reusable bottles.</p>
<p>Birnbaum <a href="https://www.news.com.au/finance/business/manufacturing/its-propaganda-its-hate-sodastream-chief-accuses-boycotters-of-antisemitism/news-story/b21da26c77132ee92b966963d64217f7">challenged activists</a> within the Boycott, Divestment and Sanctions Movement, who maintained that SodaStream’s factory in the occupied West Bank, where Arab and Jewish employees worked side by side, perpetuated Israel’s oppression of the Palestinian people. He also fought Israeli Prime Minister Benjamin Netanyahu to grant Arab workers permits when the company <a href="https://www.bloomberg.com/news/features/2017-12-20/how-sodastream-makes-and-markets-peace">moved to a new plant in Israel</a>. </p>
<p>Birnbaum has led SodaStream with the conviction that focusing on societal values will create long-term economic and financial value. Given that SodaStream’s stock traded at US$11.40 in August 2015 and this acquisition values SodaStream at over US$140 per share, it seems that his conviction has paid off. </p>
<h2>A more sustainable future</h2>
<p>While SodaStream’s DNA has been shaped by its commitment to societal impact, PepsiCo was better known for sugary beverages and salty snacks – neither of which are very healthy and connected with a growing global obesity epidemic and mass farming practices that by their very nature cause environmental damage.</p>
<p>This is something PepsiCo CEO Nooyi recognised and <a href="https://www.fastcompany.com/3066378/how-pepsico-ceo-indra-nooyi-is-steering-the-company-tow">since she became CEO</a> in 2006 she has prioritised more sustainable strategies over the long term – economically, socially and environmentally. Under her leadership, PepsiCo has acquired several healthier food companies, including Sabra Hummus, Naked Juice <a href="https://www.fool.com/investing/2018/06/01/pepsico-continues-its-push-into-healthy-snacks.aspx">and healthy snacks brand Bare</a>. It has also redesigned its production and supply chain activities <a href="http://www.pepsico.com/sustainability/sustainable-sourcing">to become more green</a>. </p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/233086/original/file-20180822-149466-m7zv5y.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Socially conscious Indra Nooyi.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/maysbusinessschool/5170476032/in/photolist-8SU3ou-8SQXfv-Zg8F93-byhidA-8SU3hw-8SU3iA-8SU3ho-8SQXeZ-Zg8FwY-Z1BjKQ-8SQXkp-8SQXkz-YVMLUU-ZjYuuW-4LTx1c-Z1BmnY-ZjYwDW-8SQXmR-YjE9sJ-CigfFS-FCP6U1-ZmquTQ-ZjF5w4-CigxaU-26ZXeNk-YG6LuV-27h9tGo-Z1BtkW-Z1AWL9-Z1vUjL-Zj3Yra-YjybJ9-Cigo6b-Zmvvfw-YjEgjj-Zk52SA-ZenTQQ-Z1BdZ1-Yo8dnV-Yo8ske-Yd6HU5-ZmqggQ-ZpkrXR-ZhJF8V-YjxJ5C-YjDFv7-ZpkNFV-Z1vQqo-Zf1Q7U-YU2hG5">Mays Business School / flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>This latest investment shows PepsiCo’s continued commitment in this direction. Although Nooyi is retiring in October, incoming CEO Ramon Laguarta is the face of the acquisition, committing to SodaStream’s operations and employees. Just as Birnbaum has championed his values to create economic value at SodaStream, Nooyi and Laguarta believe the same can be done at PepsiCo – even if it is a much slower process.</p>
<h2>Culture change</h2>
<p>Because changing a company’s culture is so difficult, there’s no obvious way to do it. One approach is to use acquisitions. For example, in 2000, Unilever acquired social impact pioneer Ben & Jerry’s <a href="https://www.bbc.co.uk/news/business-18167345">for over US$300m</a>. In 2007, Clorox bought natural care company Burt’s Bees <a href="https://www.theguardian.com/sustainable-business/burts-bees-clorox-sustainable-change">for almost US$1 billion</a>. In both cases, the much larger acquirers made it clear that they were buying both the operations and the social values, to learn from the values and leverage them in their other operations. </p>
<p>In the strategy and acquisitions realm, this is known as David influencing Goliath. Few large companies have embedded sustainability and social impact into their operations, investments and values <a href="https://foodinstitute.com/blog/sustainability-name-game-unilever">more effectively than Unilever</a> has in the 18 years since it bought Ben & Jerry’s. And PepsiCo’s acquisition of SodaStream is an investment towards decision-making based on social and economic impact. </p>
<p>Over the long term, with investments like this and with enough nudging and support, corporate cultures can change. Leaders like Paul Polman at Unilever, Nooyi at PepsiCo and Birnbaum at SodaStream have demonstrated that it’s possible for corporate cultures to adapt and evolve, letting investments with a social impact drive economic success. </p>
<p>Of course, it’s too early to tell whether PepsiCo’s decision to buy SodaStream will pay off. But it’s easy to see why the company is making this acquisition and it’s easy to see the significant intangible value it could have for PepsiCo.</p><img src="https://counter.theconversation.com/content/101929/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>It’s a bold move from outgoing Pepsico CEO Indra Nooyi.Shlomo Ben-Hur, Professor of Leadership and Organisational Behaviour, International Institute for Management Development (IMD)Brian Bolton, Associate Director, Global Board Centre, International Institute for Management Development (IMD)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/767712018-08-13T10:22:07Z2018-08-13T10:22:07ZWalmart tried to make sustainability affordable. Here’s what happened<figure><img src="https://images.theconversation.com/files/231517/original/file-20180810-2894-1eljuak.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Can Walmart go green while maintaining its commitment to low prices?</span> <span class="attribution"><span class="source">AP Photo/Tom Uhlman</span></span></figcaption></figure><p>What a difference the birth of a granddaughter can make. </p>
<p>For Lee Scott, who ran Walmart from 2000 to 2009, the arrival of his granddaughter not only <a href="https://books.google.com/books?id=NZWrBAAAQBAJ&pg=PT32&lpg=PT32&dq=lee+scott+walmart+sustainability+%22granddaughter%22+born&source=bl&ots=v0C2lpjRxW&sig=w0DDA9Vqi8haEptJfVu8-oNYOuA&hl=en&sa=X&ved=2ahUKEwiG09Si3r_cAhVD6lMKHXHeAscQ6AEwDHoECAMQAQ#v=onepage&q=lee%20scott%20walmart%20sustainability%20%22granddaughter%22%20born&f=false">convinced</a> him the threat of global warming was real but set him on a course that altered the very DNA of the <a href="https://www.forbes.com/global2000/list/#tab:overall">world’s largest retailer</a>. He decided he wanted to use its size and resources to make the world an “even better place for all of us,” changing the way millions shop in the process. </p>
<p>In 2005, midway through his tenure, he challenged his employees: “What would it take for Walmart to be that company, at our best, all the time?” </p>
<p>The answer became Walmart’s <a href="https://corporate.walmart.com/global-responsibility/sustainability/">sustainability program</a>, an ambitious effort to figure out how to get its budget-conscious customers to buy more sustainable products. Of course, it was more than Scott’s granddaughter that pushed the retailer in this direction. A <a href="https://topdocumentaryfilms.com/wal-mart-the-high-cost-of-low-price/">dismal perception</a> among the public as well as a <a href="https://finance.yahoo.com/quote/WMT/chart?p=WMT#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%3D">stagnant stock price</a> also played roles in prodding Scott and other Walmart officials to take the company in a more environmentally aware direction. </p>
<p><a href="https://scholar.google.com/citations?user=cvvmqUAAAAAJ&hl=en&oi=ao">We</a> <a href="https://www.researchgate.net/profile/David_Hyatt5">spent</a> <a href="https://doi.org/10.1177/0008125617695287">five years</a> studying the program – speaking with Walmart’s sustainability leaders, its suppliers and others who have a stake in the company’s activities such as environmental groups and farmers. Our findings highlight both the promises and perils of what one Walmart executive optimistically termed the “democratization of sustainability.”</p>
<h2>Glaciers, landfills and shopping bags</h2>
<p>During our extensive research into the implementation of Walmart’s sustainability program, we found many executives from the CEO on down who were passionate about making the company more environmentally friendly. Before the retailer even began its program, corporate executives traversed the globe to better understand what was at stake. </p>
<p>We were told stories of Scott’s summer 2005 trip to the top of Mount Washington in New Hampshire, where <a href="https://www.mountwashington.org/research-and-product-testing/past-projects/climate-change-and-air-pollutant-impacts-to-new-englands-rare-alpine-zone.aspx">scientists take measurements</a> of the ice and the wind to measure the effects of climate change and air pollution. There he met with Environmental Defense Fund President <a href="https://www.huffingtonpost.com/fred-krupp/walmart-the-awakening-of_b_9253920.html">Fred Krupp</a> and some of the scientists to discuss the company’s environmental impact and what it could be doing differently. On that same trip, he also met with maple syrup farmers who explained how climate change was affecting their harvests. </p>
<p>Other company leaders made trips to parched cotton fields, landfills covered with Walmart shopping bags and melting Arctic glaciers, all with the aim of gaining a deeper understanding of sustainability and engaging with environmental groups, journalists and critics.</p>
<p>But it still wasn’t clear where all this was going until August of that year, when <a href="https://theconversation.com/us/topics/hurricane-katrina-8452">Hurricane Katrina</a> hit New Orleans, causing extensive human suffering and property damage along the coast.</p>
<p>Walmart, in an unusual move, <a href="http://www.washingtonpost.com/wp-dyn/content/article/2005/09/05/AR2005090501598.html">gave local managers wide discretion</a> in helping communities respond and, along with a few other large retailers, worked hard to get needed supplies to the area. In the context of <a href="https://theconversation.com/5-things-that-have-changed-about-fema-since-katrina-and-5-that-havent-83205">widely reported government failures</a> during the crisis, Walmart <a href="https://www.huffingtonpost.com/ryan-scott/how-hurricane-katrina-cha_b_8043692.html">received praise</a> for its actions – a far cry from the usual criticism Scott received from social and political activists. </p>
<p>After Katrina, Scott had an epiphany, which culminated in that <a href="https://corporate.walmart.com/_news_/executive-viewpoints/twenty-first-century-leadership">speech</a> he made in October 2005 near Walmart’s headquarters in Bentonville, Arkansas, during which he announced the project: </p>
<p>“What if we used our size and resources to make this country and this earth an even better place for all of us: customers, associates, our children and generations unborn?”</p>
<h2>Seeking sustainability</h2>
<p>In the speech, Scott laid out Walmart’s sustainability vision to Walmart employees and suppliers. He called for reducing waste, using more renewable energy and selling products that “sustained people and the environment.” </p>
<p>In a way, these goals sounded easy. Simply cut down on waste, become more efficient, convince its legions of suppliers to make more sustainable products and sell them at its “low, low prices.” Sustainability goes up, costs go down, everybody wins. But as Scott and his successors learned, this was easier said than done. </p>
<p>Some aspects were relatively straightforward. The company’s efforts to operate more efficiently produced <a href="http://corporate.walmart.com/2017grr/performance-highlights">significant environmental value</a> – and helped its <a href="https://www.environmentalleader.com/2012/10/walmart-to-save-150m-with-sustainability-initiatives-in-fy13/">bottom line</a>. The efficiency of its fleet of trucks doubled within a decade. Walmart <a href="https://corporate.walmart.com/2018grr/">has now converted 28 percent</a> of the energy sources powering its stores and operations globally to renewables. </p>
<p>And last year, the <a href="https://corporate.walmart.com/2018grr/reducing-waste">company diverted 78 percent</a> of its global waste from landfills, instead finding ways to recycle, reuse or even sell the garbage. Its goal is to eventually get to 50 percent renewables and zero waste in Canada, Japan, the U.K. and U.S. by 2025.</p>
<p>Selling products that “sustained people and the environment” was harder. By 2008, its was clear that progress was not being made as fast as the company had expected. </p>
<p>Walmart had a challenging job. While the <a href="https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html">market</a> for sustainable products is large and growing, it has primarily catered to people with a lot of disposable income <a href="http://www.nielsen.com/eu/en/insights/reports/2015/the-sustainability-imperative.html">who can afford</a> to pay the “goodness” <a href="https://www.luxurysociety.com/en/articles/2018/02/how-luxury-brands-are-practicing-sustainability-creative-ways">premium</a> for things like Toyota Priuses and organic foods. </p>
<p>What about the majority of consumers who usually see the <a href="https://www.sustainabilityconsortium.org/downloads/consumer-science-research-compendium/">high price of sustainability as a barrier</a>? Are sustainable products a luxury good only attainable by the well off? </p>
<p>The questions and challenges of selling sustainable products escalated over time. What is a sustainable product? How could it be measured effectively and efficiently? And how could this information create value for the company and customers? Would people be willing to pay for it if it was impossible to keep the costs down?</p>
<p>Two interconnected challenges it faced are particularly illuminating: the lack of a sustainability standard and how to convince suppliers and customers to go along. </p>
<h2>What’s ‘sustainable’ anyway?</h2>
<p>Walmart leaders quickly learned that the absence of a credible sustainability standard hampered their ability to market new products. </p>
<p>Back then, marketing products as “sustainable” was anything goes. While a few marketing attributes, like “organic,” are <a href="https://www.usda.gov/topics/organic">verified</a> by the U.S. Department of Agriculture, for the most part companies were free to call their products “sustainable,” “natural” or “good for you,” regardless of whether it was true or not. </p>
<p>The need for a standard crystallized when Walmart asked suppliers for proposals for a <a href="https://corporate.walmart.com/_news_/news-archive/2008/04/21/wal-mart-consumer-behavior-shows-buying-green-is-going-mainstream">2008 Earth Day promotion</a>. It wanted to specifically promote products that were sustainable. Suppliers responded with such a vast range of claims that Walmart managers could not figure out which products to include. Examples of traits that made a product “sustainable” ranged from having “reduced” packaging material – though there was no gauge as to what it was reduced from – to the use of non-toxic ingredients or the product’s overall recyclability. </p>
<p>A subsequent promotion of Campbell’s soup with a green “Earth Day” label (instead of its customary red one) generated external criticism and accusations of “greenwashing.” That is, some <a href="https://thewashcycle.wordpress.com/2009/04/13/campbell%E2%80%99s-is-going-green-or-are-they%E2%80%A6/">bloggers</a> claimed sustainability at Walmart simply meant taking existing products and putting green labels on them.</p>
<p>Lessons like these led Walmart to seek a way of defining what sustainable means for all its products – a mammoth scale given that the company had over 60,000 direct suppliers and a single store could sell about <a href="https://corporate.walmart.com/_news_/news-archive/2005/01/07/our-retail-divisions">142,000 products</a>. So, in 2009, the company helped establish the <a href="https://www.sustainabilityconsortium.org/">Sustainability Consortium</a>, a collaboration of retailers, suppliers, universities, environmental groups and others to create a data-driven index of sustainability.</p>
<p>The consortium would eventually produce a sustainability “toolkit” with key performance indicators and guidance for achieving sustainability at the product category level whether these be laundry care products, computers or beer. </p>
<p>Such indicators could then be used by consortium members in communications with their suppliers, typically in a sustainability scorecard that the supplier would complete. For instance, a manufacturer might be asked if it had plans for reducing harmful emissions – and if it didn’t, the thinking initially went, this type of information could eventually be passed on to consumers who could then make their own judgments.</p>
<p>The problem was, relying on customers didn’t work.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/231584/original/file-20180812-2909-r28tvo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Getting its budget-conscious customers to choose sustainable products was one of Walmart’s biggest challenges.</span>
<span class="attribution"><span class="source">AP Images for Walmart/Gunnar Rathbun</span></span>
</figcaption>
</figure>
<h2>Focusing on suppliers – not consumers</h2>
<p>Most corporate efforts to become more sustainable are based on the premise that <a href="https://ashtonmanufacturing.com.au/66-of-consumers-willing-to-pay-more-for-sustainable-goods-nielsen-report-reveals/">consumers are willing</a> to pay more for eggs that are organic or coffee that is sustainably sourced. </p>
<p>This posed a dilemma for Walmart since its margins are so thin and most of its customers shop there for the ultra-low prices. How could they be convinced, en masse, to pay a bit more because something is tagged as sustainable? And what would be the best way to let them know a particular product was more sustainable than another? Company leaders believed, based on internal surveys, that although its customers desired (or would in the future desire) more sustainable products, many did not have the means or desire to pay extra. </p>
<p>And while Walmart’s implementation of sustainability metrics into its supplier scorecards gave it insight into supplier practices, they did not provide detailed, verifiable information required for a customer-facing label.</p>
<p>This led Walmart to focus less on consumers and more on suppliers. If it could just make sure its products were more sustainable or at least that it was able to offer more options – without a meaningful increase in price – it could go a long way toward achieving its goals. And consumers wouldn’t even realize they’re helping make the world a better place. </p>
<p>Walmart’s merchants were ready to listen. The supplier scorecards that started rolling in 2012 helped Walmart identify inefficiencies in its supplies’ own supply chains, just as the retailer had found in its own operations years earlier. Walmart used them to push suppliers to seek out similar low-cost innovations in their operations – so they could become more sustainable without altering product price tags – and aligned 5 percent of its employees’ performance goals on sustainability improvements, thus incentivizing buyers to ask about, and suppliers to report on, sustainability metrics. </p>
<p>Early indications are that Walmart’s supplier-focused product sustainability strategy has been influential. A 2014 <a href="http://purestrategies.com/downloads/the-path-to-product-sustainability">study</a> by sustainability consultancy Pure Strategies surveyed a broad range of 100 companies such as Timberland, General Mills and Coca-Cola to better understand what it takes to operate sustainably. It found that Walmart was the top-cited retailer driving suppliers’ investments in product sustainability, with 79 percent identifying the retailer as influential. </p>
<h2>It’s ‘complicated’</h2>
<p>Many of the primary lessons that Walmart has learned so far relate to an emergent understanding of the complexity of selling low-cost sustainable products.</p>
<figure class="align-right ">
<img alt="" src="https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=900&fit=crop&dpr=1 600w, https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=900&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=900&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1131&fit=crop&dpr=1 754w, https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1131&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/229464/original/file-20180726-106511-ug5gwo.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1131&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Walmart Chairman Rob Walton.‘</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Walmart-Shareholders-Meeting/0197bc33de7440539e20c974b65a96a6/5/0">AP Photo/Gareth Patterson</a></span>
</figcaption>
</figure>
<p>Commenting about the difficulty developing its sustainability index quickly, Rob Walton, Walmart chairman and son of the founder, <a href="http://fortune.com/2012/04/17/wal-mart-chairman-how-we-came-to-embrace-sustainability/">told a panel</a> in 2012: “But good gosh, this is really complicated stuff, and it’s giving our buyers information to inform decisions and compare products. It will be a great day when we can give consumers that information.”</p>
<p>Walmart’s efforts showed that balancing cost and sustainability is possible but difficult to implement. For companies, labeling a low-cost product as “sustainable” makes it harder to justify charging a higher price for a similar good that bears that label. And retailers would prefer not to waste limited shelf space providing those options.</p>
<p>Customers may <a href="https://www.unilever.com/news/press-releases/2017/report-shows-a-third-of-consumers-prefer-sustainable-brands.html">prefer</a> sustainable practices yet be unable to pay the premium, even when it’s very little. So, while Walmart can push in this direction, it probably cannot create a mass market for low-cost sustainable products on its own. The retailer and others who wish to develop such a market will likely continue to struggle with what counts as “sustainable enough” for price-conscious customers. </p>
<p>Until that question is answered, sustainable products are likely to remain “luxury” goods that fail to penetrate into the mainstream.</p>
<p>But if we care for the next generation, as Lee Scott did when he decided Walmart was going green, Walmart’s goal of bringing greater scale and scope to the typically niche market of sustainability is a vital one. </p>
<p>“As you become a grandparent,” Scott <a href="https://grist.org/article/griscom-little3/">told a journalist</a> in 2006, “you just become more thoughtful about what will the world look like that she inherits.”</p><img src="https://counter.theconversation.com/content/76771/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>David Graham Hyatt is affiliated with the University of Arkansas, which in partnership with Arizona State, founded the Sustainability Consortium with a lead gift from Walmart. </span></em></p><p class="fine-print"><em><span>Andrew Spicer does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Two business professors spent five years studying Walmart’s ambition project to bring sustainability to its millions of budget-conscious customers – a plan that began with the birth of a granddaughter.Andrew Spicer, Associate Professor of International Business, University of South CarolinaDavid Graham Hyatt, Research Associate Professor of Supply Chain Management, University of ArkansasLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/982492018-06-20T04:37:48Z2018-06-20T04:37:48ZWhat will freight and supply chains look like 20 years from now? Experts ponder the scenarios<p>The Australian government is developing a <a href="https://infrastructure.gov.au/transport/freight/national-strategy.aspx">national freight and supply chain strategy</a>. As part of that effort, we created a set of scenarios describing what Australia’s future might look like 20 years from now. In evaluations by a large number of experts of all the future drivers of change we identified, two emerged as the most powerful and uncertain: widespread use of automation, and increased pressure to become environmentally sustainable.</p>
<p>We also explored what Australia should do to remain successful in each of these possible futures. Each scenario was crafted as a rich description of the future, full of elements relevant to supply chains and freight. </p>
<p>To illustrate what the world might look like in each of these futures, several “news articles” accompany the scenarios. They tell us of a fleet of robots that deliver parcels by air and ground directly to Australian homes. They describe a container of Australian wines travelling from Victoria to Shanghai without human intervention, using <a href="https://www.smh.com.au/technology/autonomous-ghost-ships-are-coming-to-revolutionise-freight-20170905-gyatcs.html">autonomous ships</a> and <a href="https://theconversation.com/au/topics/autonomous-vehicles-1007">vehicles</a>. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/guilt-free-online-shopping-can-parcel-deliveries-ever-be-truly-carbon-neutral-77629">Guilt-free online shopping: can parcel deliveries ever be truly carbon-neutral?</a>
</strong>
</em>
</p>
<hr>
<p>In one scenario, China has become the sole dominant power in its half of the planet. In another, the world economy has fragmented into blocks, with barely any trade between them. Cyber-attacks, terrorism and slander are used as weapons to disrupt supply chains in one scenario. In another, a whole new generation of consumers, the Alphas, demands high levels of service and fast delivery in everything they buy.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=336&fit=crop&dpr=1 600w, https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=336&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=336&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=422&fit=crop&dpr=1 754w, https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=422&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/223700/original/file-20180619-38819-18mkm61.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=422&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Container terminals have long used autonomous vehicles and machinery, and autonomous ships are on the way.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:9-028_Rotterdam_ECT.jpg">Quistnix/Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span>
</figcaption>
</figure>
<h2>How did we create these scenarios?</h2>
<p>We started by asking 52 experts in freight and supply chains about things they expect will be different two decades from now. These interviews revealed more than 200 future drivers of change. We validated these in a survey with an even larger group of experts. </p>
<p>We then used 32 families of these drivers as the building blocks to create <a href="http://cscl.space/scenarios">four scenarios</a>:</p>
<ol>
<li><a href="http://cscl.space/scenarios/s1.pdf">The Rise of the Machines</a> – a world where technology dominates everything we do</li>
<li><a href="http://cscl.space/scenarios/s2.pdf">Enter the Dragon</a> – China is the dominant force in an increasingly fragmented world</li>
<li><a href="http://cscl.space/scenarios/s3.pdf">Flat, Crowded and Divided</a> – Australia’s population has soared, to the point that easy access to cheap labour
has nullified any hopes of a technological revolution</li>
<li><a href="http://cscl.space/scenarios/s4.pdf">Big Brother Goes Green</a> – the effects of climate change are increasingly real, and both governments and savvy consumers demand that companies meet high environmental standards. </li>
</ol>
<p>We made sure that each scenario was plausible and internally consistent. The scenarios were designed to be very different from the present and from each other, and to complement each other as a group.</p>
<p>While these scenarios are fun to read and thoroughly grounded in data, they are not predictions. Their purpose is not to forecast what the world <em>will</em> look like in 20 years. </p>
<p>Instead, the scenarios present us with several versions of what the world <em>might</em> look like. Their purpose is to help us <em>prepare</em> for what the future could bring. I like to think of scenario planning as a vaccine against future surprises.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/to-service-global-trade-todays-ships-and-cargo-are-smarter-than-ever-46032">To service global trade, today's ships and cargo are smarter than ever</a>
</strong>
</em>
</p>
<hr>
<p>The four scenarios served as the stage for a series of workshops conducted across Australia with a total of 90 experts. In these workshops, the experts discussed the challenges and opportunities each scenario presents for Australia’s freight and supply chains. They proposed ways for Australia to be successful in each scenario, and compared notes on suggestions that worked well across multiple scenarios.</p>
<p>We collected more than 15,000 words’ worth of handwritten expert recommendations in our four workshops. We transcribed and analysed all of them, and prepared a complete summary of the most frequent and robust ideas. These are included in our project’s <a href="https://infrastructure.gov.au/transport/freight/freight-supply-chain-priorities/research-papers/files/Scenario_planning_report.pdf">final report</a>.</p>
<h2>So what do the experts recommend?</h2>
<p>In the experts’ recommendations, it is easy to identify three major themes that are common to all four scenarios.</p>
<p>The first is the ever-growing importance of data. For Australia to be successful in <em>any</em> of the futures we envisioned, large amounts of relevant, timely and reliable data must be gathered and shared. This will require open and common data standards to be developed. The need to protect confidentiality will have to be balanced with the need to share data.</p>
<p>The second major theme is the need to educate for the future. Training in robotics, automation, artificial intelligence (AI) and data analysis should be widely available. A focus on science, technology, engineering and maths (STEM) should start in Year 1. Workers who are displaced by new technologies should be retrained, so they can re-enter the workforce.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/coming-soon-to-a-highway-near-you-truck-platooning-87748">Coming soon to a highway near you: truck platooning</a>
</strong>
</em>
</p>
<hr>
<p>The third major theme is the need to rethink regulation. For Australia to be successful in any of the futures we explored, it is necessary to simplify, standardise and harmonise regulations across levels of government and geographies. Regulations, and the process to create them, must become more flexible and agile, so as to promote innovation.</p>
<p>There are other robust recommendations that, according to the experts, are necessary in all four scenarios. </p>
<p>One is to make exports a strategic priority of national importance. Making exports faster and easier was recommended. </p>
<p>Another is the need for cities to include logistics in their plans from the start, not as an afterthought.</p>
<p>The many insights obtained in our project are informing the freight and supply chain strategy that the Australian government is creating. These will help those making long-term decisions to avoid future surprises that might not have been anticipated without a systematic examination of the many possible futures before us.</p><img src="https://counter.theconversation.com/content/98249/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The research project described in this article was funded by the Australian Government's Department of Infrastructure, Regional Development and Cities.</span></em></p>Supply-chain experts see reliable data, STEM education and smarter regulation as essential for Australia to succeed in an increasingly automated world under pressure to be environmentally sustainable.Roberto Perez-Franco, Senior Research Fellow – Supply Chain Strategy, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/910272018-02-01T13:30:46Z2018-02-01T13:30:46ZPutting a price on long term business value is hard – but never more vital than now<figure><img src="https://images.theconversation.com/files/204436/original/file-20180201-123829-1d1g7bk.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Firms run with the long term in mind can aim to provide social, environmental, and financial returns.</span> <span class="attribution"><a class="source" href="https://pixabay.com/en/money-home-coin-investment-2724241/">nattanan23</a></span></figcaption></figure><p>In the wake of the financial crash ten years ago, there has been renewed interest in how to value a company. The complex financial derivatives that appeared to be powerful tools for financial growth before the crisis turned out to be worthless. No one wants to make the same mistake again.</p>
<p>When in 2009 Paul Polman, during his first results presentation as chief executive of Unilever, announced he would not be providing the customary quarterly forecast of the firm’s future performance, the company’s share price plummeted. Here was a CEO, some analysts thought, who having taken the reins of one of the world’s consumer goods behemoths appeared clueless as to the future direction of the firm. Others took the opposite view: why would they lambast somebody for refusing to pretend to know what the future holds? Being in it for the long term does not, as many financial analysts think, simply equate to discounting today’s cash against tomorrow’s future value.</p>
<p>It was an early warning shot, and now nearly a decade later the markets are beginning to catch up with Polman. Among the recommendations of his 2012 review of the <a href="https://www.theguardian.com/business/2012/jul/23/stock-market-review-end-cash-bonuses">excesses of Britain’s stockmarket culture</a>, John Kay, professor of economics at LSE, suggested an end to the cycle of reporting quarterly results to shareholders in a bid to discourage short termism. Many firms have since scrapped the process. Crystal ball-gazing - or “forward guidance” in formal parlance – is being left to the eight out of ten financial analysts who express a preference for such market dowsing. </p>
<p>Others have echoed Polman’s sentiment. In a <a href="http://uk.businessinsider.com/blackrock-ceo-larry-fink-letter-to-ceos-2017-1">recent letter to blue chip company bosses</a>, Larry Fink, CEO of Blackrock, the world’s largest investment management firm, urged firms to look to long term value. Fink is seeking to ensure companies understand that long term growth stems from sustainability of the business model and operations, attention to environmental factors that could affect the company, and recognition of the company’s role in the communities in which it operates, including matters such as employees’ personal development and financial security. As Blackrock manages trillions of dollars of investments in public listed companies, it is among the largest single investor in these firms – and so has clout to make its feelings known.</p>
<h2>People and profit</h2>
<p>What matters to people – be they employees, shareholders, customers or collaborators – are the social footprints companies make when going about their business. People may not wish to work for a company they see operating in ways they disagree with. Nor may they want to buy its products or invest in it. Firms are judged by the company they keep, and billions of dollars are being pulled and reinvested elsewhere on the basis of the long term strategy – or lack of it – the business model and financial horizons a firm might adopt.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/204433/original/file-20180201-123852-1ndmzfy.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Unilever has pushed ahead with long term value goals, aiming for social and environmental as well as financial targets.</span>
<span class="attribution"><span class="source">Unilever</span></span>
</figcaption>
</figure>
<p>Consequently, investors and society more widely are beginning to wake up to the need for long term and sustainable business practices that pay attention to these so-called <a href="https://www.unpri.org/about/what-is-responsible-investment">environmental, social and governance factors</a>. And here, too, Unilever got in early: its <a href="https://www.unilever.co.uk/sustainable-living/">Sustainable Living Plan</a>, launched in 2010, aims to double revenue while halving the firm’s environmental footprint. </p>
<p>Unilever sells two billion products around the globe every day, everything from deodorant, soap and washing powder to margarine and ice cream. That involves a lot of plastic bottles, aluminium tubes, plastic tubs, and paper cartons – a formidable amount of material that would keep Sir David Attenborough awake at night. But it’s also what makes Unilever’s employees get up and go to work in the morning: not just to make Unilever’s shareholders money, but to save the planet. They now have a purpose that fosters their longer-term commitment to the company. </p>
<h2>New ways of measuring value</h2>
<p>The challenge is to articulate, and then calculate the net value of that purpose. Fink encourages companies to “articulate a path to financial performance”, while understanding “the societal impact of your business as well as the ways that broad, structural trends – from slow wage growth to rising automation to climate change – affect your potential for growth”. Companies, he laments, have not been specific enough about their long term strategies. Nor have they been specific enough about the long term value. </p>
<p>This represents an equally daunting ask for the accounting profession. At best, only half the value of a typical firm can be recorded. The other half – the difference between the book value and market value – is intangible. We need to quickly evolve accounting and audit practices if they are to capture the wider sentiment that drives a commitment to long term value created by purpose. </p>
<p>The good news is that work is already underway and initial results are in. They make interesting reading: according to a <a href="https://hbr.org/2017/02/finally-proof-that-managing-for-the-long-term-pays-off?">recent study by the NGO FCLT and consultants McKinsey</a>, around 167 of the 615 non-financial US companies (comprising 65% of the market value of US companies) adopt a long term value approach. Judged against their peers, these companies invest more, have higher quality earnings, and generate higher margins.</p>
<p>Had the rest of the publicly-quoted firms in the US adopted a similar approach this would have added another US$1 trillion in asset value, increased total US market capitalisation by 4%, and added 5m more jobs to the US economy, in turn generating an additional US$1 trillion in GDP. Maybe a focus on long term value also creates short term, and sustainable, rewards.</p><img src="https://counter.theconversation.com/content/91027/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Anthony Hesketh does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>More CEOs and investors are looking to long term value over short term profits – an approach that may net them both.Anthony Hesketh, Senior Lecturer in Management, Lancaster UniversityLicensed as Creative Commons – attribution, no derivatives.