On transitions and pitfalls from Coke, Microsoft, David Jones, The Iconic, and more

News from the front desk, Issue 433: Microsoft was accused of greenwash this week. It wasn’t long after this global giant announced it was “doubling down on sustainability” and putting it at the “core of every part of our business”.

What a joke, said the Tweeter:

“Seriously, do not let @Microsoft & @BradSmi get away with this flagrant greenwash. As long as it is holding exhibitions called “Empowering Oil & Gas With AI” & partnering with the likes of Exxon to extract more oil, any claim to “double down on sustainability” is 100 per cent meaningless

This week too online retailer The Iconic said it was now providing a search function for customers to filter by sustainability criteria on issues such as environment and animal welfare.

David Jones announced it was doing something similar with a map that allows customers to check on factory locations, the types of products they manufacture and to learn about the demography of staff employed at each site.

“This is just the first step towards full transparency and we will be progressively publishing further partners in the near future,” David Jones told media.

Last week BHP said it would improve its green copper credentials, and Atlassian joined RE100 and promised to use 100 per cent renewable power by 2025.

And today (Thursday), we opened a morning newspaper to see a full page ad from Coca-Cola saying it was using more recycled plastic. A notable 70 per cent of plastic bottles in fact would be made “entirely from recycled plastic by the end of 2019”. Part of its commitment to Australia’s 2025 National Packaging Targets, it said it’s enough to remove 16,000 tonnes of virgin plastic each year from 2020.

We’d already managed to survive the shock announcement late last year of Coke’s road to Damascus conversion that it would now collect and recycle its containers at music festivals. This followed a fight to the death to stop container deposit schemes.

While several good people have praised Coke for taking this stand, others have asked why it didn’t start earlier. And from our point of view, there are other questions to be answered. For instance, what happens to the plastic bottles when they’ve been recycled once? Do they stay in the loop and keep getting recycled and how often is it safe to do so? Plastic is not as durable as glass or metal so you’d imagine this gig is finite.

(We’ve been assured by the public relations people that we will have some answers after the Easter break.)

On Microsoft’s continuing work with fossil fuels, there’s an argument that fossil fuels will be with us for a while yet and the subtext being that someone has to do that work.

But surely Microsoft isn’t the only company that can help miners more efficiently extract oil, gas and coal. And surely it’s big and burly enough to be able to survive turning away work that doesn’t fit with its new sustainability ethos.

But while Microsoft and Coke were attacked after announcing they had embarked on the journey to sustainability, other similar announcements from big corporates are greeted with far less cynicism.

So what’s happening here?

Obviously, there is a good in doing something even just a bit better, and there is even more power in broadcasting the good you do.

But if you put your head up above the parapet with a good or noble idea while the rest of your business is involved in more nefarious activity, you risk getting it blown off.

Today though there is little choice for major corporates but to embark on the transition to a more sustainable platform.

The world has shifted. There is shareholder activism around climate change, there are the risks of climate change itself and growing pressures to identify and quantify those risks.

And that’s before we get to the growing pressures for better corporate, social and governance practices.

Deloitte partner Paul Dobson who heads up the risk advisory unit and advises on this kind of work says that in the past two years a lot has changed.

Two years ago maybe 80 per cent of Australia’s top 100 corporates were working on sustainability. Today, he says, there’s an even bigger surge forward into sustainability programs and rebranding.

The drivers, he says, are the underlying shifts in the broader community with concern for climate issues and issues around trust.

“Boards and executives are not immune to them. They are trying to respond because they impact share prices and a range of things.”

Coke, for instance, would have looked at the moves in public sentiment around plastic and straws. Two years ago it was not there, but now it’s “like a juggernaut”.

But managing the transition for a big corporate is a minefield, he says. The decisions on how to strategise sustainability, climate risk programs and manage the media messaging around them are complex.

“These large organisations have got big operations and they’ve been around for a long time. As they recognise issues, many are taking steps but they need to do it in an orderly way; it needs to be an orderly transition.”

Dobson says the best advice he can give is to get companies to consult as many stakeholders as possible and to tell the full story. In other words not just the positives, but the parts that are still a challenge and will take considerably more time to deliver.

“When I talk to clients it’s about the balance. The point is you can’t do it overnight and this gets lost in the Twittersphere and there are unrealistic expectations.

“I encourage my clients to engage with stakeholders, even those who don’t agree.

The critics on their part could be a bit more encouraging too, he says.

“If Coke is using more recycled content that should be encouraged and then ask what else can you do, rather than saying ‘you should have been doing this all along’.”

Admonishing instead of encouraging just makes organisations more reticent to change, he says.

Dobson says there is “less and less greenwash”, particularly as boards and the C-suite are at the receiving end of every more intense queries about how companies are tackling climate change and climate risk.

Consumers are on the move but at the other end are the pressures coming from the Task Force on Climate-related Financial Disasters.

Dobson says the TCFDs have forced directors to think about climate impact on their business and they can see there are reputational implications in not acting and a cost of capital implication, “so the solutions can’t be greenwash”.

So yes transition it’s hard work and complex and sometimes it may backfire or attract unfair criticism, but as the world wakes up to the fact of climate change and its many implications, there’s no other choice.