Sustainability must be integrated through the culture of the C-suite to be effective, according to business leaders at the Australia’s Sustainability in Business Conference & Exhibition in Melbourne last Thursday.
Steven James, chief executive of Teachers Mutual Bank, and a panel speaker at the Green is the New Black: The Growing Role of the C-Suite in Sustainability forum, said his organisation led from the top.
“It is the executive and board who drive sustainability at the bank,” Mr James said.
Mr James chairs the monthly sustainability committee, which has five C-Suite executives.
“I can tell you the executives are all animated, passionate and pushing the business agenda relentlessly forward. But lasting leadership on sustainability comes from everyone – from the board room to the mail room,” he said.
“Sustainability has been part of our philosophy for decades, even before it was a popular concept. We don’t use members’ funds to finance large-scale greenhouse gas pollution, and don’t use members’ deposits to directly lend to, or buy equity or debt in, any large-scale greenhouse polluting activities from fossil fuel exploration, extraction, production and use.”
Anthony Frencham, chief executive of DOW Chemicals Australia, said Australian businesses had a serious problem if they weren’t integrating sustainability through the culture of the C-Suite.
“It hit us in the 1990s and that is when we formed a sustainability council in the company,” he said. DOW Chemicals Australia appointed a chief sustainability officer in 2007. “By then it wasn’t tactical anymore; it wasn’t tick-box stuff. It had become strategic.
“That chief sustainability officer was there to help the corporation and the businesses to go and deliver on what was being demanded by our customers, by the market, and by society, and by then we had figured out that it was the right thing to do in any event.”
Kimberley Clark has engaged a global sustainability advisory panel, Jacqueline Fegent-McGeachie, head of corporate affairs and sustainability said.
“We have seven external people who are thought leaders in sustainability areas… they come together with the [global sustainability leadership team] and are critical in the evolution of our understanding and take-up of these concepts.
“As we know things in the sustainability space and our different material issues, insights are constantly changing. So they come together in closed-room environment where they are briefed and have a safe environment to learn, to ask questions, to challenge on different aspects.”
All speakers agreed that the C-Suite needs to have a good grasp of sustainability issues to mitigate risks to their company.
The importance of supply chain sustainability
Malcolm Rands, chief executive of New Zealand’s Eco Store, said the authenticity of the supply chain was an “amazing risk” because the company’s customer base was among the most informed and judgemental in the world.
“The specific risk for us is we use plant-based chemicals – rather than petrochemicals – but the trouble with plant-based chemicals at the moment is they are either taking out food land or tropical forests. We have a lot of strategy around that.”
Mr Rands just returned from New Britain in Papua New Guinea where Eco Store has a partnership with a long-established palm oil company.
“It is so ethical! They have been going since ’67. They are a thousand miles away from the closest orang-utan and they have got past the stage where they are just giving people a good life; they are now working with them to stop domestic violence. These are the sort of partners we are looking for.”
Algae are another minefield as there is a genetically engineered element.
“One of our competitors in the United States brought out algae products and they got attacked by all these groups and the eco movement,” he said. “So it’s a tricky path.”
Ms Fegent-McGeachie said Kimberley Clark was taking an innovative approach in sourcing the wood fibre that goes into its tissue products.
“As part of managing risk in our supply chain we do a lot of proactive engagement with the likes of WWF and Greenpeace,” she said.
The company is working on certifying its supply chain to Forest Stewardship Council standards.
“While all our products in Australia are certified, globally we actually can’t get our hands on enough FSC-certified pulp, which I also think indicates the pressure the forests are under.”
Kimberley Clark has committed to sourcing 50 per cent of its fibre from alternative sources by 2025.
“So we have been doing a whole lot of innovation and looking at a range of options around different materials that are much faster growing and more renewable than your typical tree.”
Kimberley Clark is about to launch its first FSC-certified bamboo product.
“It satisfies all the environmental standpoints but also all the community and economic standpoints as well,” Ms Fegent-McGeachie said.
What to do with waste
Another risk area is post-consumer waste. Kimberley Clark has worked with the Australian Food and Grocery Council to introduce recycling points for flexible plastic packaging and is researching how to divert nappies from landfill. They backed a nappy composting facility in Auckland several years ago and are currently supporting Relivit in Nowra, NSW, to set up an Australian nappy recycling plant.
MrRands says social responsibility will be key to businesses of the future. “I personally don’t think government is going to help us at all,” he says. “It is actually going to be progressive business that is going to pull humanity out of the problems we are in now.”
Clever businesses will go beyond social responsibility and sustainability to focus on regeneration.
For example, Eco Store’s laundry liquid is able to be used on organic gardens as a fertiliser after it leaves washing machines as grey water. “So instead of it being a waste product it is actually the food for the next process,” Mr Rands said.
The company is now working on applying its products to municipal waste.
Government’s war on sustainability
Mr Frencham said the Australian Government’s “flip-flopping around” on sustainability issues had had a “Somme-like effect” on the industry.??”A lot of the investments we have to make for a sustainable future – especially at my end of the spectrum – are billions and billions of dollars and are decades-long investments for you to get your returns.
“If you have flip-flopping around on renewable energy targets and on incentives for this or for that well frankly that’s where government getting involved corrupts the process.
“We really need the market to want to do this for all the right reasons and when oil has gone up to $100 a barrel, if you can’t start driving some sustainability around materials, then there is something fundamentally going wrong.”