With a disappointing political outcome at Rio+20, the president of the WBCSD says the only option is for business to spring into action and implement change at scale
Peter Bakker, the president of the World Business Council for Sustainable Business (WBCSD), believes that the corporate sector currently offers the best opportunity for saving the world.
Following the disappointing political outcome of Rio+20, he is on a mission to encourage business to move away from visioning the future and writing glossy reports to implementing change at scale.
Like other business leaders at Rio, he recognises that global solutions are unlikely in times of economic and financial crises, and the best alternative is to build coalitions at a more local level, with individual countries and cities, or as he and many others refer to them as “the coalitions of the willing.”
He rejects criticism that the 1,000 businesses that descended on Rio are not serious about creating change, pointing out that the 200 CEOs who attended the Business Action for Sustainable Development conference in Rio “don’t fly to bullshit around, but to have real discussions.”
Bakker, who has been in the post for six months, represents a refreshing younger and more radical voice amongst businesses, and some of the WBCSD’s more progressive members hope he is not held back by the older and more conservative CEOs who still make up the majority of the organisation’s membership.
A four point action plan has been developed by Bakker and he plans to spend the next few months getting it properly underway. The WBCSD will focus on sector and cross-sector coalitions, dialogue with government and encouraging more companies to join the progressive business camp.
“We have a global emergency and a global process which is completely not working to address that emergency” he says. “The last six months of negotiations has been very troublesome.
“There is no point in saying business is not doing its best or some are trying to sabotage change. Life is very simple in my mind, there are good people and bad people and good companies and bad companies.
“You can go home from Rio totally frustrated and create absolutely nothing, but if you see the result as half full, despite the disappointment, you will see hooks for processes, dialogues and for agreements around targets.
“I go back to the office and will write a positive and tough message to my members saying now it is time to kick into action. We need to create coalitions of the people who want to be good, who have plans to progress and make it attractive for other people to follow. The 20% of really bad guys we need to regulate out of existence.”
Bakker says companies are developing their approaches to sustainability, pointing out that 20 years ago most business leaders could not spell sustainability yet now serious companies have strategies and reporting as well as specialist staff.
But he says the WBCSD needs itself to make a step change by no longer concentrating on seeking to educate business.
“The time of creating awareness is behind us,” he says. “If you are not aware today then you are not a global leader in business so now we are going to concentrate on the scaling of solutions.
“In the past we would all work hard to write a brilliant report and then thought the job was done. Now if we write a report, that’s when the project starts.
“I don’t want self-satisfaction, which I saw at the corporate leaders forum in Rio, or people bringing me stories of CSR achievements. The truth is if you add up all the CSR programmes across the world and all the 200 plus commitments from this week, we are not nearly going to save the world.”
So what about Bakker’s four point plan. Well, firstly he plans to extend the WBCSD’s sector led coalitions to the tyre and chemicals industries.
He said success had already been achieved in the cement and forest sectors, which had provided great examples of how companies can share best practice and create common measurement and reporting standards.
Where he sees most potential, however, is creating cross-sector working groups that can create change at city level. Bakker met this week with the mayor of Rio who is keen to look at creating a collaborative project.
“With the majority of the world’s population living in cities, this is where we need to concentrate on creating change,” he says. “We need to take a systems point of view as a car company cannot make a city sustainable. We need to include every other sector such as public transport, construction and utilities.”
Where Bakker feels there needs to be innovation is in the whole field of reporting and this Autumn he will launch a major new project to help create a common methodology for companies to integrate impacts on ecosystems and biodiversity into accounting systems.
Although the project plan has not yet been finalised, more than 50 companies have already signed up to take part.
“I am going to push extremely hard on this notion of integrated reporting,” says Bakker. “The furthest front runner is Jochen Zeitz of Puma and PPR with his E P&L model and we need to find how this can work for all companies. We need to move to a world where non-financial reporting becomes rule-based.
“We need to think how do you change the way you think about the performance of a business so that you align the business with the world we want to create. We all talk about green growth but what do we mean by it and for us it has to be about growth which is inclusive.”
Bakker says it is vital to have a common reporting methodology and points to the fact that while most major companies now report their CO2 emissions, it is impossible to compare them because there is no agreed accounting rule.
While the WBCSD is putting its focus on accounting for nature, Bakker is only too aware that work also needs to start on the much more complex task of working out how companies can account for their social impacts. Puma has already started work on this.
“I was a voluntary ambassador against hunger for UN general secretary Ban Ki-Moon,” says Bakker. “I have seen people die from hunger and it is beyond a tragedy; it is amazing you and I can sleep at night when we know what is going on. We need to empower women. It is not acceptable that women are not part of this.”
Creating new accounting frameworks, however, won’t have the desired effect unless the financial system starts to put a value on companies’ sustainability performance. This is the reason Bakker also plans to bring together financial companies to look at ensuring this happens.
“The valuation of a business has to change and that’s why I need the banking sector to value these commitments,” he says. “If the capital markets measured the sustainability of companies then people like Paul Polman at Unilever would be seen as a god.”
What Bakker does not mention directly is the other side of the equation, that if the City does not put a value on sustainability, CEOs like Polman could be brought down if they have two quarters in a row of poor performance, with city figures likely to blame him for paying too much attention to saving the world rather than driving profits. He has already made enemies by challenging the status quo and no longer giving quarterly guidance.
However, Bakker does raise this concern more generally: “There are economic interests and most CEOs are not the owners of what they manage. In some of these transitions to including the externalities, there will be big shifts in economic systems and these need to be managed carefully because you do not all of a sudden want to kill something that is not yours, because then you will get a revolution from the other side, the capital markets, and you need to manage that.”
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