Borderless Executive Live: The Podcast
Candid conversations with business leaders on a borderless life. Hosted by Andrew Kris, Founding Partner of Borderless.
Borderless Executive Live: The Podcast
Why Smart Leaders Embrace Sustainability Even When the Spotlight Fades
Sustainability expert Mike Barber explains why sustainable business practices remain crucial despite losing some media spotlight and political traction in recent months. We explore how sustainability continues to gain momentum with investors, customers, and regulators while creating tangible business value through innovation, efficiency, and resilience.
• Nearly 10,000 global corporations now committed to science-based targets for net zero emissions
• Major investment firms like Brookfield continue deploying billions into renewable energy
• The role of Chief Sustainability Officer evolving from education to performance optimization
• Simple energy audits can yield 15% savings with zero capital expenditure
• Integrating sustainability early in R&D and product development creates significant value
• Circular economy initiatives like IKEA's refurbishment program generate new customer interactions
• Sustainability requires whole-organization thinking, not just leadership from CSOs
• Two-thirds of Fortune 500 purchasing officers cite sustainability as a strategic sourcing factor
• Carbon Tracker Initiative offers free investment-grade analyses of sector winners and losers
• Three key takeaways: sustainability is here to stay, creates business value, and requires leadership commitment
Hello and welcome to Borders Executive Live the podcast. My special guest today is Mike Barber. Mike is a very experienced executive at senior level working with FTSE companies and has a particular passion around sustainability and particularly in the energy transition sectors. His interest is best defined not just as mere interest but as a passion a passion for sustainability and how we can be used to add value to the way that companies operate. Is that a fair enough introduction for you, mark yeah?
Speaker 2:absolutely. Thank you, andrew, and I've been looking forward to this conversation because it seems that in the last few months, maybe, sustainability has lost a bit of its edge. People aren't talking about it so much. The geopolitical changes coming at us, especially from the other side of the Atlantic, maybe suggest that sustainability has lost some of its shine, but I don't think that's the case. So I think now is a great time to be talking about that, and why.
Speaker 1:Okay well, I certainly agree with you. I think it's taking a bit of a battering in the traditional sense. However, the requirements for sustainability is just not going to go away. I think, as you put it, mike, it's cemented in place as a fundamental business issue. Is that how you see it?
Speaker 2:too. It is, and I think it's requirements, but it's also opportunity as well, but it's also opportunity as well. So sustainability incontrovertibly remains on the minds of customers, clients, investors, regulators, society at large perhaps not with the razzmatazz that it's enjoyed for quite a lot of the last few years, but nevertheless it's here and certainly if you just casually look at news flow, there are so many examples of organizations doubling down on their commitment, whether that's looking at signups to the SBTI standard on net zero, which continues to grow and now is approaching 10,000 global corporations committed to that standard. Just a brief look at the news last week showed Brookfield Asset Management over 100 billion in investment deployed, saying they see geopolitics as an opportunity to perhaps pick up some bargains in the renewable energy space Consortium of investors, again last week with 1.5 trillion under investment, saying to their asset managers that their fundamental belief that sustainability and climate change remains a long-term route to risk or outperformance, and requiring their asset managers to develop their sophistication in understanding futures winners and losers.
Speaker 1:Yeah, you're absolutely correct. It's not going to go away, despite being hijacked by politics, which is at least our perception of this subject. Whether we like it or not, the plan is not going to get any cooler given our current rate of activities. You made some comment to me a while back about the role of chief sustainability officers. Perhaps one thing to question whether that's an appropriate title these days. If you don't want to enter into a political realm, would you have any other alternative titles to that? You may end up doing the same stuff, but maybe with a different title.
Speaker 2:Yeah, I mean I certainly think the role is evolving and perhaps initially the role is evolving and perhaps initially the role of chief sustainability officers or responsible business leads has been focusing on helping educate their organization and their leadership and help illustrate the possibilities that sustainability have and the demands that it might. Might, yes, but I think beyond that. Now most organizations have a sustainability strategy, with perhaps different levels of commitment to that, but most organisations have that strategy. They are disclosing to their investors and to their customers what they're doing around sustainability, and the opportunity is for, then, the chief sustainability officer's role to evolve in helping the organisation deepen its performance and access some of the opportunity, some of the innovation, some of the increased resilience that is on offer for organisations that take the thinking, take the forward look and amend their strategies and behaviors accordingly.
Speaker 1:I mean, I've seen you comment on identifying quick wins on energy and on waste. I mean, put that under the sustainability umbrella if you like, but this is just plain common sense, isn't it? Whatever your ultimate aim, that you've got to look for ways to optimize on energy use, on waste, as a way of making this business operate better, before you bring it into, before you major on it as a commercial strategy.
Speaker 2:People manage what gets measured. Sustainability has encouraged organisations to measure different aspects of their performance. And guess what? When you measure something, you find different ways of behaving and managing that performance. I remember a hospitals group with a large real estate footprint because of the north of 50 hospitals they run properly surveyed their energy footprint for the first time and identified a close to 15% annual saving in their energy bill without taking any capex. So a series of behavioural changes and managing hospitals' energy performance in the way they're intended to be managed produced a multi-million pound saving for one organisation with no need to go to the finance officer and ask for an investment budget, and that's not insignificant, yeah.
Speaker 1:And put a sustainability hat on that if you like, but it's just plain common sense that you'd want to do that. Same applies to other functions too, doesn't it Like R&D, for example? Every function has a role to play in looking at the sustainability of the business from a standpoint of their contribution to energy optimization and so on. Right yeah, absolutely.
Speaker 2:And I mean when I often think about the pharmaceutical industry. Life sciences and often drug discovery, is focused hugely on, and understandably on, drug performance, the beneficial impact it can bring patients, and the effort, the resources, the inputs required to manufacture that drug are often not thought of as a constraint until a very long way down the drug's discovery and you can absolutely get into situations where the quantum of input required to produce a drug is absolutely enormous. I think that there will be opportunities in that and other analogous situations to bring ideas around the ultimate product manufacturer's consideration far earlier into the discovery journey and perhaps with no need to undermine the ultimate effectiveness of the product but just to allow a new appreciation of what the eventual product lifecycle might look like. And circularity, I guess, is the kind of buzz that's come up over the past two years. That's brought a lot of new thinking and a lot of economic and commercial benefit to organizations as they've introduced that. So what?
Speaker 1:you're saying is put a sustainability lens on very early on in any new process and make it integral to that process rather than as an afterthought, as you're saying. Pharmaceutical is absolutely typical with such huge costs going on discovery, huge costs going on marketing. They're really the big crunches and then we'll think about manufacturing later. That's sometimes an impression. I'm sure I'm being a little unfair here, but there there is that element. It's always left to last. So if you can bring that sustainable lens in earlier, by the time you get to manufacturing on volume, you will have developed a really sustainable way to get to this final product which you're saying right, yeah, and I mean flipping, flipping industries entirely ikea, uh, for example.
Speaker 2:Over the past couple years they've introduced an ability to bring some product back into store for um for uh inspection and potential resale in some markets. Ikea furniture makes up 10% of the second-hand furniture market, so IKEA in that is involving itself in something that is already quite a big business, and in the most recent sustainability report, ikea talk about having handled half a million items in such fashion, having supplied more than 2 million customers with spare parts and replacement items, and that is a lot of customer interactions that they are benefiting from that likely wouldn't have been there had this possibility not been present.
Speaker 1:So I mean it sounds like to me, taking that EKR, they didn't do it only for sustainability reasons. It really makes good business sense. There's business value there. There's really true business value. That's, I think, the direction your argument goes to when you're talking with corporations. Right, it makes good business sense, there's a business proposition there and it's not a lost leader either, as far as I can tell from what I've read about EKR's efforts there. This is really a tangible, positive business process.
Speaker 2:Yeah, absolutely. I mean, two million additional customer interactions is not nothing.
Speaker 1:What I was going to ask you about really at this point is what about you know? How do you become sustainability literate in a company? I mean, you know, CSO is almost like a preacher, if you like, here, but I think there's a role for every executive, isn't there in this process?
Speaker 2:I think there is, and in some way I I think back to the information revolution that organizations went through maybe over the last 30 years and how things like erp systems helped or even required organizations to work together differently Because everybody could see they're part of the value creation process. In similar terms, I think sustainability offers something similar. I mean, I think that most organizations have got a chief sustainability officer or equivalent person. Most organizations have got a chief sustainability officer or equivalent person.
Speaker 1:Most organizations have that person within two levels of the CEO, so they are Usually the CEO himself or herself is the advocate here, is the driver of sustainability.
Speaker 2:Yes, yeah, yeah, yeah, absolutely, that has often and is often the case. Yes, absolutely, that has often and is often the case. Yes. So I think, taking that whole organisation view and asking oneself how can I make a contribution, how can I add additional value to my function by taking some of the sustainability ideas and thinking about non-financial value broadly, how can I do more and less? How can I produce more for my customers? How can I think of the long-term and deliver value in that context, in addition to meeting my immediate business objectives? All of that thinking will drive in the right direction. And then, finally, I'd say, just be aware of the magnitude of change that the world economy is going through, not just from a geopolitical perspective, but from a climate perspective and the changes to supply chains and customer demand.
Speaker 1:Well, you're saying, shutting your eyes will not make this stuff go away. It's a reality that we'll have to live with.
Speaker 2:go away. It's a reality that we'll have to live with. Indeed, I mean just the other week a survey of Fortune 500 chief purchasing officers, more than two-thirds said that sustainability was now or within three years going to be a material part of their strategic sourcing decisions. And that's because it's differentiation which organizations can can choose, and, you know, maybe they'd rather take that route to differentiation rather than going going by price well, indeed, I think I'm sorry, interrupted just there for a second.
Speaker 1:It's really saying sustainability is a wonderful strategy from a pure business economic perspective, but increasingly, of course, customers, whether they're consumers or upstream from consumers, demand a sustainable approach and it isn't just being woolly-headed or preachy, it's a reality of business that we'll all have to be far more sustainable in the way that we operate our businesses If we're to contribute to global well-being. Let's call it that. It's not some esoteric thing, it's just common business sense.
Speaker 2:It is. So I could briefly mention an organization called the Carbon Tracker Initiative and they focus on the high carbon emitting sectors so oil and gas, the chemicals industry, power generation and so on and they produce free investment grade analyst reports on sectors, identifying relative winners and relative losers as they see it, as judged by analysis of those companies and ports, their investment presentations and suggests questions that investors might ask management of those organisations. And I would say those are really really readable reports. They're free once you've registered, which is also free Just as a lens on how might someone critically appraise a relative winner or a relatively exposed organisation. I'd say that's a pretty good read over a lunchtime sandwich.
Speaker 1:Absolutely, just say the name again Forrest, would you please? The Carbon Tracker.
Speaker 2:Initiative.
Speaker 1:Carbon CTI, Carbon Tracker Initiative Absolutely so what's kind of a thought that we should be leaving our audience with at this point when we're talking about sustainability in this future year?
Speaker 2:So I'd really boil it down to three things, and I think we've touched on those as we've gone through our conversation, andrew. Firstly, sustainability is here to stay, and we rehearsed why that is the case. Secondly, that it's a route to value and resilience for their organisation. And then, thirdly, that this is a whole leadership discipline. It's value across the organisation, and just being ready to recognise that it's going to take some investment and some time and some consistent focus from senior individuals, the senior leadership team. I think pulling those three things together leaves organizations in a good place.
Speaker 1:That's a very good message indeed, mike, and really appreciate hearing from somebody that has a true passion and a true understanding of what makes sense in this area and what doesn't. I'm sure your clients in industry and elsewhere will be really impressed with the fact that not only do you understand the subject and express it well, but saying what really makes really good sense to follow on the whole sustainability issue. Thank you so much for taking the time with us. Thank you, appreciate it.
Speaker 2:It's a team effort, andrew and I enjoyed this conversation Me too. Thanks so much.