Posted in GreenBiz
February 14, 2022

Sustainable business must be people-centered


This piece originally ran at WRI.

Long gone are the days when business could serve profit as its only master. Today, to maintain the real-time social license to operate, and to safeguard the resources businesses need to exist, business must equally consider planet and people.

Without people, there is no business. And yet to many, business can be an amorphous, unreachable thing: a workforce without faces or names; a CEO on a private jet; people inside the walls of buildings the public can’t enter, executing proprietary tasks unknown by the end user; farmers producing food ingredients in corners of the world most consumers haven’t visited; and transporters moving goods across waterways and roads most consumers won’t travel.

It’s important that everybody — CEOs, policy makers, consumers, producers — understands the impact that individuals and businesses have on each other with a people-centered perspective on sustainable business, starting with these three examples.

1. Businesses need employees and employees want sustainability

Even in this era of automation, COVID-19 has proven it still takes people to make a business run. Amidst workforce shortages and the Great Resignation, companies are offering signing bonuses and other perks to attract and retain their workers. Even before the pandemic, Gen Z-ers — those born in the late 1990s and now starting their careers — were seen as being driven by purpose, passion and values, giving a competitive edge to companies with a strong reputation for doing right by people and planet.

Employee activism to shift employers’ ambition and business models has been on the rise. In 2019, more than 2,300  Google employees wrote an open letter demanding the company include in its agenda a science-based, action-oriented list of climate actions, and in October 2021 the New York Times reported 1,100 employees at McKinsey & Company signed an open letter asking the consulting firm to disclose their clients’ climate emissions.

Companies are starting to heed these employees’ concerns. In the fall of 2021, Deloitte announced a new climate learning program for all 330,000 of its employees worldwide, aiming to inform, challenge and inspire them to understand the impacts of climate change and empower them to confidently navigate their contribution to addressing climate change. This is a good thing because it’s going to take an all-of-business approach to transform the economy and meet net-zero corporate commitments.

There are seven notable barriers companies face in aligning their corporate commitments with climate policy advocacy. When people who perform different business functions don’t communicate with each other, company-wide sustainability can suffer, from climate policy leadership to renewable energy procurement to product research and development. Recognizing the need for partners in all business functions, companies that break down org chart barriers to take an all-of-business approach to their commitments represent a new era of corporate sustainability leadership.

2. Business shapes the lives of workers and communities along their supply chains — and must do so justly and equitably   

Often the discussion of supply chains is tied to profit (minimizing disruptions and future-proofing supply of essential materials) and planet (engaging suppliers in activities to reduce their environmental impact). However, it is too rarely an inclusive discussion about the health, livelihoods and communities of the people all along the supply chain. As corporate climate action works toward near-term and long-term net-zero goals, here are two ways corporations’ plans must put people at the center.

First, companies must listen to local communities suffering from the worst impacts of climate change and integrate equity into their approach. Low-income and other disadvantaged people contribute the least to global emissions and climate change, face the most immediate and dire consequences, yet are most excluded from decisions and benefits along the path to a low-carbon economy. New analysis from WRI, Achieving Social Equity in Climate Action: Untapped Opportunities and Building Blocks for Leaving No One Behind, states that, “if designed with equity concerns in mind, major investments and innovative solutions to help mitigate and build resilience to climate change could bring the greatest gains to communities that are most impacted by disasters and pollution.”

Three approaches to social benefits in climate policy planning (Source: WRI)

Second, business must ensure that in their transition to a zero-carbon economy they don’t leave anyone behind. Shifting business models and taking climate action must be a just transition. This requires tackling the challenges faced by communities and workers as they shift toward sustainable livelihoods, while also ensuring that the benefits of the zero-carbon and resilient economy are shared fairly. 

Eight pillars of just transitions

One example is the transition to a circular economy, where shifting business models in apparel may disproportionately and negatively impact female garment workers. To identify these unintended consequences and inequities, a WRI guidebook helps companies identify the stakeholders in their supply chains and recognize the effects their transition to re-use business models may have on them, to ensure the transition is equitable and just.

Circles of influence in equity (Source: WRI)

3. Business influences consumer purchasing and consumer demand shapes business

For businesses to exist and succeed, they need people to buy their products and services. Those business offers can be a force for positive transformation or perpetuate outdated, unsustainable practices. In the food service industry, for example, one way to create a sustainable food future for the growing global population is to shift diets toward options that use the land and resources more efficiently. Companies can harness behavioral science and marketing solutions to aid the shift.

Shifting diets of the world's "high consumers" (Source: WRI)

In partnership with WRI’s Better Buying Lab and Cool Food Pledge, companies like Panera are using behavioral science to adjust their menu language to promote their most planet-forward menu options. This helps them meet their corporate climate goals while meeting customer needs without heavily relying on marketing because the product sells itself.

But sustainability does sell. A new study from GreenPrint, an environmental technology company, found “that nearly two-thirds (64 percent) of Americans are willing to pay more for sustainable products but most (74%) don’t know how to identify them. According to the findings, 78 percent of people are more likely to purchase a product that is clearly labeled as environmentally friendly.” Businesses that know consumers are looking for green brands and labels will shape their marketing to win the people’s favor and sell more products.

Meanwhile, with the increase of eco-consciousness and green marketing, consumers may be wising up to unsubstantiated green claims, according to Greenpoint. “The study also found a large degree of mistrust about companies’ environmental claims. Most people have doubts when companies say they are environmentally friendly, with 53  percent of Americans never or only sometimes believing such claims. To trust a company statement, 45 percent of Americans say they need a third-party validating source.”

A recent Edelman Study tells us that it is 68 percent more important to consumers that they trust brands they buy from and 86 percent expect brands to be accountable to societal challenges, local communities and more. When the message isn’t radically transparent, backed by action and science, there is no trust. Climate activist Greta Thunberg put it bluntly on Twitter: 

The #COP26 is over. Here’s a brief summary: Blah, blah, blah. But the real work continues outside these halls. And we will never give up, ever.

Green marketing and voluntary commitments aren’t enough. They must be coupled with legislation and grassroots political involvement, third-party validation, people-centered equitable approaches and transparency. Individuals alone can’t transform massive systems, but when people mobilize, vote and maintain high expectations of brands, they can shape the social license to operate.

Business is the sum of its parts, so put people at the heart of sustainable business

We often speak of a two-way street in partnership, but perhaps it’s time for a new analogy. Our road needs to be a one-way street, with all lanes moving in the same direction: one lane carries the sum of individual action like employee activism and consumer preferences shaping business, and in the other lane, companies are driving forward their corporate climate ambition. Along this roadway we should expect to yield to merging e-buses and pick up carpoolers so that travelers arrive at the destination — a just and equitable, low-carbon economy — reflecting a true triple bottom line.

Editor’s note: Amazon, Google, Tyson Foods, Deloitte, Panera are funders and partners in WRI’s work. All content reflects the independent views of the author and referenced research.

February 14, 2022 at 03:27PM

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