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CSR’s leading thinker, John Elkington, explains why he wasn't with global power brokers in Davos last week but in Germany seeing how Bayer spin-off Covestro is using CO2 in place of polymers
If you are looking for someone to dispel some of the deep gloom that is engulfing the political and economic landscape at the moment, you could do worse than climb the two flights of stairs that lead to John Elkington’s Georgian offices off London’s Bloomsbury Square.
The down-to-earth environs of Elkington’s Volans consultancy seem a world away from the five star hotels in Davos, where global power brokers and sustainability folk gathered last week for the World Economic Forum to discuss climate change and the fourth industrial revolution, against a backdrop of Trump’s inauguration.
But though Elkington, sustainability’s leading thinker, has spent decades reading the runes for some of the world’s biggest companies and global organisations and was on the WEF faculty for years, he wasn't taking the heady alpine air in Switzerland this year. Instead he travelled to Germany to meet with Covestro, a spin-out from the German chemicals giant Bayer, which has just opened a plant using CO2 in place of polymers in mattresses and upholstered furniture.
When I met with him just before Christmas, looking for his take on the political events of the past year, it was clear he didn’t see many silver linings. Trump and Brexit could represent huge setbacks for global progress, changing the world in ways that can’t be foreseen, Elkington says. He is particularly worried about the appointment of Exxon CEO Rex Tillerson as secretary of state, having once had Tillerson shout at him, over the heads of 300 bemused oil and gas executives in Norway, “That’s a goddamn lie”, when Elkington asserted that Exxon had lobbied against the existence of climate change. “If Trump is considering people like that, God help us," Elkington says. "He could derail the post world war two global order, which is already under huge strain.”
Globalisation in reverse
The next 10 years, he says, will be off-the-scale challenging and dangerous. “I believe we may be seeing globalisation going into reverse. We will see protectionism build at a rate of knots, which is beyond anybody who has been working in this space for the past 30 or 40 years.“
History was always Elkington’s favourite subject, and he describes the era we have entered as a “U-bend in history”. “When you are in a U-bend all kinds of things go wobbly. The old order is coming apart faster than the new order is self-assembling. It is a time of maximum uncertainty. That’s when you get the likes of Donald Trump springing up, talking as if they know how the world can be saved, but very often doing it by trying to shore up old industries, for example coal.”
Amid the vacuum of political leadership, and the potential unravelling of environmental protections in the US and UK, the need for companies to lift their own game is acute. “There are moments when governments become so distracted they are simply incapable of taking an appropriate lead," Elkington says. "Whether we like it or not, business has to step up and encourage governments to act and regulate where appropriate.”
He gives the example of climate change, which the insurance industry was early to flag up as a financial risk. But it is not only sectors that are on the front line of issues like climate change that have to step up. No sector is immune from the impact of disruptive new technologies such as artificial intelligence, machine learning and autonomous vehicles.
Root and branch reforms
"Some of these technologies have huge implications for how sustainability is done," Elkington points out. This is highlighted by the World Economic Forum in its annual survey of global risks, saying technologies such as AI and robotics hold great potential to enhance global decarbonisation, but could just as easily exacerbate global risks if not governed sufficiently.
The problem is that with a few notable exceptions, the sustainability industry is not up to the task of getting on top of these new trends, which aren’t grasped by typical CSR analysis.
"The sustainability industry isn’t properly thinking through the negative impact of technologies such as drones and autonomous vehicles and geo-engineering,” Elkington says. “We aren’t doing in-depth analysis yet, or engaging with these embryonic industries … And that worries me. [Sustainability] people are seen as the old order rather than being deeply helpful in shaping what’s coming next.”
They are needed because although artificial intelligence companies are coming into the sustainability space, many aren't referencing important frameworks such as the Sustainable Development Goals, which Elkington sees as a radical agenda that is key to creating the new business models of the future.
He says the SDGs, with their radical agenda of ending hunger and poverty by 2030, won’t be achieved, as many people think, “by doing more of what we have been doing".
No sector is immune from disruptive new technologies such as autonomous vehicles (credit: Mercedes Benz)
Elkington outlined the "breakthrough business models" that will be needed to meet the SDGs in a paper he wrote last year for the Business and Sustainable Development Commission, a year-old initiative that wants to inspire companies to use the SDGs as a framework for growth. Its flagship report Better Business, Better World, arguing that sustainable business models could open economic opportunities worth at least $12 trillion and up to 380 million jobs by 2030, is published this week, though he won’t be in Davos for the launch event.
Elkington says that unlike business models that pursue incremental change, satisfied with 10% growth, “breakthrough” businesses are pursuing change at a rate of 10 times current progress. He describes the new models as "exponentially more social, lean, integrated and circular" (see an excerpt from the report here).
"We aren't just talking about integrated reporting or integrated supply chains," Elkington says. "We are saying there is a growing need to link every element of the global system in ways we are not doing now. Most companies do reporting, but it stops with them. It goes to stakeholders and investors but it doesn't have much influence on policy makers and regulators."
Elkington has been trying to bridge this gap on numerous fronts: he heads up the Global Reporting Initiative's year-old technology consortium, which is looking at how big data can be used to unlock sustainability information from individual CSR reports and make it freely available to help businesses and policymakers solve big global sustainability issues. The consortium, which involves HP, IBM, SAP and machine-learning analytics start-up Quid, was put on hold for three months while the GRI was without a CEO, but with Timothy Mohin due to take up the reins this month, Elkington has been assured it will get back on track.
He is on the advisory board of French supply chain data provider Eco Vadis, which last month announced €30m in venture funding to step up CSR analysis using the latest innovations in machine-learning.
And alongside his work with the Business and Sustainable Development Commission, Volans has been working with the UN Global Compact's LEAD group of 50 major companies from around the world, which describes itself as “uniquely positioned to inspire widespread uptake of sustainability solutions among businesses around the world”.
This year, in a gratifying sign that his "breakthrough business models" agenda is getting global traction, the LEAD members will have their annual meeting in New York this year branded a Breakthrough Summit.
The LEAD list includes the UK's ARM Holdings and Unilever, L'Oreal, Accenture, Novo Nordisk, Total, Infosys, Aviva, Nestle, and Pirelli, but also the likes of Brazil’s Vale, involved in the Samarco mining disaster, and Russia’s Sakhalin Energy Investment Company – not companies ideally positioned to adopt radical new business models.
Asked about the apparent contradiction, Elkington says: “The idea is that this is a scouting mission. We come back and report what we find - and then take forward some of the companies that want to explore the new territories. There are risks involved for all concerned, of course, though being scalped is hopefully not one of them. And those who send out scouts can always choose to ignore them, as General Custer did.”
Covestro, which Elkington visited in Germany,is one of the anchor companies in Project Breakthrough, an online platform by the UN Global Compact and Volans showcasing the business leaders who are thinking beyond incremental sustainability. Others include Eric Rondolat, CEO of Philips Lighting, Patagonia's Rick Ridgeway, Interface's Jay Gould and Jim Woods of The Curve, an energy management spin-off from sustainability think tank the Crowd.
Greatest challenge ahead
It is clear that Elkington, although 67, has no plan to retire. On the contrary, he is rolling up his sleeves for the grand challenge of his career. He may have raised money for WWF at age 11, written 19 books, served on 70 corporate and NGO boards, co-founded three companies (Environmental Data Services, SustainAbility and Volans), and been garlanded with many awards, including Ethical Corporation's lifetime achievement award last year, but all of that was just preparing him for what lies ahead, he says.
"In the last 12 to 18 months the nature and scale of what we have to do is becoming much clearer. The fact that business is going to be central to delivering the change we need is clearer to a lot of business leadership, certainly in the OECD world," he says.
“I really do think we have the potential to drive things in a new direction and very much faster than to date,” Elkington said. “But we need to work with different people and take risks that are off the scale."
John Elkington is one of the leading sustainability thinkers Ethical Corporation interviewed for an indepth examination of how the CSR agenda must change in the wake of the Brexit vote and Donald Trump. See Brexit means 'fix it'