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The Net Positive Company

QUESTIONS FOR: Paul Polman
Former CEO of Unilever and Co-author, Net Positive
Interview by Karen Christensen


The man the FT called “The standout CEO of the past decade” shares insights for becoming ‘net positive’.

 

How do you define a ‘net positive’ business?

A net positive business is one that improves the well-being of every stakeholder it touches, at every level — through its products, its value chain, its operations and its work on social issues. For the last 50 years, the private sector has embraced an obsession with short-term profits and shareholder primacy, and the results have been extreme. Unfortunately, nobody is going to come along and save us: As my co-author Andrew Winston and I say in the book, “We broke it, and now we have to own it.” Business leaders are now responsible not just to their own companies and investors, but to all of society.

Looking ahead, one thing is certain: Taking steps to mitigate the damage will be cheaper than dealing with the consequences of not acting. This is a journey that every business must join, led by a clear North Star: To align with our fellow human beings and the planet earth.

 

Is net positive the same as ‘net zero’?

It’s actually much broader. Being ‘carbon positive’ or ‘carbon negative’ (confusingly, they mean the same thing) is one element of addressing climate change, but it doesn’t fully address the action that is required. That approach avoids real responsibility: Buy some carbon offsets and you can claim your business is net positive. We don’t see offsetting as the goal in the long term. Net positive is about your total handprint on the world — not just your carbon footprint. In addition to dealing with the ‘E’ aspects of ESG efforts like wastewater, sustainable sourcing and biodiversity, it also deals with the social aspects of ESG, like human rights, living wages and diversity and inclusion. Achieving ‘net positive’ entails answering a very simple question: Is the world better off because your company is in it?

 

For financial services and consulting companies,

being net positive means picking the right clients.

 

Are big corporations moving in the right direction?

There are lots of companies moving in the right direction because many leaders have caught on to these issues and recognize what is needed. But few of them are doing it holistically. You have to be consistent in all aspects of running your business in order to have credibility with your employees, your stakeholders and everyone else. That’s why we wrote the book.

Recent examples of net positive actions abound. Microsoft has made a commitment to pay back its carbon emissions going all the way back to 1975; Walmart has made a commitment to restore 50 million acres of land and one million square miles of oceans to enable regenerative agriculture; and in the fashion industry, 70 CEOs are collectively moving to regenerative cotton and internalizing biodiversity. I could go on.

 

 

Many alumni of the Rotman School work in financial services and consulting. Can these industries become net positive?

Absolutely. Financial services and consulting companies are not resource intensive — except for human resources, obviously. But they have an enormous handprint in society because of the many high-profile clients they deal with. For them, being net positive means picking the right clients — and helping them be net positive. Some professional services companies take on any client they can get, and as a result they end up dealing with issues like corruption in South Africa and opioid production in America. Taking on clients that actively want to defend fossil fuels is not a smart thing to do anymore — and it doesn’t help you attract the right people, either.

If you work in financial services, you can join the Net-Zero Alliance of Asset Owners, which is committed to decarbonized portfolios. You can ask the right questions at shareholder meetings — questions about corruption, labour standards and carbon plans, for instance. And you can play a big role in standard setting. Senior people in these industries are often in a position to influence governments and others to move to broader frameworks. The good news is that some of the big consulting firms, like the Boston Consulting Group, are starting to make these commitments.

Can you talk a bit about the role of partnerships in achieving net positivity?

For a long time, corporate strategy has focused on the inside of companies: what capabilities you have and how to build strategies and tactics out from there. But that inside-out view is only one part of the equation. The most critical element of the net positive mindset is understanding the world’s needs — which requires an outside-in perspective.

The easy efficiencies can be achieved quickly — and they remain critical — but leaders will soon discover how many things they cannot do alone. Transformative change requires broad partnerships. The key challenges we face — to make our economies work for everyone, not just a few; to decarbonize the world; to live in harmony with nature and protect biodiversity — these are monumental challenges. Leaders have to demonstrate that they’re open to working with others, not just commanding from behind a desk.

Nowhere is the need for collaboration more urgent than in battling climate change. All large companies are now working to cut their direct and indirect (from the electric grid) carbon emissions — which is classified as Scope 1 and Scope 2 by the Greenhouse Gas Protocol. But the real breakthroughs will come from assuming responsibility for — and teaming up to tackle — supplier and customer emissions, which are referred to as Scope 3. In most industries, Scope 3 makes up the large majority of value chain emissions.

 

Revolutions in big data processing, GPS modelling, drone-based

aerial photography and many more can help solve our big problems.

 

How should leaders go about forming these partnerships and alliances?

Because it uses a multi-stakeholder model, a net positive company will inherently look for alliances within its ecosystem of players with shared interests. This network should grow to include peers, suppliers, NGOs and governments. It’s not just that some issues are hard to solve alone; it’s that our challenges are so intertwined, it’s impossible to work on one problem at a time. Partnerships will inevitably overlap, forcing systems thinking. The Sustainable Development Goals (SDGs, above) are deliberately designed to interact and reinforce one another. Without partnering, which is the 17th SDG, achieving the other 16 goals will be impossible. Any company that fails to participate in partnerships for the common good is destined to become a dinosaur.

You write that in this quest, “technology is mostly on our side.” Tell us what you mean by that.

Technology is doing a lot of good. In 2014, the International Energy Agency forecasted that solar would hit $0.05 per kilowatt-hour by 2050, but this was achieved 30 years faster, in 2020. Over the last 10 years, the costs of solar and wind power have plummeted by 90 and 70 per cent, respectively. Renewables are now, on average, cheaper to build than all other forms of electricity. Battery prices have also dropped quickly, accelerating the electric vehicle market. Most major automakers have committed to phasing out gas and diesel and going all-electric. For example, GM plans to do so by 2035 and Honda by 2022 in the EU market. And Daimler has stopped all R&D in internal combustion engines. Moving quickly to renewable energy and electric fleets has become a no-brainer.

 

Renewables are now, on average, cheaper to build

than all other forms of electricity.

 

It’s not just clean technology making transformative change: Revolutions in big data, GPS modelling, drone based aerial photography, robotics, computer vision, AI and many more are powering the Fourth Industrial Revolution. These new tools can help solve our big problems. In our food system, ‘precision agriculture’ is greatly reducing waste as seeds, water, fertilizer and pesticides are placed exactly where they’re needed; modern Deere tractors have become rolling AI-driven computers; and companies such as Schneider Electric are offering advanced building management systems that can slash energy waste. The technologies and know-how to build smarter homes, grids, cities and food and transportation systems are at our fingertips. And access to technology — specifically mobile — is proving to reduce inequality and extreme poverty.

However, technology also has a dark side: The information bubbles that social media creates are breeding hate, misinformation and the opposite of the solidarity we need to tackle our shared challenges. The big tech companies should take a broader view of their impacts on the world and take responsibility for them. That type of ownership is a core attribute of net positive businesses.

For leaders who want their companies to be net positive, what is the first step?

The fact is, there can be no systemic change without organizational change, and there can be no organizational change without individual change. So it all begins with a leader’s own awareness. Some executives think long-term planning has become useless in our fast-changing world, with sudden shocks like pandemics. But companies can and should stretch their thinking by using tools like scenario planning. The point is not to develop a detailed strategy for the next 10 or 20 years; it’s to think about who you are. Which personal and corporate values do you hold that will never change? Why do you exist, and how can you help to build a thriving world? In short, what is your purpose? Not only is this important, it will pay off: Just Capital did a study recently and found that companies with a clear purpose had a 30 per cent higher shareholder return over the last four years than their peer group.

My advice is, familiarize yourself with the United Nations’ Sustainable Development Goals and figure out what they mean for your business and the environment you operate in. Then, link these ideas to your organization’s purpose and take steps to bring that purpose to life. And always remember the net positive mantra: is the world better off because your company is in it?


Paul Polman is the co-author of Net Positive: How Courageous Companies Thrive By Giving More Than They Take (Harvard Business Review Press, 2021) and Co-Founder and Chair of Imagine, a B-Corp promoting the implementation of the United Nations Sustainable Development goals. He is also Chair of the International Chamber of Commerce and Vice Chair of the UN Global Compact. As Unilever’s CEO for ten years, he demonstrated that a long-term, multi-stakeholder model goes hand-in-hand with excellent financial performance. The Financial Times named him “The standout CEO of the past decade.”


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