At the recent YPO Europe Impact Summit, Paul Polman — Chair and Co-founder of IMAGINE, Honorary Chair of the International Chamber of Commerce, The B Team, Saïd Business School and Vice Chair of the UN Global Compact — joined global chief executives for an informal Q&A focused on the role of business in building a sustainable and more equitable future, even as the world continues to fight a global pandemic.
Described by the Financial Times as “a standout CEO of the past decade,” Polman’s decade-long tenure as CEO of Unilever (2009-2019) demonstrated a new form of purpose-driven capitalism based on long-term value creation to multi-stakeholders. He was a member of the United Nations Secretary General’s High-Level Panel, which developed the Sustainable Development Goals, and through various organizations, including his recent social venture, IMAGINE, continues to work on mobilizing companies to achieve these goals, with a focus on addressing climate change and social inequality.
COVID-19 widening disparities
“COVID-19 brought to the fore the relationship between biodiversity, health, economy and social equality. We can see the complexity of our system,” says Polman.
He explains that prior to COVID-19, climate change was projecting to be well above three degrees. Gender inequality was also going backwards, with projections that it would take 217 years to close the gap, while income inequality was widening.
“But COVID-19 has put us back on all these measures,” says Poleman citing that women, who only hold about 45% of jobs, constitute 60% of the people laid off. “On income inequality, between April and June, billionaires of this world saw their fortunes increase by 27.5% to well over 10 trillion dollars, so we are not starting from a good framework.”
Positive news on fighting climate change
On the positive side, Polman says businesses and governments are increasingly recognizing the need to address climate change and investing in greener business practices. “During the last financial crisis in 2007-2008, about 2% of spending was going to greening the economy,” he says. “This time, from early indicators, about 30% of spending is going to greening.”
Polman attributes the progress to countries like China making strong commitments to be carbon neutral by 2060, and in Europe to the Green Deal. Another key factor has been the private sector moving at an accelerated speed because they are starting to see benefits of moving to a greener economy. Where we are falling short, he adds, is in some of the bigger countries. For example, the U.S. is directing twice as much in subsidies to the fossil fuel sector, which Polman described as “an industry of the past,” instead of the green energy sector.
You need to overcome the mindset that there is a trade-off between greening the economy and economic growth. If we don’t green the economy, we don’t have economic growth. ”
— Paul Polman, Chair & Co-Founder, IMAGINE share
But Polman remains optimistic for the situation in the U.S. as well. “The technology has developed at an incredible speed, making alternatives more attractive. We have seen 60% of coal plants being retired as green energy becomes cheaper and about 70% of American companies making climate commitments,” he says, highlighting the discrepancy between government and corporate realities. Polman adds that polls now show 85% of Americans believe in climate change, up from 50% or 60% previously.
What can consumers do?
Citing that the private sector accounts for 75% of emissions, with only 100 companies being the major emitters, Polman says his focus has been on corporations and governments. But he stresses the importance of a multi-stakeholder approach and getting consumers on board.
Some of the fundamental changes Polman says consumers can do to make a difference include:
- Change habits. Because of the lockdown restrictions, many people are already making changes, for example in reducing travel.
- Make your voices heard. Voices of consumers are heard at the checkout. Be sure to spend your money behind companies and on products that create better future for all.
- Influence the political process. Vote and engage in consumer and employee activism. Polman adds, “We see many CEOs accelerating change because employees are having the power to influence the company from within.”
We had gender inequality and income inequality before. But COVID-19 has put us back on all these measures. For example, women only hold about 45% of jobs but constitute 60% of people laid off. ”
— Paul Polman, Chair & Co-Founder, IMAGINE share
What should businesses do?
According to Polman, businesses in most countries constitute about 60% of GDP, 80% of financial flow and 90% of the job creation. Given their scale of influence, he urges business leaders to accelerate the global responsible business movement to meet aggressive targets (set by Sustainable Development Goals) through two key actions: Commit to climate change and social equality.
“First, companies have to be sure their cash flow works. Once they meet their immediate needs, whatever the size of company, the best way to guarantee longer-term success is to position the company toward the future economy and not the past economy. Ensure you’re greening your business model at an accelerating rate,” says Polman.
Since the start of the pandemic, more companies have joined the UN Global Compact than before, committing to greening their value chain and social contract with society. “That movement is already under way, and I would encourage every company to go in that direction if they want to be part of that future.”
Use available tools to accelerate and measure the transition to a green, more inclusive company. Polman recommends companies use available tools, like the SDG Accelerator program to accelerate and measure business solutions. “Only if you can show as a company that you’re starting to have a positive impact will you have a successful business model,” he says.
Advocate. Polman stresses the importance of ensuring governments spend more on a green and socially inclusive recovery by speaking up for change at a political level, as businesses need a framework and policies to operate. While many businesses and coalitions are leading the way, more can be done. “First, you need to overcome the mindset that there is a trade-off between greening the economy and economic growth. If we don’t green the economy, we don’t have economic growth,” says Polman. “We also need job creation to ensure social cohesion. If governments are looking for growth and job creation, it is better to invest in these industries that have a higher payout, which happens to be greener industries.”
Polman also suggests persuading governments not to shrink back on spending in saving their economies, especially in saving the small- and medium-sized enterprises (SMEs). In most countries, these represent 80% to 90% of the economy, and 20% to 30% risk going out of business.
His final message to global chief executives: “Whatever you do (in response to COVID-19), you have to create a more equitable society. That means including women and minority in everything you do. Be sure to make this an inclusive recovery.”