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May 26, 2023
Moderator:
David Cushman, Executive Research Leader, HFS
Panelists:
You can listen above or watch this HFS Videocast here:
Session Description:
The climate and global sustainability emergency is already horrifying, and it’s about to get far worse. It’s hard to know what to say anymore. But to cling to optimism, any individual, team, or organization can take concrete actions right now. Businesses and their leaders can address sustainability at the speed and systems level we need. Politics and the public cannot.
Context and clarity are the immediate ports of call from which these problems are solved. The global sustainability context can be broken down and aligned across ecosystems and throughout organizations. The focus must be channeled toward the greatest spheres of influence.
Standing in the way of these actions are deep-rooted organizational problems, which we will aim to address:
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This transcript was auto-generated from the original recording and lightly edited for readability. We've done our best to catch errors, but names, technical terms, and company references may be misspelled or imperfectly captured. For the definitive version, please refer to the original audio or video. Views expressed are the speakers' own.
So yeah, we’ve got an emergency. It’s interesting to me earlier where some of the folks on the panels were saying this is really, really important to us — the sustainability question. And I’m interested in understanding whether that’s actually true right now, so we’ve got a little bit of audience interaction, I hope. That’s the next slide. Hello. So we’ve got a poll. The first question is really, in your organization, in your relationships with your partners, are you seeing sustainability as a higher priority, the same priority, or a lower priority than before the pandemic? Do I need to click onto the poll page? Ah, there we go. So it’s fifty-fifty so far. That’s 2 of you voted, so come on, it’s an emergency. Alright, so we’re settling broadly for more than pre-pandemic, which is interesting because that might be telling us something about the changing state of where we are, and I think we might come on to some of this as we discuss it. But in our own data — we can close that poll, move on to the next slide, please. Yeah, so this was quite scary. We had 70% of the C-suite not acting on sustainability: either well-meaning but not actually managing to achieve much, or waiting for others, or actively greenwashing. Less than a third of CEOs and board members were supporting their organisation’s sustainability, and less than half of senior decision makers were collaborating internally, and barely any collaborating beyond their own walls. When you look at this data, that bears that out. Even internally, only 44% of people are finding collaboration opportunities within their own organization, let alone when you go beyond into their own ecosystem. So that’s a challenge, bearing in mind the scale of the emergency we’re facing, right? So, my first question — and first of all, I’d like to get the panel to introduce themselves, because we’ve got some stellar names. Can we go from the far end, please? Can we start with Adrienne?
Nice to meet you all. My name is Adrienne Bowles. I’m the head of operations at Sourcemap, and Sourcemap is based here in New York. We’re a supply chain mapping software to enable 100% traceable and transparent supply chains back to the raw material. It’s nice to meet you all.
Susan Kenniston, global head of sustainability for Wipro, a global tech services firm. I really appreciate being here, and really appreciate Sourcemap as well — so huge shout out to Sourcemap.
Kelly Fisher, I’m the head of corporate sustainability for HSBC, which is a global bank.
Mike Sakalas, and I’m vice president of sales for Pure Storage, and we make high-performance sustainable data storage and data management platforms.
Nandini Tare. I am an associate practice lead for digital engineering, manufacturing and sustainability at HFS.
Hey everybody, I’m Katy and I lead environmental sustainability at Google. I’m primarily focused on Google TV at this time.
And I should warn everyone, I did brief the folks beforehand — feel free to just lay into this at any point. I’m not necessarily going to go along the line asking the same question, but the first question to all of you is: how are we going to do better with this collaboration problem, both internally and externally? What’s going to move the dial there? Who wants to go first?
Sure, I’m happy to jump in. I think in most existing organizations what you really need is a champion who can, in so many words, lead without authority — influence, inspire, and get everybody aligned on the thinking that needs to change in order to think about your products and your services in a more sustainable fashion. So if you want to achieve sustainability and you don’t know where to start, find yourself a champion that can help rally the troops internally.
I think, to add to that, making sure that it’s really tied to the core business objectives of a company, making sure that it’s tied to the direct outputs that every team and individual is accountable to within their roles. And within that, if we think about supply chains in particular, one of the great momentum shifts that we’re seeing is that sustainability is no longer being relegated to an individual or a team within a company — sometimes even nested in a marketing division. This is an initiative that’s being aligned to procurement, compliance and other teams, to see how this can be a collaborative and cross-functional priority for the business, because it’s really around seeing sustainability as managing risk exposure and risk mitigation within a business.
Yeah, and I’ll add — because you asked both about external and internal — on the external side, those drivers are profoundly powerful. At HSBC it was when our clients started asking about sustainability and our relationship managers didn’t always have the answer. Boy, did I see change happen very quickly when a client asked about it. Same thing with companies that are driven by investors or consumers. You don’t want to wait until a key external stakeholder asks and not be ready with an answer about what you can offer them or what you can do to collaborate with them on sustainability. I completely agree with Katy that an internal champion is key. It’s best if it’s your CEO. We have had CEOs that paid it some more lip service, but our current CEO, Noel Quinn, is absolutely bought in. He has embedded it in HSBC’s strategy, and he has said things publicly to the media like he wants HSBC to be the first bank to prove that an ESG balance sheet is a profitable balance sheet — which may not be moving to some of my colleagues who have been combating climate change, but for a banker that’s actually a pretty moving and pretty emotional statement, that he wants to prove that this is profitable. So as soon as he started saying things like that, everything fell into line. It’s now tied to people’s compensation. Every one of our bankers — as my Americas CEO says, who speaks client speaks climate. I used to go to a lot of client meetings; I’m not needed as much anymore because they understand how to talk to our clients about sustainable finance and sustainability.
Yeah, I agree. The CEO definitely sets the tone, obviously in all kinds of ways, but especially with sustainability, in order to get everybody to start thinking about it seriously. And you know, when I say an internal champion, it could be the CEO — obviously you need the CEO to have buy-in — but this champion is also somebody who will start to get the ducks lined up. At the end of the day you really need everybody thinking about sustainability in their day to day and how they operate, just in the same way that they think about risk management or really anything else about the product or service that you have. When I say champion, I don’t mean bring some expert from the external world to start talking to everybody about sustainability. You need the people within your organizations to get up to speed and get trained on sustainability, so that they understand your business, they understand the model, and they understand how to work with each other, but also now bring in that layer of sustainability thinking. And sustainability is not that complicated. When you know your business, it’s not that hard to get your people trained to then start thinking about this layer of sustainability as well.
I absolutely agree with you. There has to be literacy — sustainability literacy — across the organization, as well as an alignment. And I think somewhere creating the right KPIs and the right metrics would also help in ensuring that we’ve got more awareness around sustainability, and also tackle the challenges that come up with this.
Susan, I know we were talking earlier about the impact of data on all of this, and also the risk for organizations that don’t get this right in their beliefs around sustainability right now, in terms of recruiting people and retaining people — it’s becoming an employment choice. You said you’ve seen quite an increase in demand in recent times, so can you tell us a bit about that?
Yeah, and it ties up a little bit with how collaboration is changing, so maybe I can connect some dots there as well — collaboration and then the increase in demand. The collaboration is really interesting. Historically, collaboration has been a lot through industry coalitions — the apparel coalition, for example, or the supply chain coalition, or the automobile coalition — that drove a lot of collaboration and standards that we have today, and it was really very impressive for what they’ve done for the industry as a whole across the board. But what you’re seeing now is a shift to smaller forums of collaboration given the sense of urgency that’s out there, and I think it’s really, really encouraging. You’re seeing different stakeholders, different entities coming together to drive new ways around sustainability. We’re seeing it, for example, with our alliance partners and our clients and other institutions, around very focused areas and problem solving, and I really think it’s unlocking some new ways of doing things faster. So that’s what’s behind the collaboration changes today — that need for speed of change. And connected to that, underlying a lot of it, is the data and getting a line of sight to data. Some of it is, of course, the data for disclosure and the reporting and the requirements that are coming in terms of the global standards, the regional standards, the local standards, and that’s fantastic — so people are collaborating on those data standards and getting the data back. But what is really interesting, bringing it back to the internal stakeholders, is it’s showing up more in terms of financial reporting, and that’s changing the internal stakeholders quite a bit. So it’s now going less to the CSO suite but more to the CFO suite in terms of accountability of the data, the data rigor, and now the stakeholder being the CFO. That’s completely changed the engagement model in a lot of companies right now, in terms of the momentum: who needs the training, who needs the data, how do we advance this very quickly. So all these dots are really quite connected — the momentum, the collaboration, and then the driver on the external disclosure and now into your financial parts and the rigor around that. It’s really all coming together and, honestly, changing in the last 6 to 9 months at a speed that we haven’t seen.
I wonder if I could — sorry, Mike — I was just going to ask Adrienne, because Sourcemap may not be familiar to everyone in the room. It might be worth explaining what you guys do, or have been doing for a decade now.
Yeah, over a decade. Sourcemap was founded out of research that our CEO was doing for his PhD at the MIT Media Lab, and was simply founded out of this question of where do things come from. What we do is we work across industries — starting with apparel, food companies, biotech, life sciences, a variety of industries — to help them understand the supply chain. It simply starts with the tier-one suppliers that they’re directly sourcing from, asking them to report the suppliers that they’re buying goods and materials from to provide to these end customers, which are some of the world’s largest brands. If you wear clothes and eat food, you probably are associated with one of the companies that Sourcemap works with. So we are basically helping them to map the network of suppliers upstream in their supply chains, to uncover risks in their supply chain, which today is becoming more to the forefront and aligned with the overall business objectives of many of these world’s largest companies through the regulations and compliance levers. Here in the United States and in the European Union, there are regulations that we’ve already seen come into effect last year in 2022, more coming into effect this year and in the years to come, which are really holding companies accountable to the ways in which goods are produced and making them accountable to the social and environmental impacts of those goods. In particular, last year, in June of 2022, there was a law passed here in the United States, the Uyghur Forced Labor Prevention Act. That law is directly impacting apparel companies, food companies, and a variety of other industries, from batteries to manufacturing. Effectively, what that law states is that if you’re importing goods into the United States and those goods are passing through or originated from the Xinjiang province in northern China, those goods can be held at the port, and the responsibility is on the company to be able to prove that they have a system in place to monitor how those goods were produced. They can provide documentation on the chain of custody of those goods — all of the suppliers and people who touched that product, where it came from. If a company can’t provide that information, those goods are basically held at port, and these can become multimillion-dollar challenges or issues for companies where those goods can effectively be lost. So this is now having a very direct impact on business continuity and the overall operation of the business. And that’s really, to Susan’s point, waking companies up, where this is now something that the chief procurement officers, CEOs and CFOs of companies are directly paying attention to and making decisions on. So sustainability is no longer sitting in a corner — they’re at the table and making core decisions about the business.
Thanks. So I interrupted you, Mike — there was a point you wanted to make about data, was it? I thought that was a really good point.
I think what we’re getting to is that sustainability used to be a conversation of: do I want to grow, or do I want to be sustainable? Where we need to go, and where it should be heading, and I think all the panelists are agreeing, is that this isn’t the end conversation. How do we grow our business, how do we service our clients, and how do we be sustainable? Until the C-level understands that this is not a trade-off — it’s an additive benefit — you now get into a culture change, you get into a behavior change, and that’s what everyone’s talking about. What I take away is: our company was born out of sustainability. We made decisions to say, how can we change the way that companies are housing and using their data, and how can we do it at 110% of the power and 110% of the cost, and all of those byproducts. So that’s a cultural change when you talk to clients. You don’t have to say, look, do you have a sustainability angle because we want to satisfy these requirements. Sustainability needs to go up the prioritization stack, and it needs to be an ‘and’ versus a ‘no’, and I don’t think we’re there yet — I think it’s happening. There’s so much goodness going on, but it’s up to us to make it that end conversation. It’s almost becoming a contractual requirement, and when it becomes a contractual requirement, people then have to respond to it.
But I know some of you have been working on this before anyone started putting it into the procurement deals. Katy, would you talk us through a little bit about how you build sustainability into every step of the production process when you’re working with Google?
Yeah, just to build on Mike’s comments a little bit — yes, sustainability thinking needs to be incorporated early on if you want to avoid any cost changes down the road. Obviously, with any change management, it gets painful if you don’t think about it up front. In the same way that you think about performance and quality, sustainability should be right there. This is about efficiency. If you have an energy-consuming product, it’s about energy efficiency. These are not new thoughts. It’s just now it’s like up here, P0, versus, oh, it’s a social endeavor. That’s not the case anymore — that’s old thinking. With Google TV, it is a change-management moment for us, and we’re really proud of it. We had to come in and look at things like power consumption. What makes my job easier, honestly, is having regulations that come out of the EU that I can point to and say, sorry, not me, it’s the regulation, we have to do it. But it shouldn’t have to come to that, you know what I mean? And that’s something we were able to do with the CTA, the Consumer Technology Association, which is the parent company of CEA. It has come together for the US and Canada to create voluntary agreements across the industry. Because the situation in the US with the states is that if you let the states and the advocates in the different states enact policies, you’re going to get all different requirements in every state, and then you’re really stuck, because then you try to come up with solutions that meet all the different requirements, and you’ve got to keep up with the different requirements of different states. But if we get a voluntary agreement across the industry, now the advocates are happy, and we’ve got one set of requirements that we’re trying to meet across the board. So we did that with the TV Energy Efficiency voluntary agreement this past year, and that was announced at CES by US Secretary of Energy Jennifer Granholm. Those are the kinds of endeavors that I think really make the maximum impact, to get everybody lined up all together, so it’s not like we’re competing across the industry to be sustainable. Because none of us are going to survive if one other company isn’t going to be sustainable and it’s going to deplete the resources of the planet — we can’t survive either. We have to be aligned on this. That’s the reality of the situation. So, for Google TV as an operating system and launcher platform, the parts that we really control are the energy efficiency, the power consumption levels of the OS. We were able to tackle that pretty quickly internally through our engineering efforts. The tougher parts are supply chain management. Obviously you’ve got to go all the way back, and you have to think about how deep of a story you want to be able to tell about your product. When we’re looking at packaging, for instance, first of all you’ve got the package that the consumer picks up at the retail center — we want that to be plastic-free and fully curbside recyclable, if anything out of convenience. With certain counties in California, you can’t just plop the box on your curbside; you have to take it apart, it has to fit in a certain bin. It’s a whole thing. But if it was all fully plastic-free and curbside recyclable, that makes it easy for the consumer. But if you dig a little deeper, you’ll realize that the manufacturer of, like, the remote controls sends the packaging with plastic wrap of its own to the end packaging unit, and then that becomes a whole pile of plastic on its own. The consumer may never see it, but it exists, and it counts as part of your supply chain output. There’s a lot of different portions that I don’t want to take over the entire session to go through, but as you can imagine, there’s a lot of ground to cover. What I am seeing is the eagerness of organizations to cover it. Why? Because consumers are starting to really demand it, and that consumer interest and visibility into the sustainability of your products is increasing exponentially every day.
So that consumer question is interesting. I’ll just throw this along the panel, and anyone who wants to pick this up, it’s fine. I’m just thinking — people might say in a survey that they care, but how do you see it actually impacting decision making on a daily basis on the consumer side? Are they actually coming in and saying, I reject what you’re doing because I don’t think it’s sustainable?
OK, well, the best researcher that I’ve seen on this is a woman named Randi Kronthal-Sacco at NYU Stern. NYU Stern has a Center for Sustainable Business. I highly recommend you read her work, because she doesn’t talk to a 20-year-old who’s about to walk into H&M and say, do you care about sustainability — of course they’re going to say yes, and then go in and buy a sweatshirt and throw it out. She actually looks at actual purchases, and she saw that any product marked sustainable was the single greatest increase starting the pandemic, even though people couldn’t get toilet paper. My dad accidentally ordered those giant rolls of toilet paper that you see in, like, Citi Field, because he couldn’t get toilet paper. You’d think people would just have been desperate for any product and not have cared — that’s not what the actual consumer data showed. I also saw a really interesting report the other day that said the single greatest wage increase in the US — and this is good news, I know you don’t hear good news on a climate panel very often — the single greatest wage increase in the US right now is the lowest-income wage. That population is also the population that has seen the greatest increase in caring about buying sustainable products. So that means their income is also now funneling into sustainability products. So the data is there on consumers.
Yeah, because that’s always been the challenge — if you haven’t got enough money, can you afford the sustainability issue? We can come to that question if you like, but in the round, right now we’re facing several emergencies, and one of them is sustainability. How do you get that to be prioritized in the organization, amongst all the other levers that are going on? And how have you achieved that? Susan, maybe tell us about how that conversation’s happening with some of your clients.
Yeah, it’s interesting, and maybe connecting it to the last conversation around the consumer as well. A lot of the leading sustainability companies today feel like they’ve got a pretty good line of sight in terms of what they’re trying to do to get after their improvement activities. They know what they need to do, they’re starting to see some of the results of that, but to make the progress that they need to make for the goals and the targets that they’re setting, what they’re needing to do is tap into the consumer experience. To me, that is a big deal — that they’re going there now and taking on some of the responsibility for helping the consumers and educating them. If you want to reduce the footprint, then maybe we need to have a soap that’s a powder so that we can package it differently. It’s nudging them in the direction. So that’s one thing that a lot of our clients are starting to do — go to the consumer-experience end of it, which is really interesting. In terms of bringing in the change at the business level, a couple of things that we’re really seeing: absolutely addressing the compliance requirements that are showing up in the global and regional standards — of course CSRD in Europe and TCFD in the US, and then local standards as well. That is a big driver for the transparency requirements, and transparency for consumers and employees. Employees are choosing companies based, 40% today, on the position on climate change. So there are a couple of stakeholders that that data is very important for. But what’s also really interesting that’s showing up right now is the sense of urgency. While you’re waiting to see the results of how you’re doing and if you’re on track for your improvement activities — and a lot of companies are — this is a quote from one of the forums that we’re in: this is possible, and these are leading sustainability companies, but it’s very, very difficult, because this is a new muscle for them, to measure their emissions footprint, to do all this. So while that is happening, and while they’re learning how they’re doing and putting those improvement activities throughout their value chain, at the same time, and then doing disclosures, they know that they have to grow the business as well. They have to reduce the impact and they have to grow the business. So what you’re seeing now is this practical bringing of the information of how you’re doing to drive impact down, and to grow business, into the leadership levels of the company, for much faster feedback loops of how are you doing and what does it look like to grow a business responsibly. That is one of the biggest things that we’re seeing, and it goes into educating and training the leadership team about how to work differently in that decision making. So it is bringing them into that decision making of becoming a responsible business. It is no longer that sustainability is a side thing — it is part of your capital, natural and social capital, and what you do to manage the company. So there’s a whole lot of interesting new decision making. The data is good enough, they know how to work data, they have the instincts of how to run the business, and they’re building the muscles and the learning of how to make decisions together to become a responsible business. That’s at the functional level, that’s at the C-suite level. It’s really exciting, because it is the sense of urgency that’s driving it — they want to get that feedback loop for how they’re doing, as well as support the disclosure requirements. So it’s kind of a parallel path of urgency.
Yeah, I guess the message I’m getting is that we’re doing so much better in making the argument, we’re doing so much better in coming up with ways in which these things should be measured or how we should assess the data. I guess the question is: so what’s happening? We’re still seeing really bad results globally for sustainability on a daily basis. Only today, I think the BBC was reporting we’re hitting that 1.5 degree target that no one wanted to hit this year. So, given the massive influence that industry can have, why is it taking so long, or why is what we’re doing apparently not working?
David, I’ll jump in with: sustainability is hard. That’s why we’re up here. If it was easy to deploy — change behavior, culture, all those things — it would have been done, and we would have waved the flag of success. It’s hard. HSBC’s a wonderful example that you gave. It’s got to be digestible; we’ve got to do this in parts. People walk out and say, you know what, I don’t have that type of support in my company to go deploy a sustainable data center, a sustainable stack infrastructure — I don’t have that. We’ve got to be able to give a roadmap and bite-size chunks to be able to go deploy and at least get going on the path. It’s such a daunting task that we create officers around sustainability, we create departments around sustainability — we create all of this because it’s not easy. If it was easy, it would just be deployed. More than anything, we can define the problem, which we all understand extremely well. Europe’s a good example, around the increased cost of power, and it’s driving change. But now it’s like, at the grassroots level, how can we actually digest and make change in bite-sized pieces? And I don’t think those roadmaps are out there across this entire ecosystem stack. I think Susan talked about Wipro and what they’re doing, and I think that is absolutely where they’re heading. More than anything, clients are asking us: where can we start, how do we start, what should we focus on? That’s important for us, to be able to educate and give that roadmap, at least start people on that journey. And until it becomes a top-3 priority, unfortunately, it’s going to be a conversation.
I also want to add that I think we’re evolving from a mindset that sustainability is like a luxury good, or that only luxury products are also sustainable or handmade, or something very special about it. We have got to get out of that mindset. We even faced it internally, where it was like, oh great, we’ll make the more sustainable product, it’ll be high-end and we’ll mark it up. It’s like, no, that’s by definition not the sustainable solution. The sustainable solution is the one that everyone can afford and the planet can afford altogether. Maybe initially changing the specs of the product will change the cost, but first of all, that’s because we have yet to tap into the economies of scale that we’ve been used to with things like plastic parts. And also because we have to think a little more creatively — something’s shifting here in the way that we’re looking at the product, and we have to come up with more creative solutions in order to make sure that the price is compatible with the product and our consumers, but that it is also compatible with the resources available to us on the planet itself. I really hate when I hear that, oh, it’s sustainable, it’s like a high-end version of the thing that we already have. That’s not sustainability.
And I think, to add to that, oftentimes sustainability is deflected as being the responsibility of the consumer rather than the responsibility of the business, which I think we’ve all been speaking to a little bit. The onus shouldn’t be on the consumer to question whether or not the good that they’re buying was made with forced labor, or if that good was made by cutting down a forest to bring it to the market. Those shouldn’t be questions that consumers have to concern themselves with. They should be able to make decisions about their goods based on: is this the thing that I want to buy, and is it the best thing for me? Of course those aspects come into it, but it should be the responsibility of the business that’s producing that good to be able to mitigate those risks within their business, because it’s good for their business and, to Katy’s point earlier, it’s driving better margins, better efficiency, and overall better products that enable sustainability — which is really enabling making sure that we’re not depleting resources, so that these businesses can be around for a long time. So I think that’s really the shift that we also need to start.
Well, since we’re talking about costs, I feel like I have to step in here as the bank in the room. Actually, your bank can help with that — your bank partners — because most of our clients say they don’t have the resources to fund it themselves. There are a couple of exceptions. Cargill, for example, has a great program where they fund the farmers themselves to move to regenerative agriculture — that’s great. But that’s where banks like HSBC step in. We have a $1 trillion commitment, and we want to help your companies finance the change you want to see, so you don’t have to make that argument that you have to find the resources internally. I came from automotive before this, and I saw how hard our chief environmental officer argued to get the resources to recycle the water in our paint facilities, or go to zero landfill at our 10 plants in the US. That’s where the bank steps in, and particularly on supply chains, which tend to be 70 to 90% of all your company’s footprint — we’re the trade bank. Finance can seem really complicated when you pair it with sustainability, but it doesn’t have to be. So we’re doing things like sustainable supply chain finance, where you just tell us your ratings on your supply chains, both on the human rights and the environmental side, and we’ll pay the suppliers that are proving they’re doing well better — we’ll pay them quicker, we’ll pay them a better rate. So now we’re using finance to try to drive that change you want to see. I don’t want companies to feel like they have to do it all themselves, because that’s sometimes where I see the argument die. The C-suites want to seem like they’re supportive, until they see a price tag on it, and then it stops.
I think the problem is multifold. One is, sustainability is still new. I have to say this because, coming from a digital engineering and manufacturing background, for manufacturers to have an uptake in the latest and greatest technologies, it took an evolution. It wasn’t immediate — talking about cloud, they were not like, OK, here, I’m going to invest in cloud. But there is going to be an evolution in sustainability. There are some key things that need to happen. One is, I keep going back to organizational alignment, because while the CEO has a vision and goals, does procurement understand those visions? Right now, what we know is that about every contract has about 20% weightage when it comes to sustainability. But when actual procurement happens, they’re talking about cost, they’re talking about efficiency. Are they talking about, this is my sustainability percentage weightage, and these are the goals that the suppliers have to meet? That becomes key. So we need to start internally, when we look at an organization, to align that, and then create those roadmaps to resolve those issues. That’s going to be a cultural change. Going back to what we started our conversation with — it’s culturally, we need to change about how we look at sustainability, how we think about sustainability, how we invest in ourselves about sustainability. We cannot put the onus of sustainability at a consumer level.
OK, so I think we’ve gone through quite a lot of the areas we wanted to explore. We did promise we’d offer some direct things that people could do, and a lot of what you’ve been suggesting are things people can go and do and focus on. But I wonder if you could just give all of these folks here today something — just one thing — that they go back and go, right, I’m going to do this when I get back to the office, and it’s going to make a difference. So I’ll start from the end, please.
Map your supply chain. You need to understand all of the suppliers that are in your network. You’re not just dependent on, and there isn’t just risk with, the direct suppliers that you’re buying from.
Just one thing I was going to say: travel less. But I think that’s a really hard one in a lot of businesses, and that is a big one for a lot of businesses as well. I think the one thing — and it’s been talked about a little bit today — is training. Training is fundamental. Everybody needs training on this right now, whether it’s the C-suite, the functional leaders, or individual employees. They want it, they want it to be part of their jobs — like we talked about, 40% of them want this to be part of the employee experience — and making it approachable and safe for people to learn this, because it’s just a new way of doing business. So I would say training is one of the biggest things you could do that really will take off.
If you think that climate change isn’t part of your job, no matter what you do, you’re wrong. Al Gore — I saw him speak last fall during New York Climate Week at the New York Times — said what we’re going to see right now, and I think this is a bit what you were getting at, is as if you combined the industrial revolution and the way that changed the world with the speed of the digital revolution, where we now all have a computer in our pockets. If you combine those two together, that’s what we’re going to see in climate. So if you think it doesn’t relate to your job, you’re wrong. And to Susan’s point, educate yourselves. There’s so much information out there that you don’t need to look very far, no matter what your role is. You will find information on how it applies to your job, and I’m happy to act as a follow-up for this — to list some of the things that we’ve invested in that are non-proprietary, out there, like NYU Stern’s Return on Sustainability Investment tool, things like that that would help you get started in your organizations. But get started, trust me. I play this as a game with people at HSBC — I say, give me a job and try to find a job that climate change doesn’t apply to, and they’ve not stumped me yet.
I will try to not repeat everything everyone else said. I’m going to go down the education path, but we all, as company employees, have key vendors that help us succeed in our jobs. Understand what the vision is, and understand what can be executed today. If you buy into a vision with no executables, you might be let down in 2 or 3 years. You need to understand what you can deliver today to start on that journey, and then you need to buy into a vision. If companies that are key vendors to you don’t have that vision, strategy, and an executable arm of that today, that’s a worry, because sustainability is not a new topic that has been brought to the forefront in 2023. So if you don’t understand that — I’m going to go down the education path — get close to those vendors and make sure you do.
I think you should go back and start looking at sustainability and creating those roadmaps, breaking those down and ensuring it’s executable, right? Because that’s more important. You can always create a roadmap, but if you cannot execute it, it’s of no use. So work through that. And as an individual, I think there are still a lot of things that you could do — try to walk, cycle, and travel less is also something that you should look at.
If there’s one thing that I think everybody here should do, it’s when you go back to your organization today, you’re going to open up a spreadsheet and do some rough, back-of-the-napkin calculations of the emissions of your product or service that you provide. It doesn’t have to be perfect, but basically, know thy impact and take responsibility for it. So whatever it takes — if you want to focus on the power consumption it takes to produce your product or service or whatever it is that you’re providing — put it in a spreadsheet, do some rough numbers, Google and get some help on how to create those calculations of carbon emissions. I guarantee you’re going to be floored when you see exactly what it takes to produce what you have, and it’s going to move you. And you’re going to share that out with other leads in your organization, have them look at those numbers and say, this is our real-world contribution to climate change, what can we do? Here are the inputs, how can we tweak those inputs and start to move that needle down? Know thy impact.
So I think we’ve had some really interesting evidence of things we should actually do. We’ve got, I think, a little bit of time for some questions. Anything you’ve got that might get a bit more clarity on the action you should do would be a really interesting question for the panel, and I’ve got loads of questions coming up. So, the man with the mic.
Thank you for this. When we’re talking about data — I’ve been doing a lot of work with the government, US housing, and I’ve done work with state agencies, and nobody, to your point, wants to infect or destroy or make their customers ill. I think this is just common business practice. I had met somebody who was a valedictorian of their school, and they’re going to go to Cornell. I asked them what they’re going to major in — and I’m going to get to the data point — but they said they’re going to major in individual carbon footprint. This was about 2 years ago, and it blew my mind that that was actually a thing, and that the smartest person of about 5,000 people is going to go major in it. But it put the onus, from a data standpoint, to say: can I take those attributes — so for ESG, for environment, social, governance, whatever those are — can I take them down to an individual level? So for US housing, I said I could go and take — and there are some Google things here, CoreLogic and product stuff there — I said, let’s go down and score for each individual looking for a house. Let’s match the individual and their family composition to the type of property, the location, the environmental impact of the property, its ability to be a target for solar or for reduced energy consumption. That way I could path the dollars all the way to that HSBC — is it eligible then for sovereign fund investment? — because we’re taking it all the way up to that one. But by taking it down to the individual, I also saw that all of the members of the company can see what the impact is on that persona of your customer, and that’s how you gain a lot of momentum. You don’t want to put somebody in a house that’s going to flood. And actually, President Biden used that reference without realizing it was from two weeks before, at an ethics session where we talked about Chase putting somebody in a house that they should have been able to realize was going to flood. It was the lowest-cost housing in the town, but at an environmental level it was also the most likely to be flooded, which is why it was inexpensive. So I can take those elements all the way down, and if we’re all data people, all the data is available, and it’s one of those, from a design standpoint, you should have known better. That’s really what we’re talking about — long-term impact. I can take that all the way down to the customer, to the community, to the neighborhood, to the larger environment. So from a data standpoint, start capturing and being an advocate for keeping that data too. So have any of you seen that as a challenge that you’ve solved so far?
Well, I love what you said, and you’re absolutely right. All of us would agree that data for good — it’s not data for data’s sake. It’s data for: what case are you making? With my team, I always use a shorthand: issue and the tissue. They know that means we’ve got to hit our executives with the data and then make them cry a little bit, right, because they want to be hit in the head and the heart. I love what you’re saying. I also think you’re trying to touch on data to fuel a just or an inclusive transition, which is what we’re now starting to really focus on at HSBC. We’re doing things like working with this great organization called New York City Energy Efficiency Corporation — you know them — they’re going into New York City buildings that are the lowest income, and starting there with energy retrofits. So it shouldn’t be just a transition, it should be a just transition. And part of that, looking at these funds, because I worked with the Energy Commission in Connecticut as well, and they get $1 out of every bill paid —
— but we’ve got a few other questions we need to move on to.
Hi. So we are hearing so much about generative AI and the impact it’s having, or going to have, on our lives. How about the impact on sustainability? Because large language models are going to be using large amounts of computational resources — even higher, much higher than what they’re currently using — and powerful data centers. The energy consumption is going to go through the roof. And, Katy, you mentioned calculating our own carbon footprint, but this is going to massively increase the carbon footprint. Do you think it’s going to take us back a few steps in our quest for sustainability? How to handle that?
Yeah, I mean, it’s the same conversation we were having about Bitcoin, right? Like, how is that sustainable? I could just say, for Google, Google has a goal of being carbon-free by 2030. That includes, obviously, the data center operations. I think the focus in that conversation, in terms of processing and sustainability, is the data centers and ensuring that they’re all using renewable energy sources in order to power them.
Mike, did you have any thoughts on that?
I think it’s a great point. When you start thinking about AI, you start thinking about engines, and you start thinking about processing power. As Katy’s talking about, it’s an absolute consideration. I will tell you, as AI gets readily implemented in all walks of life — whether it’s farming, whether it’s banking, whether it’s retail — if you don’t have the foundation set right now, you’re going to have a bigger problem when AI becomes part of your mainstream business, because it’s going to make your sores and the cuts that you have even bigger. And that’s factual. If you look at data centers today, they’re 2 to 3% of the overall power being used in the world. If we don’t get to renewable energy, if we do not get more proficient at this, it’s going to be a lot worse in the coming years.
So I’m really sorry, folks, but that is all the time we have for questions. But I’m sure some of the panel will be around during the lunch break, so if you’d like to go and have a chat with them, feel free. So please thank this glorious panel — Katy, Nandini, Kelly, Susan, and Adrienne. Thank you very much indeed.
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