Delivering the annual lecture at the World Retail Congress in Rome, Paul Polman, former Unilever CEO, said society had reached a tipping point. The cost of inaction was far higher than the cost of action – something firms would ignore at their peril.
“Consumers are demanding change, especially Millennials and Gen Z,” he told delegates, “they want to buy from brands that stand for something, and they are willing to pay more for it. They will also choose to work for more responsible employers, so companies would be well served to focus on their people and take action at the level that is needed.
“The ones that don’t, I think, are already heading to the graveyard of dinosaurs.”
His comments came as a report from global management consultants Boston Consulting Group (BCG) released at the conference showed less than 20% of companies were on track to hit targets needed to meet the limit of the rise in global temperatures to 1.5 degrees, set by the Paris Agreement in 2015.
Mr Polman, co-author of the book Net Positive: How Courageous Companies Thrive by Giving More Than They Take, said the food and fashion industries were critical to turning the tide and meeting the sustainable development goals.
He said the food sector, where he spent most of his career, employed more than a billion people worldwide and was responsible for 30% of greenhouse gasses and 70% of deforestation.
Yet while 800m people go to bed hungry each night, it has the “audacity” to waste about one-third of the food that is produced.
The fashion industry was “not much better”, with a “mind-boggling” amount of clothes being burned or finding their way into landfills.
He said business leaders needed to show “courage” and be more ambitious in tackling climate change and human rights issues rather than just doing the minimum that they could “get away with”.
That meant striving to repair the damage being done to the planet by excess production, energy and water use and deforestation, rather than simply reducing their impact.
In a passionate 30-minute address which ended in a standing ovation, he said: “Less bad is simply not good enough. A tyrant who starves fewer people than a decade ago but has all the resources to feed them is still a tyrant. I used to kill ten people; now I kill five. Am I a better murderer? Less bad is simply not good enough. The do no more harm principle is not good enough when overshooting the planet’s boundaries. We have to start thinking restorative, reparative and regenerative, which we call net positive.”
Mr Polman said business could not afford to be a “bystander” and could not succeed in a system that was failing so many people. They needed to focus on the size of the prize rather than the costs involved.
“The cost of inaction is higher than the cost of action, which makes it an enormous opportunity,” he stressed.
He added: “Covid cost Europe and the US $70 trillion to save lives and livelihoods, and another $35 trillion of global GDP will be lost this decade as a result. That is infinitely more than what it would cost to implement the sustainability development goals.”
However, business leaders would need to think differently in order to drive meaningful change, focusing far less on short-term returns for shareholders.
“This is not a crisis of food security or inequality or climate change,” he told Congress, “those are the symptoms. I believe we have a crisis of greed and selfishness, of apathy. This is a human crisis that we are facing.”
In order to drive meaningful change, businesses need to be run for the long-term and ditch the “rat race of quarterly reporting.”
When he was running Unilever, he said he stopped quarterly reporting and moved remuneration schemes to be based on long-term outcomes to “drive the right behaviours and optimise returns for all stakeholders, not just a myopic focus on shareholders”.
He told delegates that they had all “won the lottery of life” as they were all in the top five per cent of the world’s population; it was their duty to do more to help the other 95% who were less fortunate.
“It is in your hands. You decide which side of history you want to be on.”