The Role of Business in the Biden Administration's Sustainability Agenda

hello all uh and welcome to the second of our series of three webinars sponsored by the business and society program at stern uh tonight we have tonsi whalen and jeffrey hollander and we will be speaking about what business can do to help the biden sustainability agenda and so um just as a reminder we will begin with a moderated discussion and you are welcome to add your questions to the q a and then i will pose the questions after the moderated the questions from the audience after the moderated discussion so if i could ask tonsi and jeff to join me thank you thank you both so much for being willing to join this discussion um as you both know and and it's wonderful to have two stern professors with obviously such prominent roles um uh in in your private lives and and with the center for sustainable business tonsi welling being the director of the center for sustainable business and jeff being president and founder of the american sustainable business council so we really have a lot of expertise in addressing these questions just to start out the biden administration has made it clear in less than a month in office that the sustainability agenda is a top issue for the administration so for example they have taken really meaningful steps like committing to net zero emissions by 2050 rejoining the paris accord which is a really big deal pulling the keystone pipeline permit switching the federal government's fleet to electric vehicles creating a new cabinet role for a special envoy on climate we even heard just last week janet yellen as treasury secretary talking about how she sees climate change as a risk to the financial system and that she'll be pushing tax incentives for the reduction of carbon emissions so some of these steps have definitely been controversial and are likely to meet some resistance especially with a split senate jeff i'd like to pose the first question for you because as president of the american sustainable business council what do you think the president's top priorities should be what do you think is realistic for him to be able to achieve or for this administration to achieve and what do you think it's going to take to get those priorities accomplished well thanks and it's a pleasure to be with all of you uh thrilled to be able to participate in this dialogue uh i think that the priorities he's established and communicated are generally the right ones uh and i think the the things that stand out as critical or obviously covet uh that has to be a focus there's no question about that climate uh as you were just talking about has to be a focus uh the economy and social inequity is something that we absolutely have to deal with we can't not make that a priority uh and i i think if i could choose a fourth one it would be infrastructure uh as something that is is is probably a place where there will be more consensus than in the other three areas and filtered through everything he does he has to use a lens of of racial justice and equity we we can't look at racial justice and equity as a separate issue it has to be built in to all of the priorities all the programs all the initiatives that that he is going to advocate for um and i think uh and we'll talk about this more later on you know i think the probably the biggest challenge he'll face in addition to being uh uh faced with a a a such a closely divided senate is the reality that that by nature he's going to want to work with the republicans that's not a bad thing but at the same time he can't afford to let it slow him down the way it did in the obama administration because i think that there were some real missed opportunities by wanting to reach out and reach across the aisle for too long a period of time when he had a a the ability uh to pursue things without the type of agreement that he was looking for go ahead just in addition to the points that both of you have raised i think there's quite a few uh interesting elements and how the administration is going about this first as jeffrey said in terms of winding inequity uh and racial issues throughout everything um they're doing a really good job of that they're also building jobs throughout every type of initiative they're building climate i mean the head of the economic um the national economic council brian d's came out of blackrock but was running esg stewardship and part of that it was in the obama administration so you know it's it's fascinating to me how you know in in agriculture there uh he's asked that um they look at climate in terms of regenerative agriculture with a particular focus on black farmers not solely but so you can see how this sort of um we're being very smart about looking at the intersectionality of all these different issues in terms of how they're trying to implement them and also trying to avoid being put into a box of this is sort of a climate change thing over here as opposed to hey we're looking at how do we build back from covid um and from all the other trauma we've gone through um how do we build towards a future uh where we can um uh you know tackle some of these really really major societal issues in front of us in a way that is embedded in society and in the economy let me ask kind of the how question in that respect because in fact the biden administration has made the pledge that 40 of the overall benefits of its investments in clean energy and energy efficiency should flow to disadvantaged communities but i guess i'm wondering how what do you think are the best levers to pull in order to accomplish that kind of climate justice um you know intersectional uh goal and and i guess what can business do to maybe help deliver on that pledge yeah i think yeah you know some of those levers uh need to be things like raising the minimum wage and what business needs to do is business needs to make the business case for why that's really good for the economy we've we've lived for too long for too many years with this notion that raising minimum wage is bad for business and bad for the economy and really what we face is that companies that are paying substandard wages are being subsidized by the government when their workers can't cover their their living needs and that's not fair to businesses that are paying their workers well so we definitely have to look at that i know that that's a a a priority for biden i hope it doesn't fall by the wayside too quickly as he tries to get his package through but i think we also have to look at other tools i think we have to look at things like baby bonds as ways to give people funding from day one i think we have to look at things like a wealth tax that uh is highly controversial uh but uh you know i'm i'm sure the people that that have assets of 10 20 100 billion dollars uh won't be able to spend all that money and we can put it to much better use than they can uh so i think we we need programs and we we need to be expansive in our thinking this is not a time where we can afford to focus on incremental change we have to think big we have to solve problems that are so pressing that they're putting our economy and our society at risk and that will be a challenge for the biden administration that will be looking for ways to compromise so to add to that i'll talk um first about this question of workers and i want to talk a bit about some of the climate and environmental commitments and impacts they have but you know just to build on um jeff's point around a minimum wage and sort of the the opposition to that um from a business perspective so it's really only in the last 40 years when you look at it the businesses have sort of said well we need to extract as much value as possible from workers we need to outsource them offshore them automate them to deliver more money to shareholders and as part of that this focus on keeping the minimum wage you know very very low has led to really significant negative impacts for shareholders i mean if you look at dominoes um one of the lowest uh it pays one of the lowest wages benefits et cetera in the retail space which is saying something because they're all pretty low 300 turnover okay so they're replacing people every three months as they replace people every three months the training in terms of the pizzas that they produce and customer satisfaction is pretty bad and they commit to replacing those pizzas free so if somebody doesn't do a good job they're paying for that plus we've also seen when they have that kind of when you have that kind of turnover you see theft you see you know low productivity et cetera so there's a lot of really negative um financial impacts of taking a uh you know a position that you shouldn't be paying people what they actually need to make to have a attempt to have a likes basically um so i agree with jeffrey that that that's a really important piece um you know i i think um looking at to some of the other areas right so uh we've seen that um disadvantaged communities are often disproportionately affected by extreme weather events by climate change right so we've seen flooding uh we've seen um outages in terms of electricity or fires etc often not always but often affecting uh people of color more than others and so building and investing in in green infrastructure that will build resiliency against flooding against fire against these types of issues will be really critical that can also create jobs as well as create opportunity you know improve quality of life for communities another i think really important area um where this uh where the buy administration can go is that 40 of climate emissions come from the built environment um so if you're just looking at new york city you know the enter the retrofitting of the buildings here require a job force i mean a workforce to be able to put that in place and we don't have enough people currently trained to do that and this will be true across the country and but also in addition to the workforce to work on that you need um microgrids that can um you know bring in and provide solar affordable solar and affordable sources of renewable energy to communities that otherwise couldn't access it so there's also a series of opportunities rural areas as well um really left out of all types of grids including the internet and cell phone service right um so really investing in that resiliency and access to the rest of the economy that that people have as well as you know protecting their environment another key area that i would say would be important in terms of resiliency for all of us but going back to your point about people of color is water a water infrastructure you know around the country our water infrastructure is really deteriorated and we haven't been investing in it and that's resulted in problems like we saw in flint michigan but it's true everywhere you know a lot of the small dams that are protecting our water in very bad shape potential you know um really catastrophic events could come from that um you know you've got a lot of waste of water as well um and then increasingly we're going to be having to pay for our water as we no longer have access to it so what kind of impact will that have on on disadvantaged communities so i think there's a series of ways in which the government can quite easily direct both resiliency dollars and job dollars related to climate related to environmental issues as well as tackle some of the issues that jeff raised around minimum wage so whereas i think that the something like a wealth tax is likely to be extremely difficult to get through in in our current environment something that would definitely be viewed would would be very difficult to get bipartisan support it sounds like there has been an uh increasing you know sort of growth in business openness to raising the minimum wage there's definitely it varies around the country but there's a lot more openness to that and then um tonsi many of the things that you were talking about are examples of where it's it's sort of government taking the lead because those infrastructure projects which obviously would be outsourced to business in in many you know cases but ultimately it's sort of it's up to government to take the lead i guess i'd like to turn the discussion a little bit to how business can partner really partner with the administration what are the opportunities for sort of that public-private partnership what are the obstacles to business being a partner to the biden administration on sustainability what do you think are kind are there sort of myths i know tonsi i guess i'd like to hear from you first i know you've sort of talked about myths that are getting in the way of business serving as the drivers of progress on sustainability and i wonder what biden can do to make it easier for companies to kind of take the lead and and so it doesn't you know sort of share that burden of of leadership in sustainability and climate change sure well so first i wanted to just um quote from a fortune uh ceo survey where they asked ceos what do you want the biden administration to tackle um and so as you might expect the first was trust in government you know the majority the big numbers were trust in government and coveted relief and economic recovery you know up there first and foremost but the next three were infrastructure climate and then education slash workforce training managing the debt you know which used to be actually a high one was way down at the bottom right so clearly there's a consensus by business that these are issues that they want public policy public policy support in tackling and that also we're seeing increasingly the business themselves recognize that they've taken they need to take a leadership role um you know we we've heard uh every year from um uh blackrock ceo larry fink um about the the role of business and how as government has become less of a leader and hopefully they'll become more of a leader now but nevertheless less of a leader um business needs to step up and that it's actually part of your social compact to be um somebody who a company who doesn't just who does not create problems but helps to solve problems right which in a certain way if you think about the role of business it's about creating opportunities and solving problems right we have some really big problems that can also be business opportunities so you know in terms of some of the ideas around um you know how how business can engage with um with the with the government and i think um i know that uh jeff will have a lot to say about this but i think first and foremost just sort of combating the disinformation out there um you know because business is trusted actually that the edelman trust barometer is seeing business is actually trust rising to a much higher level than many other forms of other many other institutions especially government um so if if enough business leaders come together to say climate change is an issue it creates an opportunity for us for our competitive advantage we need to get in front of it inequality is an issue this is what we need to do we need that kind of a shared voice and i'm going to leave that because i think jeff jeff will talk about that um very eloquently but i also do believe that as business comes together and and works hopefully with government they also need to bring in civil society it needs to be um you know a a uh tripartite engagement right we need civil society to keep business honest frankly of someone who used to work in the nonprofit sector um you know in terms of um in addition to combating um disinformation i think this point around um we need to we need to be competitive as companies and as a country and we're seeing europe and china eating our lunch in terms of shifting where the economies are going given all the challenges we're dealing with i mean it's as though the united states of america right now we're kodak and saying um i don't care if these cameras are going i know some people are still going to be using these old style cameras so i can still make film and like stop bothering me about everybody else converting to these digital things right it's sort of like we're we we are our government has had that attitude and some business has supported that attitude and we need to recognize that that let's go back to let's let's like take the lead on this um working with the government who can then provide incentives as you mentioned um you know figure out what are the incentives that are creating bad behavior what are the incentives that we could work on to really support research and development right um scaling up certain technologies what are the key areas where we need technologies how do we have public-private partnerships around really building out those technologies to tackle some of these these problems i think also i mean there's just like so much in here so but like you know how do we um you know on the market side the investor side of things like what what do we do about carbon offsets and creating a really robust carbon uh market right for things like soil um so like if we want to help farmers which is something that we've been you know we do how do we help them with preserving soil carbon how do we help fishermen protect um ocean carbon right and sequester carbon how do we protect forced forestry through sustainable forest management all of those are ways that business can engage and make money but also help us tackle this this climate change issue and i'll just there's so many other things but i'll just stop with one other one which um you know i think is a really important area to look at in europe you have end of life responsibility around products and so automotives for example there's an entire ecosystem of businesses that are set up that make money off of the responsibility that the car companies have to reuse recycle and properly dispose of all of these vehicles once people are no longer driving them um and for one company we worked with that um reusing 2.5 of the product and recycling 10 of the product um resulted in 100 million dollars net for them that doesn't include the money being made from all of those little businesses that have been set up to tackle this there's huge opportunity around circularity around recycling around renewables etc to create new businesses and new job opportunities and new sources of income that's terrific and you've given a lot of very specific examples that suggest that what the administration would need to do would vary industry by industry in order to kind of break down the obstacles i wonder jeff if you have any sort of favorite suggestions for what the administration can do to empower business to take greater action yeah well i i i would think about it in a slightly different fashion i think that there's two fundamental types of companies one set of companies that are moving towards and committed to taking care of their stakeholders versus companies that are focused on their shareholders and we can't afford to support companies that are only in business to take care of their shareholders and the biden administration has to make it clear that this way of doing business is not sustainable into the future and we have to move towards metrics and measurements and deliverable goals in the ways in which companies take care of all stakeholders not just their shareholders and similarly there's businesses that are only able to survive because they push their externalities off onto society and the environment that is not a viable way to continue to do business into the future and the biden administration has to begin to understand that there's not just one type of company people do business in very very different fashions and they practice capitalism in very very different ways and the way in which we've been practicing capitalism is not working biden can't meet the goals and aspirations he set for himself if business doesn't begin to change course and recognize that in the future they have to focus on their stakeholders they have to stop externalizing their costs onto society it's a wonderful professor at harvard george seraphine who has calculated for 2 000 companies what those externalized costs are and just to give you an example exxon for example externalizes about a hundred billion dollars of costs a year on the society and the environment that's not sustainable and yet we're paying the bill for that we have to change the rules of the game there's there's there's all kinds of opportunities that businesses can pursue but they need to pursue opportunities that make their business one that is not dependent upon externalizing costs or delivering only for their shareholders so um that is a great starting point for for my next question and thinking about how sustainability really has been an engine for a wave of disruptive innovation and i think you mentioned um you mentioned exxon exxon was the most valuable company in the world only seven years ago and now it's worth one quarter of what tesla is worth and so we're really seeing that like the companies that are are embracing innovation around sustainability are able to to really use it to leapfrog ahead and the ones that are are externalizing the cost along the lines of what you're talking about are really struggling and arguably the pandemic and kovid has really sped up some of these transitions i'm wondering who you see um maybe jeff we could start with you who do you see as the companies that are kind of at the forefront of this in of of taking advantage of the opportunity for innovation uh and who do you see as the laggards and what kinds of innovations you see unfolding over the next four years in in this space yeah well one of the ways to look at the the leaders and the laggers is to look at which politicians they're funneling money to and where those politicians stand across the spectrum so that's something that i'm always paying attention to but but i tend to look at categories of business not just individual companies and maybe tonsi can talk to specific companies but clearly there have been some major changes in the automotive industry because tesla is a leading example but but when we look at what volvo and what general motors have done in terms of making pledges to get out of the internal combustion engine business in the coming decades that is a big big sign for the future of the fossil fuel industry which is going to present increasing challenges not just to their stock price but to the viability of their very business clearly to support that transition we need lots of people in the energy storage business and the energy storage technology in order to make this transition to electric vehicles we have to handle electricity very very differently we're going to even have to look at things like wireless power transmission there is a company in israel that is already making electric planes for cape air that will be hopefully in commercial service in the next 24 months we need to think about people who are light weighting materials that is a category of opportunity for all businesses and people that can figure out how to do that light weighting will have great business prospects new ways to use the internet 3d printing and as tonsey mentioned regenerative agriculture has to replace the traditional way in which we practice agriculture not only can't we afford to lose any more soil but we need to sequester carbon in the soil which is what regenerative agriculture does and we need to make sure that there's a real market for companies and and farmers who were doing that they need to get financial returns for sequestering that agriculture that carbon sorry yeah that's gonna be really tough in uh the developing world where it's so needed but uh so tonsi i wonder what um if you have any favorite like leaders or laggards yeah well let me start um with consumer package goods i think it's an interesting illustration i can give some other examples as well um and and so to give some background to consumer package goods which means food and personal care products right that you get in the supermarket so we've done research with iri that collects all of our barcode data um at retail so mom and pop to walmart to amazon and what we found is that over the last five years sustainability marketed products provided 55 of the growth in consumer packaged goods across we looked at 35 of 40 categories or 36 excuse me we looked at 73 000 skus and 90 of the categories that we looked at the sustainable products were outgrowing the conventional now if you look at that um and you think about it in terms of industry what we saw and we first started doing this we do it every year we did this prior to kovid the first time and what we saw then was that dairy uh for non-uh conventional had a ten percent growth so that meant things like plant-based or organic or noaa gmos the conventional dairy was at minus ten 10 within six months the two largest dairy producers in the united states dean foods and uh borden went out of business now they clearly were not paying attention to where consumers were going on these issues and whereas if you look at companies that are sort of making the pivot they're doing well so if you look at innovation from a cpg perspective unilever which has made a commitment to 100 sustainable sourcing reducing its environmental footprint by half providing um jobs for uh i think a million small producers around the world uh now it's just announced a commitment to a living wage through its prior supply chain it's made a commitment to phasing out plastic in its packaging it bought seventh generation which jeff founded so that's its best point of course um and uh and and is really um you know a huge innovator in the space and um their what they call their sustainable living brands the one that are characterized by sustainability and purpose are the ones that are growing and not only that but they're on an acquisition strategy of purchasing smaller bands like they did with seventh generation and and ben and jerry's and others um to really build out the portfolio if you look on the opposite side at a craft um which you know makes oscar meyer bologna and things like that you'll see that they have made absolutely no pivot no art no investment in shifting to where consumer tastes are around sustainability around nutrition and they are performing incredibly poorly um so so just to you know people people need to recognize that these are really meaningful issues for business this is no longer a nice to have this is a must-have in terms of driving innovation um i'll give one last uh sort of example that i think is fascinating in a different sector i can give lots more if you want but um so damtar which is a pulp and paper company operating out of the southeast um but around as well in canada um they had um uh to pay for the waste that came out of their pulp and paper plants so they were looking that where they were sort of thinking from an innovation frame and from a circular economy frame how do we deal with this problem right this is an environmental problem and it's a cost for us so they came up with the idea of creating a because this is a bio-based product a bio-based fertilizer that they could provide to the farmers that was better for the environment than the nitrogen-based fertilizers that the farmers were using it was lower cost to the farmer and now damtar had both a source of revenue small source of revenue and they no longer had the cost of disposing of the wastewater it was just applying a completely different kind of sustainability driven innovation frame to how they were doing their work and the final example i give is nike um you know who uh was looking if is is embedded in their innovation function and innovation is key to nike's dna and they were looking at the fact that sneakers are made by stamping out the the uppers of these different pieces which is really kind of wasteful and they also wanted to create a higher performance shoe so what they did was they came up with the idea of flyknit technology which is a strand of recycled polymer that they weave into the upper which is um 15 lighter reduced waist by 80 percent has been a category disruptor and a very nice money maker for nike so we see i can just i could give you hundreds examples like that which shows that just really innovation um sustainability driven innovation is really the future for for business that's really helpful because i think that there was i mean i've certainly read things that argue that well what happens is companies start making money and then kind of they indulge in investments in sustainability to make themselves feel good and burnish their reputation but your you gave really good examples of where um it's clear that the direction of causality is in the opposite direction that basically those investments in sustainability are what generates later returns and you've given that kind of at the macro industry level and also with some of these specific examples at the country level so i'm going to pose the my last question before we open it up to the group i'm going to specifically pose it to you tonsi um what are what do you think are some of the most important tools metrics and practices that kind of move the needle on sustainability and how can business councils and corporations and governments and maybe even investors you know though i know you know if you're only pleasing shareholders you might not get far but maybe even investors how can they collaborate to ensure the adoption of those tools metrics and practices and should business education play a role in in any of this so maybe you could take them for i know it's a big question maybe you could take a a shot and then jeff if you have anything you'd want to contribute tonsi yeah well so as you said big question so place to start i mean you mentioned janet yellen being interested in disclosure uh related to climate and potentially other issues so i think you know clearly everyone's struggling with the fact that we have a variety of different standards and metrics around how we define esg so i think um you know public policy to support a clearer definition around that that is not only the united states but ties into what europe is doing in others would be a very very helpful contribution also i would just say for business as well that they shouldn't be thinking about uh esg disclosure as just disclosures i need to take off this box in this box instead they need to be thinking about how do they embed sustainability quarter their business strategy because these are material environmental and social and governance issues that have an impact on them that they can't impact themselves and that we want to see public policy support for those for that um so that's a very you know so developing that materiality analysis um i think it's a very important tool and a place to start with your business strategy um another trend that we're seeing is obviously as as more and more companies are um being asked for by investors for esg data so this is sort of an investor pressure and financial data but not connected i think we're going to begin to see and we already are seeing that companies are going to begin to have to track the financial impact of their esg investments which isn't to say that they all have to have a significant roi but you do need to be able to know what the results are and so we at stern have developed what we call rosy return on sustainability investment methodology where we've been working with um companies from cargill to mc mcdonald's to speaking of automotive general motors to to to understand and track financial return on um investment so i think that's another whether it's rosie or some other way that's a really important tool for for business um i think you know as and jeffrey we're sure we'll talk more about this the the sort of focus on diversity and inclusion inequity um bringing uh your employees up to um you know a fair way a living wage ensuring like if you have gig workers are there portable benefits how do you actually structure things in a way that create a better economic situation for americans um also sort of very important and we're doing some research around how you can track that and and and and work towards that um and let's see um finally i will i'll end and turn over to jeff with another area is is your board right you need a board that's educated around these esg issues we did some research looking at the fortune 100 1188 board members three of them had experience in climate eight had experience in cyber security right so clearly and i mean you you could look at the study and the way i put in hbr but clearly there's a series of credentials that those boards need and there's now training programs for board members so they can ask the right questions of their executive team are they focusing on those material issues and finally in terms of education and training yes business schools i think need to be embedding understanding of these issues whether it's in finance or in corporate studies to actually prepare students for the reality that all of these issues are going to be front and center and managing as jeff said at the very beginning managing different stakeholder issues which is a soft skill figuring out how you get to win you know win-win with managing for what do your employees want what are the communities what do the environmental ngos want what does the government want as opposed to we're just doing what we want what the shareholder wants that's a complex environment that business school students need to be prepared for and jeff you brought up metrics earlier as well do you have comments or examples of tools or metrics or practices that really work yeah well as i mentioned before i think formalizing the way we capture externalized costs is a critical long-term goal it's not going to happen in the short term but it's critical to understand what a business's impact on society and the environment is in the short term i think we have to move towards regulation on esg reporting and i think that it has to be mandatory i think it has to be regulated i think that we need uniformity in the way that reporting is done and i also think that that there's positive things that companies do that they don't get credit for that should be quantified from a reporting and a measurement perspective like investing in their workforce if you build a building it's on your balance sheet if you invest in the talent and capability and wisdom of your workforce it's invisible and shows up as an expense that sends the wrong message to companies why should they invest in their workforce when they don't get financial credit as an asset that they've created so there's a huge huge role for these metrics to play they have tremendous impact on the way business will behave and it's critical that in the next couple of years we start to get this right we we make a huge leap forward so that shareholders stakeholders investors and employees really know how a business is impacting society in the planet so i'm turning it to the questions from uh the audience and please uh feel free to add on to the uh q a um i see that the initial questions are definitely addressing some of the most controversial topics so questions about things like um well sort of uh the green new deal was definitely something that biden distanced um himself from or you know his platform from in the election um can we see do you see uh the possibility that the green new deal kind of ends up influencing uh or maybe elements of it influencing the administration's agenda going forward it is influencing the administration whether or not they recognize it publicly the american sustainable business council was the first business organization along with its 200 000 members to endorse the green new deal we think it's good business sense we think it is the right direction to move in from a long-term perspective and we don't really care whether biden and and harris use those words or not what we have to make sure is that the environmental and economic commitments that underlie that deal are integrated into the policies that he puts forward so and and again i think the challenge is that business needs to give biden some cover in terms of the economic sense that these policies make as tonsi was talking about the companies that are pursuing these policies are doing better in the marketplace let's not be timid about saying this is what it takes to win in the marketplace these policies are good for business it will make america a more competitive country we will do better create better jobs and have a better future for by embracing the policies of the green new deal do you think we're going to see a carbon tax i think we will i think that there is enough republican support and we have to cultivate that republican support we have to reach out to those republican senators we have to make sure they understand the business case we have to make sure that there are businesses in their districts that will support them for taking a positive stand against uh not putting a price on carbon when we talk about externalizing costs when we talk about full cost accounting the number one place to start is putting a price on carbon it's critical that we do that in the next two years i believe that we will get it done but it will take business putting pressure on the government to support that initiative here's a question that i i wonder tonsi it seems like it was designed for you um so uh so rosie was developed to help businesses figure out their return on sustainability investment uh the question is can can it be useful for policy makers to be thinking about you know should should such a tool or are there other tools that should be used by policymakers to be thinking about where they can have more leverage from a policy standpoint well i think a combination of the rosie return on sustainability investment methodology we put together which is really around internalities so for business for government which has a lot of costs and also a lot of procurement ability for them to understand and reduce their own costs as well as put in place innovations around sustainability be able to defend that at a local level as well as a federal level i think would be really important we also are um you know i want to support what um jeff said about uh um george serefman's work at harvard which is on impact weighted accounts which is looking more externalities and how do you assess um the cost of those externalities so i think combining those two things and actually we're working with them to define to write up this model about you how you combine the two things would be something that would help policymakers because for the rosy side of things they can then place subsidies or incentives that will help companies make those initial upfront investments knowing that they're going to get their money back right as well as begin to understand those costs of the externalities that they're creating and begin to reduce those with those types of internal investments which also bring better performance for them as companies here's a question that specifically focused on both of you commented a lot about issues of inequality and um and kind of addressing uh you know what um it does seem like we are using machine learning and robotics in many ways to replace human workers and uh and it seems like it's only exacerbating inequalities and i guess the question is sort of d what can be done to sort of retrain or or equip the american workforce um to address that and i mean one of the critiques of a minimum wage you know raising the minimum wage is the idea that it perhaps would speed up this process of a movement to um to automating uh work that has been done by by people yeah well i mean i think you know let's look at the energy industry and let's look at creating good energy jobs the alternative energy industry roughly creates 10 jobs for every one industry that the fossil fuel industry creates so by moving to alternative energy we're creating more jobs we're creating more high paying jobs and we have to make sure that those jobs are made available to to workers who need to be retrained to to take advantage of them and we have to invest in education uh asbc is an advocate for making community college free for all who want to attend i think that we've done tremendous damage to create the levels of social inequality that we're experiencing today going back hundreds of years uh we as businesses take a very radical perspective on reparations for african americans as well as native americans to try to write some of those wrongs those are controversial things those are tough things to to talk about they're tough things to acknowledge the history that makes them necessary uh but but we have to deal with the the fact that that you know when you look at the savings rates of of african americans and the average family has less than a thousand dollars in the bank one car accident away from bankruptcy or one bad health situation away from bankruptcy we've created a very precarious situation economically for too many people and those fundamentals have to be addressed together with building jobs and building workforce opportunities yeah i mean maybe this is a a question but partially a comment is um do we need to is is there something about creating innovative cultures in organizations that could perhaps allow organizations to embrace these opportunities to un you know to sort of for disruptive innovation that generates sustainability but maybe also equipping workers to um make this transition and and minimizing the inequalities so i i don't know if that's a question or a comment um but sort of like is it important to have do you see the the sort of culture of innovation being critical to organizations making this transition absolutely uh that cultural development is critical to take advantage of these opportunities that tonsi was talking about but workers have to come into those companies with preparation and training that they often don't have and we as a society need to level the playing field we need to create some opportunities that that quite frankly don't exist for too many americans today there are several questions in here that are about green washing and i do think that that is a big issue because as sustainability is so clearly a watchword and a concern for the administration uh and and honestly um consumers wall street you know a lot there's there's a lot of positive reaction to it there's a tendency to see it as maybe a bandwagon that lots of people are going to jump on but only from a superficial perspective and is there is there a role you know should government be doing things to differentiate the folks who are doing substantive you know making a difference substantively from those who are just doing it as window dressing is there anything how much of a problem is greenwashing could it actually be helpful or or is it um is it you know definitely always harmful any comments on the the sort of green washing and how you know we probably will see more of it given the tenor of the public discussion right now yeah i mean i you know we've got green washes we've got what people call woke washing we've got all kinds of washing that that you know that we see out there and so um it is very much a wild west i think whether it's in the investment space so as we see more and more flows into esg environmental social governance funds or impact investing i think there's claims that aren't well grounded and there isn't there are some sort of voluntary ways of assessing them but there isn't sufficient regulation over those claims and i do think that that is something that will shift if you look at consumers and um claims around goods that they're purchasing there's some government um oversight but very little i mean like the word natural that you see on packages doesn't mean anything and there's no definition behind it and there's no regulation of it right so um i do think that this is an area where um companies uh take advantage of very loose kind of definitions on the other hand um two things first of all i think it's really important that you know when companies make big commitments as long as there's targets and accountability and public reporting on them um i'm fine if they're making big aspirational commitments some people think that's oh well they haven't done it yet screen washing i'm fine if they're doing that as long as we can then be hold them accountable and make sure they're doing it so i think that's a positive um i i think that um you know we need to i've lost my train of thought because there was another place i was going on this um i completely lost it okay you go ahead thanks i'll come back i think i agree with you the green washing is a huge problem and the attorney generals have issued some green marketing guidelines but there's literally no enforcement of them which is a real problem and the other thing that you mentioned which is really important is uh companies committing to things that they don't yet know how to accomplish is a good thing as long as they're transparent about whether or not they reach those goals and unilever which you mentioned earlier is a perfect example when paul pullman set his goals people said you're never going to meet him and he said you know what i don't know how to meet him but i gotta meet him because it's what the world needs from us as a business and he has been willing and now his successor to report on not meeting the goals he said and that's the kind of of of business behavior we need bold commitments and transparency around how companies are doing to meet those even if they're falling short and i and just to build on that too you know because i have companies asking me about this all the time if i make this big hurry audacious goal and then i don't mean it i'm going to be attacked and again if i haven't seen that as long as you're being transparent about it explaining why you haven't met explaining what your plan is to deal with it right so i think that um what yeah that's really important what jeff said the other piece that i was going to say is that oftentimes you'll see companies make what i would call csr commitments corporate social responsibilities which are around philanthropy so with black lives matter we saw a lot of companies saying i'm going to put x dollars into black lives matter type groups and that's very useful and very important but when you look at what they're actually doing they had no disclosure over their own diversity metrics right nothing around they could say yes we have a policy to ensure that we you know our p we're going to be more diverse and inclusive but no way for anybody to tell if indeed they were being diverse and inclusive um and so that's to me a prime example of where you really need to define and start and this is something blackrock has asked for um publishing your eeoc uh you know um diversity numbers putting in place a plan like city group did around the inequity that they had between male and female pay over time you know over a couple of years to fix it right and show how they're doing on that that's the type of thing that we need so a legitimate critique i realize as i'm reading through the questions is that a lot of our focus has been on large businesses and uh so what about smaller businesses is there anything that can be done i mean to address to the challenges for smaller businesses that are very often struggling to be able to afford some of these um changes are there things that can be done to encourage large businesses to partner with small businesses on on these efforts uh innovative efforts are there things that can the government can do to reward or incentivize small businesses um any suggestions that maybe would be specific to small businesses and those that would be struggling it would be less affordable to be able to think this long term i think one thing that is foundational is better access to capital particularly for women led businesses and people of color i mean when you look at the statistics of who gets money it's people that look like me it's it's it's white men and that is a huge huge limitation on the potential for small business to grow to create jobs to have a positive influence from a sustainability perspective and we've got to fix that it's got to be part of what the sba does they they need a broader mandate they need more funding and they need to be held accountable for making sure that the way in which they distribute funds doesn't compound an already problematic situation a couple quick additions on the finance side community development finance institutions cfdis i think are a good um avenue for the bidens administration to support to get money to people who traditionally have less access to capital to companies have less access also there's plenty of small businesses that have embraced sustainability uh the b corp membership so benefit corporations where you are managing to a triple bottom line um seventh generation is one and ben enjoys one so on but um when you're managing triple triple by line most of those businesses are actually small medium-sized businesses who have met what are quite rigorous sets of requirements around how to be a sustainable business um and and haven't suffered as a result of those investments and when you look you know even smaller at startups and you see a lot of the um small entrepreneurial startups and social entrepreneurs a lot of it is social entrepreneurialism and actually those social entrepreneurs are doing very well and oftentimes you know being able to sell their companies to larger comp larger companies who want to um you know build sustainability to their dna and then finally i would say that all these big companies are making commitments that trickle down into their supply chain and they're going to be looking for vendors and suppliers who help them meet their commitments around diversity around climate etc and so therefore you as a smaller player if you develop an expertise in this area you should be able to find a series of clients who who are interested in what you have to offer these are great i have to say there are so many terrific questions that i wish we could take and there's no way to take them take them all we only have a minute left so i wonder if i could turn it back to you folks maybe starting with jeff and then to tonsi if you have any last words last thoughts or reflections to leave the audience with yeah well i think this is a moment of great opportunity for the country and for the businesses of america and we have to make sure we seize this opportunity we have to be actively engaged in making sure that we make the changes that we've been talking about that's critical and the american sustainable business council just published something called creating an economic system that works for all and it really is a public policy road map that we hope businesses will get on board with to create the kind of future that we we all hope we can achieve and i would just add that you know i think businesses are have been in the absence of government leadership seeking leadership on these issues now they can partner with government and i hear over and over again we need government support in this we can't do this by themselves now they have an opportunity to be proactive speak out as jeffrey said be part of a solution that will move business and our economy and our environment and our people forward and i think as well create you know great opportunities for innovation for providing value to society and also for and we you know companies need to find the best talent right so i'll bring it back to business school students being able to hire and bring in people who really want to be working there with you and are bringing them their best selves to work and you can do that through really um you know investing in and and uh tackling some of these real challenges that we're all facing today thank you both for contributing to ensure that stern students are well equipped to help out in that effort thank you so much for a great event i wish it could go on for longer and i'm sure the audience also does but we've got to close it up now so thank you again so much and we will be posting the video uh as soon as possible on our website thank you good night bye thank you thank you

2021-03-03 22:59

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