Compete and collaborate: The balancing act that will accelerate corporate sustainability
EXCLUSIVE: Businesses that thrive in the low-carbon economy will be those that can balance the necessity of collaboration to tackle global megatrends with an inherent competitive nature that drives efficiency improvements.
That is the view of global healthcare company Johnson & Johnson’s vice president of global community impact Frank Welvaert, who warned that businesses, administrations or nations that isolate themselves from the global decarbonisation shift would become “voiceless”.
While Welvaert wouldn’t declare whether Johnson & Johnson would follow the 900-plus companies that reaffirmed commitments to the Paris Agreement under the We Are Still In declaration, he was quick to note that strengthening ties between cities and businesses would be key to accelerating action against climate change.
Headed by former New York mayor Mike Bloomberg, the declaration pledges to achieve and eventually exceed the US’s original commitment to the Paris Agreement through a Societal Nationally Determined Contribution, following President Trump’s admission that the US would withdraw.
“We cannot just step out of the dialogue,” Welvaert told edie. “Administrations come and go, but the lifecycle of a chief executive can be bigger than that of the President or politician. It gives them a long-term vision, and they can’t change everything every two years.
“We Are Still In commitments have been made across sectors, and it is a very important signal that we believe in a different economy. This is what businesses have in common, and taking a step away from that isn’t a step forward.”
The declaration follows a growing trend of rival companies banding together under the same coalitions. In the technology sector alone, Facebook, Microsoft, Google and Apple have joined the We Are Still In commitment, having previously allied through the Advanced Energy Economy and the Renewable Energy Buyers Alliance.
At the same time, companies are showing an increased willingness to open up innovative tools to the market to deliver purpose, Tesla and C&A are just two examples of companies offering sustainability-orientated products to competitors.
The competitive business nature, especially in areas such as retail, has been linked to issues over transparency and damage to supply chains in the past. But, Welvaert suggested that competition and rivalries were key to ensuring that sustainability is accelerated amongst businesses.
“Competition will continue to exist, but there are certain areas, where on your own you’ll get nowhere and your voice doesn’t count,” Welvaert said. “Some competition will remain, and I’m curious to see how it will evolve, because we’re certainly not at the end of the transition.
“Businesses are at their best when they are competitive. If you want to push someone in a direction, you can just show them what others are doing. It will fire them up. I think change means building on the inherent competitive DNA of companies. People are changing their mindsets and their behaviour, but that competitive edge won’t disappear, the next step is to share what works.”
Johnson & Johnson is no stranger to collaboration. Most recently, the healthcare company joined the likes of L’Oreal and McDonald’s as the first eight major companies to disclose key supplier information to CDP regarding deforestation.
For Welvaert, these collaborations are essential in tackling emerging global megatrends. Last year, Johnson & Johnson updated its corporate strategy, launching "Citizenship and Sustainability" goals tailored towards megatrends such as an aging population and an increase in climate-related deaths.
The new targets will see Johnson & Johnson strive to reduce absolute carbon emissions by 20% by 2020 and by 80% by 2050 against a 2010 baseline. The company has also set a 2020 target to produce and procure 20% of its electricity needs from clean sources with a 100% target for 2050, as well as conducting a 100% comprehensive water risk assessment of all manufacturing and research and development locations.
For targets relating to waste and water management, corporate success will likely depend on partnerships with the communities that they operate in. Companies such as CDP, L’Oreal and Intercontinental Hotels Group (IHG) recently explained how water management depends on city-level partnerships, and the expansion of urbanisation will likely make city partnerships crucial for sustainability success.
In February, Trump signed an executive order to roll back the US Clean Water Act, effectively stripping pollution limits in major bodies of US water, rivers, streams and wetlands. However, companies are already rethinking how they use and recycle water – Johnson & Johnson uses wastewater recycling and is building zero-discharge wastewater treatment facilities – Welvaert felt that it wouldn’t be in the best interests for companies to work with the new rulings.
By 2050, there will be an additional 2.5 billion new people in the world – all of which will be living in urban areas. In the wake of Trump’s Paris Agreement decision, numerous US cities signed up to the We Are Still In declaration, and Welvaert envisions a time where these city-business partnerships drive the global agenda for sustainability, due to the sheer number of people that will feel the impacts of inaction.
“What I see happening now, is that when federal government steps out, the role of states and cities becomes much more prominent, the majority of the world’s populations will be living in these areas,” Welvaert added. “These urban settings will become more meaningful for societal change and they’ll be the first in line to feel the outcomes of climate change.
“By making sure that the bi-lateral relationships with cities are in place, and by aligning with them, we’re noting that we’re making our commitments.