Philippe Joubert: Boards must realise business purpose in Trump era
EXCLUSIVE: Boardroom bosses need to consider the fundamental "purpose of the business" to ensure long-term sustainability, especially in an uncertain international political climate, according to sustainable business expert Philippe Joubert.
The chair of the Prince of Wales Corporate Leaders Group (CLG) believes that, amid the political mire instigated by a climate-sceptic Donald Trump US administration, an opportunity exists for the business community to grasp the mantle for a global low-carbon economy.
Speaking exclusively to edie at a recent event in London, Joubert said: “Although I agree that Trump-type people are not good news for sustainability in their own country, it has the potential to have a very positive effect - to gather the rest which are much more numerous than the one that is against, for structural action to defeat these kind of people.
“I am seeing a lot of positive movements of businesses taking sustainability on now and moving faster than they would have moved if Trump had not existed. As usual, you have both sides of the coin.
“We cannot leave it to the next generation to find the solution. The next generation will find the solution if we already put in our behaviour that something has to be changed. We cannot just wait and see and feel the repercussions of your stupid way of doing business."
It is feared that Trump’s ascendancy to the White House, and his subsequent executive order to repeal Barack Obama’s Clean Power Plan, will put the brakes on international climate action, which reached its zenith with Paris Agreement ratification last year. But even as news filtered through of Trump’s shock electoral victory in November, business leaders at the COP22 conference in Marrakech forged ahead with bold pledges aimed at accelerating the global low-carbon transition.
Joubert believes that the momentum generated by the Paris accord and the positive COP discussions has put down a marker for businesses to prepare themselves for fundamental change. He highlighted the recent positive progress to reduce emissions in the aviation and shipping sectors, both of which were notable exclusions in the final draft of the Paris deal.
“We are seeing a lot of really good action," he said. "I think what was important in Paris, that we are now seeing, is that Paris had been possible because businesses were at the table... we have been influential and we have taken the responsibility back to structure business to go in the direction of the results of climate negotiations.
“This is very important. When you see the reaction in Marrakech to the Trump decision by the US businesses who just say ‘no, we were in Paris, we know it is important, and we will continue what we have decided to do', it is very interesting that business has been organising itself by sectors and taking very strong commitments.
“We have seen that the two sectors not in Paris – aviation and shipping – they are coming now. It is not good enough, they have to do a lot more to limit emissions to 2C. Overall, it is not fast enough, but there is very interesting progress in some directions.”
Purpose of the business
If companies are to play a crucial role in the global decarbonisation process, then the transformation will need to be orchestrated at the boardroom level, the Frenchman said. Together with Cambridge Institute for Sustainability Leadership (CISL), of which he is an advisor, Joubert has launched the Earth on Board programme, which offers independent guidance on board engagement with sustainability.
The unique position of power held by company boards makes them ideal candidates to drive the long-term, global sustainability agenda, Joubert insists.
“We have to come back to the purpose of the business. Business has not been created to deliver short-term profits. What justifies a business's license to operate is its purpose. You have the board, and the board is responsible for taking care of this purpose in the long-term. The big challenge for me at Earth on Board is to ask the board ‘where is the long-term responsibility of the company?'"
Joubert cited Unilever’s recent snub of a £115bn offer for the company from Kraft Heinz after the firm's chief executive Paul Polman insisted that there was no appetite for the deal at boardroom level. Joubert believes other companies should take note of the Unilever board’s preference for long-lasting responsible behaviour over short-term profit.
“You have a fantastic example now, with a company like Unilever, that has resisted a takeover move, because the board and the shareholders have said ‘we do not agree, we are not short-term, we are long-term - we have a clear commitment with the management and the stakeholders of the company and we are not going to throw that away because you want to make short term-profit by cutting the company into pieces’.
"For me, that’s an outstanding example of what you can do when you motivate your board. That’s the key at the moment.”
Clear policy direction
Joubert admits that businesses will need support from policymakers to find the solutions that unlock a sustainable future. He echoed the views of business leaders including Tesco, Kingfisher and Unilever, all of which have highlighted the need for the UK Government to work with innovative companies to deliver a zero-carbon economy.
Joubert’s CLG Group recently called on the UK's Business, Energy & Industrial Strategy Secretary Greg Clark to put forward an ambitious Industrial Strategy that delivers job creation, improved production and an innovation boost across the country. For Joubert, policymakers play a critical role in creating a stable environment for sustainable investment by providing clear price signals.
“I have been running a big company for 20 years and I know one thing: innovation, new products, and R&D is not an act of God. It doesn’t just happen one morning when the chief executive wakes up and says ‘wow, I have an idea, let’s do it.’ It is not like this at all. It is a very careful process that is oriented by the fundamental pressure on business. As soon as sustainability - costs of resources that we normally don’t price, like water or CO2 in the atmosphere - start to eat at the bottom-line, then the company will react to fight.
“But businesses also react a lot to expectations. If you tell someone with 100% certainty that, in five years, CO2 will be $60 a tonne, they will put $60 a tonne in their calculations. This will then trigger innovation and R&D. Fundamentally, we need to change the policy and direction and the price signal, and then we will trigger R&D, and then we will find the solutions.”