Paul Polman: Every business in the world must make a climate commitment

Unilever chief executive Paul Polman has urged the business community to act on its moral duty and deliver on the sustainability objectives set through the Sustainable Development Goals (SDGs) and the Paris Agreement.

Speaking during a high-level panel discussion on climate change mitigation at a 10-year Stern Review anniversary event in London on Friday (28 October), Polman said “the cost of not acting is higher than the cost of acting” for business. (Scroll down for video).

The Anglo-Dutch consumer goods company boss called on other firms to fully integrate sustainability into their operations over the next decade to effectively mitigate the effects of global warming on the world economy.

“If every company in this world made a commitment to multi-stakeholders [to tackle climate change], that would be a great thing,” Polman said. “If every company has, as a default option, reporting focussed on the long-term – with any short-term reporting explained – it would be a very important step forward.

“Every annual report [should] talk about what the contributions are that these companies make to fulfilling the sustainable development. If you cannot explain as a company what you are doing to make this a better world, you have no reason for being.”

Shifting roles

The Stern Review event marked a decade since the launch of Lord Nicholas Stern’s pioneering 700-page report – released exactly 10 years ago yesterday – which concluded that the benefits of strong, early climate action far outweigh the costs of not acting.

During the 10 years that have followed the Review, Polman’s Unilever has developed a reputation as a global leader on sustainability, working to accelerate efforts to design products that are less carbon and water-intensive. Unilever’s annual report incorporates the Sustainable Living Plan, which includes the company’s flagship target to grow the business while increasing positive social impacts and reducing environmental impacts.

For Polman, a big concern is that the business community is not moving fast enough to reduce its overall environmental impact. Last week, a report from global disclosure organisation CDP found that only 9% of companies have aligned their climate goals to science-based targets. Polman suggested that companies that fail to fully-mitigate climate issues internally are “undermining their own business models, from a risk, reputation, cost and opportunity point of view”.

Polman believes the political climate is now fertile for the private sector to ramp up its sustainability efforts. The Paris Agreement and the SDGs have both sent clear incentives to businesses to decarbonise the world, the Unilever chief claimed. In addition to technology advancements and the falling price of renewable energy, the “clear momentum” provided by these global agreements has forced the private sector to react, Polman said.

In the wake of the soon-to-be-ratified Paris Agreement, more than 4,000 companies now have greenhouse gas (GHG) reduction plans, with a further 2,000 creating an internal price on carbon. With the COP22 climate change event in Marrakech set to begin this Friday, Polman suggested that more businesses must adopt a leadership role in the transition to a low-carbon economy by exerting more influence on national governments.

“Our roles have shifted,” Polman said. “Responsible businesses should be much more informed in explaining the consequences of the policies that governments set, but also be far more involved in discussions on the effects of these policies.

“Unfortunately, there are too few business people who can discuss [the climate agenda] with finance ministers. So that is a challenge that we have in the first place. The story is very simple: in the food industry, if we continue on this current trajectory, there will not be any profits in about 30 years’ time. So we have to start by realising that, if we keep doing what we’re doing, it is impossible to run a business.

“We also have to make it very clear that businesses are there to serve society and society is clearly asking for a different thing. We have created an economic system which unfortunately doesn’t work for everybody. Increasingly, it affects the poor and the poor are getting fed up. We must realise that people demand sustainable sourcing, because otherwise we don’t sell our products.”

Message for Marrakech

The business community’s sustainability success will ultimately hinge on its ability to match the emission reduction commitments of governments reiterated during COP22 in Marrakech. A number of key meetings, such the ‘low-emissions solution conference’, will pull together hundreds of companies from different sectors to discuss the private sector’s role in the global climate agenda.

Polman was joined on stage at the Stern Review event by Professor Laurence Tubiana, the French ambassador for climate change negotiations and special representative for the Paris Agreement conference (COP21). After receiving a rousing reception from the London audience in recognition of her efforts in brokering the climate deal, Tubiana stressed the importance of businesses putting pressure on Governments in Marrakech to implement Intended Nationally Determined Contributions (INDCs) and accelerate the low-carbon transition.

“We have to support the actors of change that can pressure governments to do much better,” Tubiana said. “And this is business and NGOs saying ‘the INDCs are there, you have to implement them’. Beyond the INDCs, we need to think very seriously about what it takes for countries to become net-zero carbon by the second half of the century.

“The battle [during COP21] was to have a framework. Now, implementation is the key. We need to ask businesses: ‘what are you doing that is Paris-consistent?’ I would like to see in COP22 a strong message that businesses are prepared to deliver on targets. We need transparency; we are in a world where we can work on expectation, we know that actors are responding to that. So we have to make it happen.”

George Ogleby

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie