Sustainable Business Will Move Ahead With or Without Trump’s Support
"The big trends didn’t disappear on election day and, more important, they do not depend on the U.S. government."
By Andrew Winston
Andrew Winston is the author, most recently, of The Big
Pivot. He is also the co-author of the best-seller Green to Gold and the
author of Green Recovery. He advises some of the world’s leading
companies on how they can navigate and profit from environmental and
social challenges.
If we take the incoming president of the United States at his word,
things look dire for the cause of sustainability. Donald Trump and many
of his advisers appear hostile to action on climate change and to
progress on many social issues that companies have already embraced,
such as diversity and LGBT rights. Even if Trump himself stays
ambivalent on some of these issues, Republican leaders have much clearer
aims, including
extensive plans to slash environmental protections.
Will the seismic shift in U.S. political leadership have a chilling
effect on corporate action around environmental and social issues? The
short answer is no. Companies will continue to pursue sustainability in
the United States because the macro forces driving the movement remain
strong. The big trends didn’t disappear on election day and,
more important, they do not depend on the U.S. government. Let’s unpack
what’s really been propelling most companies forward, which comes down
to five megatrends.
The Economics of Clean Tech
In short,
Trump cannot stop all momentum on the clean economy. The economics are too good. The cost to build and produce solar and wind power, for example,
has dropped 60%–80% since 2010, making it cheaper than grid electricity in most states. And, most critical, this economic reality holds even
without subsidies.
Of course, government aid is helping accelerate the transition, but
given the economic boost that clean energy provides to many states,
support for wind and solar looks relatively safe in Congress. GOP
Senator Chuck Grassley said that if Trump tries to eliminate the wind
tax credit, the president-elect will
“do it over my dead body.”
A Changing Climate
I’m not talking about the politics of and governmental action on climate change, such as the
Paris Accord, carbon trading schemes, or efficiency standards. I mean
actual extreme weather and climate change. These things
are not theoretical
and are costing business and society today. When Kellogg’s CEO, John
Bryant, spoke at the Paris meeting, in December 2015, he told the
assembled executives and diplomats that addressing climate change was
“mission critical” for the company. (I was onstage with him and heard it
very clearly.) One of his reasons why is what he described as a
“fragile supply chain,” wherein weather shocks can damage grain
production — a nice way of saying we don’t know if we can grow enough
food. Across other sectors, unprecedented floods and storms around the
world have done many billions of dollars of damage to factories,
distribution centers, and local economies.
More companies are recognizing climate’s systemic risks. A week before the election, the CEO of General Mills, Ken Powell,
spoke about his commitment to acting on climate. He
put it in simple, CEO-friendly terms: “I am accountable for enterprise
risk,” he said, “and clearly there’s a strong scientific consensus that
climate is a risk.” For these reasons and more, hundreds of U.S. CEOs
signed a
letter to the president-elect that urged him to stay the course on global climate action and building the clean economy.
The Demands of Millennials
They are, after all, the largest generation on the planet and will
make up 50% of the global workforce by 2020. On average, they hold some
starkly different views about business than their predecessors did. A
global survey
of these 20- and 30-somethings earlier this year showed that 87%
believe “the success of a business should be measured in terms of more
than just its financial performance.” A
Morgan Stanley survey confirmed
that Millennials, and particularly those who are active investors, are
three times as likely to seek employment with a company that cares about
social and environmental issues. The jury is still out on whether this
group will shop differently as it gets richer and deeper into adulthood,
but every company I work with is feeling pressure from younger workers.
In their role as employees, Millennials clearly want sustainability.
Radical Transparency and Social Media
We’re all growing accustomed to finding any information we want at
any time. This includes wanting to know what’s in everything we buy, how
it was made, who made it, and so on. The food and consumer products
sectors are feeling this megatrend most acutely. The
“clean label” movement
is shaking up these industries, forcing companies to reduce ingredients
and use fewer processed and artificial inputs. As General Mills’ Powell
said, consumer expectations “have never been higher.”
Turbocharging this trend is social media, with which people can
gather, spread stories, and generally make a company miserable if it
doesn’t have its act together. In essence, as one CEO of a
consumer-facing Fortune 50 company told me, customers can destroy your
brand on Twitter (I’m paraphrasing only slightly). As he put it,
products can’t just taste or look good — they have to tell a story and
prove that they’re “responsibly sourced, manufactured, and distributed.”
This shift in expectations is driving companies to understand their
supply chains better, which then translates into pressure on those
companies to aggressively manage their environmental and social issues
.
Global Commitment and Competitive Pressure
Multinationals operate in many countries where governments publicly
support strong action on climate — and 193 countries in the world signed
the Paris Accord. It’s hard to say what will happen to that agreement,
but even uncertainty about the commitment of the United States likely
will not sink it. All of the signatories are meeting right now at the UN
climate change conference in Morocco, and they’re making it clear that
they are powering on. China
sent a message publicly that climate change is no hoax, and France’s President Sarkozy
mused about imposing import tariffs
on countries that don’t “respect the rules” on carbon reduction. In
essence, companies that don’t continue the sustainability journey are
going to fall behind and become uncompetitive in global markets.
On top of all these megatrends is incredible innovation, making
solutions to our challenges cheaper and more accessible. But even
without those technological shifts, the five megatrends here create an
overwhelming case to continue the sustainability journey. The bottom
line is, as always, the bottom line. The business case for
sustainability has been proved over and over again. The companies
managing their environmental and social issues and helping their
customers navigate these issues are creating business value in multiple
ways: They’re saving money, driving innovation, attracting talent, and
building the brand. None of that has changed, and there’s still
tremendous value to unlock. Sustainability has never been solely about
government pressure anyway — it’s just good for business.
All of this optimism aside, it would be naïve to think that the
president of the United States can’t affect the course of progress
toward a clean, sustainable world. And while we can’t know exactly what
the next administration will do, that it will not be driving
sustainability is a safe assumption. So business
has a critical role now more than ever to make up for the headwinds that a hostile administration can generate.
Businesses will need to ensure the stability of the basic
underpinnings of a thriving economy and society — that is, clean air and
water, a stable climate, abundant and renewable natural resources, an
educated and engaged pool of talent, robust global and local markets
filled with people with enough wealth to buy your products, and much
more.
If the new administration does not protect or enhance those pillars
of a strong economy, or even actively undermines them, then business
must take action, make up for the slack, and render federal action
irrelevant. If government is derelict in its duties, business has to
lead.
Follow Andrew Winston on Twitter @AndrewWinston
