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The first of three episodes produced in partnership with SAP UK that were originally planned to be recorded at their Innovation X conference in March 2020. However, due to concerns around the coronavirus, all our interviews took place online.
This episode is on the topic of Sustainable Business and features:
Our first guest was Stephen Jamieson, Head of Sustainable Business Innovation EMEA North, SAP.
Stephen explained that the topic of sustainability is really core to SAP and how they see the world. He said that their core values were to help the world run better and improve people’s lives, he explained has been central to the company’s mission since its formation over 40 years ago. .
Stephen said that what we find ourselves now in a situation where we have a climate crisis, a biodiversity crisis, a plastics crisis, a water crisis. However, he added that when you look at much of the world’s data that runs through supply chains that helps business to operate – 77% of the world’s commerce touches one of SAP’s systems in the course of its life. Therefore this data can be liberated and used in different ways in order to be able to drive the system changes that are necessary in order to deliver a sustainable future for the planet.
Stephen said that data is really central to the whole conundrum of eliminating waste. He quoted a survey that SAP ran for the World Economic Forum that found that 61% of the world do not have access to or do not know how to use recycling infrastructure. Stephen said that what needs to happen is investors and waste managers and people that have capital, fundamentally, and people that have technology to deliver that sort of infrastructure, to deliver recycling infrastructure, need to be confident to invest in that infrastructure in the places and communities where it is going to make a difference and perhaps in the areas where waste is leaking into the environment at the moment. He also added that one of the challenges that SAP hears from investment managers and from waste managers all around the world is that currently there is just a lack of understanding, lack of insight and lack of really credible understanding that supply exists, that material exists, that waste exists. He said that what we see is really an opportunity to use data in a different way and use the production data that comes from organisations differently and to bring that together with intelligence through SAP partners such Topolytics, who are able to add the data sciences and intelligence to start to predict where waste is going. SAP can also help use data to help those biggest producers of products around the world, to really understand the source of the materiality of what it is they’re putting on the market, whether or not items can be recycled in different markets, for example, or the obligations that they’re paying and making sure they have the insight they need in order to really understand the circularity of the products that they are putting into the market so that they can deliver on their own obligations and commitments that they have made to their shareholders to bring those materials back into the supply chain. Data also allows us to help stimulate the marketplaces, the economies where currently, for example, there might be huge backlogs of waste materials that are perfectly suitable to go into the supply chain of a particular product but there isn’t necessarily the connectivity in place to connect the businesses that need the material with the informal communities that might be able to provide that in a ethical and safe way.
Stephen said therefore that data is at the heart of this, and critically SAP is at the heart of being able to make these connections and help enable the system changes that can help find solutions.
Stephen said that if we look at how systems were traditionally developed, where people bought a procurement or supply chain system and then owned their data within their four walls of their on-premises solution, compared to what we have now in a cloud enabled world, a cloud environment where we have the ability to really open up that that paradigm. So, being able to deliver a network such as SAP have been doing with SAP Ariba, SAP FieldGlass and SAP Concur, where they are building up capabilities in this networked economy and really enabling the businesses that sit across that network to manage their own data assets and their own data insights, but then also being able to share those collaboratively across the supply chain.
Stephen said that taking a view across the world, the more progressive policies are the ones that are really getting into the nitty gritty of some of these challenges and putting in place the right incentives, down to the particular parts of packaging that might not be recyclable in certain areas, for example, making sure that the system regulations are put in place that drive the right sorts of behaviours, but also making policy decisions that are reasonable and reflective of the wider agenda. Stephen explained that there isn’t much point solving one problem with a particular policy around, say, a packaging tax, when that might have a consequence in terms of CO2. This is where he sees data as being really key to this this whole conversation, because we really need policies that are going to drive a progressive agenda and really reflect the planetary goals and needs, and not based on populous policy.
Impact of Coronavirus
On the topic of how Coronavirus is causing people to travel less, Stephen added that people are also engaging better online. He explained that at SAP, they’ve they have certainly had a number of what were previously planned as, in-person workshops that have now been delivered online and in that scenario they’ve been able to do more in the time and engage with more people and more customers. He also added that so far, he hasn’t seen a reason to be negative in terms of their ability to conduct business over and above the inherent challenges that we’re facing in society.
One of the things that Stephen mentioned SAP have been working through when collaborating with their customers around the topic of sustainability is that there is a natural tendency to look at what each organisation can do and how they can be better and how they can move to a better place. Whilst that might be the right thing to do in each individual organisational context, when you add up all of those different commitments, you tend to find that you still end up with the problem at a planetary level. SAP have been working through, over the last 12 months or so, is how do we start from the point of view of the lowest common denominator? How do we start from the position of ocean health – everything that happens in the world will ultimately wash through into the ocean in one way shape or form.
Stephen said that they want to use the ocean as a lens and be guided by the science, be guided by what is actually happening. What is the real impact? What is the real implication? How do we measure that over time? And how do we measure progress towards SAP’s goal of driving a planetary level impact and a cleaner ocean by 2030? Therefore, SAP’s collaborations with eXXpedition – which involves 300 women from all walks of life, sailing 38,000 nautical miles to combat ocean pollution – is a really key part of their whole mission, being able to get the eyes on the ocean and really understand what’s happening to engage directly with the science. (see our interview with Natasha Pergl in Part 3 of this podcast for more information)
Stephen ended with the message that we’ve got 10 years to deliver the impact that is necessary in order to drive a sustainable future and every individual in business has got a role to play in that journey.
Our next guest was Mike Barry, who until recently was the Director of Sustainable Business at Marks and Spencer, having worked there for 19 years, but who now runs his own consultancy firm, where he advises businesses on how to prepare for and succeed in what he describes as ‘the great sustainability disruption that will wash through the economy in the 2020s’.
Mike said that we are coming to the end of a 40 year cycle where business is focused on making itself a little less bad in terms of less carbon, less waste, less water. However, it simply is not enough to keep up with the climate crisis, biodiversity crisis or polluted plastic crisis that’s emerging around us. He added that we need to move forward much quicker and scale much quicker solutions to these challenges, and at the heart of all of this is consumption, the sheer amount of ‘stuff’ that we as a global society consume, whether it’s flights, food, fashion or phones, there’s just more ‘stuff’ entering the economy, being used and thrown away. What we require is businesses to work alongside governments in order to drive change as well as in partnership with each other, recognising that we’re all part of the same ecosystem, and he gave Coca Cola and Pepsi as an example of businesses that need to work together to create a shared circle approach to plastics on the planet. Mike explained that businesses need to work in a very much more transparent way, making sure that they surface the thousands of factories, farms, fields, forests around the world that produce our goods before we put on the marketplace and we need to work with consumers too to show them that we have to change and by changing it is easy to live a more sustainable life and it can lead to better outcomes.
[Full article written by Mike on this topic can be found here.]
Mike joined M&S in 2000 when he said that the world was consuming 80 billion garments a year but today, it’s 120 billion, a 50 percent increase in just 20 years and we’re on the pathway to 200 billion pieces of clothing consumed each year by 2030. He said that we cant carry on like that – the shear amount of cotton, wood, water, chemicals and human endeavour that goes into producing those garments, that are typically used 37% less than a couple of decades ago. He explained that on Instagram, you get the hashtag outfit of the day where people wear something once and dispose of it, which is the problem of today. However, Mike said that already you can start to see solutions in resell platforms emerging, people like Depop, thread up, posh mall and thrift+, where people, even if they wear something just once can resell it again and again. So, clothing can live on and we can absolutely see new movements emerging telling people to either dont buy new and just buy from recycle or resell platforms or from charity shops, or if you do buy new, you wear it for at least 30 times before you resell it or throw it away. The challenges to the business models that are based on just consuming and selling more products every year are there and any business model from the past that just thinks it can carry on growing in terms of units of products from the fashion industry has got a rude awakening. Mike believes that very soon in the next three to five years, you’ll start to see the people based on selling lots more stuff starting to suffer and those that are based upon lifetime value for the consumer, for example clothes that last, clothes that can be repaired, clothes that can be resold or clothes that can be rented, will be the ones to prosper in the future.
Mike shared a bit of background on how how drove M&S’ Plan A, which is the company’s eco and ethical program that they describe as tackling both today’s and tomorrow’s sustainable retail challenges.
He explained that Marks and Spencer is a relatively small retailer, only selling three billion items, compared to WalMart, which is twenty five times bigger. He said that those billions of items are coming from thousands of factories, tens of thousands of farms, thousands of cotton fields, forests, fisheries and to track and trace all those products in the old paradigm of using a spreadsheet would be impossible. You’d have 200 people filling in spreadsheets that would be hugely inaccurate. However, today with big data, with AI, with machine learning, we can start to really scrape the transparency and evidence of how these products are produced, where they’re produced, and how we can improve them very efficiently. On top of that, we can then take that knowledge to the consumer to inform them about the history of the product, where it’s come from and what they should do to make sure it’s use and ultimate disposal phase are more sustainable. Mike added that technology for good in the widest sense and data within that, big data and the services that SAP provide, is right at the heart of the sustainable future.
Mike stated that the marketplace is always cruel, it will never give you the time that you believe as the incumbent is required to change digitally or in terms of sustainability or anything else. He would advise any incumbent business that they need to move fast, partly because the pressure, not just from NGOs and regulators and investors is growing, but the pressure from consumers, the people who buy our products is great. He said people are not willing to pay a green premium for green products, and why should you pay more for a product that has not exploited people and the planet ? Mike used the examples of Tesla on electric cars or Impossible Meat are starting to offer the consumer tremendously good products which are very much more sustainable than the past, and if the incumbents don’t offer this, people will flock to the alternative.
Mike then spoke about the three key questions he asks when advising company leaders;
He added that if you don’t respond, somebody else will outsell you with better products and services which are good for the consumer and the planet. The what is where people dash to very quickly, what’s my climate target, my waste target, water target – all those things are necessary but that is the simplest part of the jurney. The hardest question is how do you integrate sustainability to a busy organisation consisting of tens of thousands of people spread across the world in thousands of different locations dealing with all the short-term pressures of today? The best businesses, such as SAP, Mike added, are doing exactly this.
Mike said that the governments have got a really important role to play. Firstly, they’ve got to put into place the long-term policy incentives and framework against which business can invest long term, for example in the UK there is a commitment to be net zero by 2050. Mike believes that we need the same long-term policy structure against which businesses can invest. The second thing governments can do is very much about the taxation system. Again, such as in the UK where the budget announcement to increase taxes on plastics that don’t contain recycled plastic content is driving business to think differently about what it does with tax and fiscal incentives. The third thing government can do is invest in infrastructure, whether it’s an electric charging network, with its rail infrastructure or new energy systems. The fourth thing governments can do is very much about R&D, making sure that governments around the world are investing in solving the world’s big problems to which we don’t have solutions today. The fifth thing governments, national governments could do is work together – it’s really important that business is stepping forward to support national governments in quite troubling times around the world.
So, Mike said that if we support strong action on climate change society and the economy that we all depend upon, we’ll be in a better place through that action. He gave the example of the Global Resource Initiative, something the UK government has launched, that has brought civil society policy makers and government and business together in the same room to co-create the systems we need to tackle deforestation in global UK supply chains, the palm oil system, the soya system, the cocoa, the coffee causing deforestation on the other side of the world.
Mike final message was that he wants people to lift their heads and realise that amongst a lot of the short-term pressures for UK businesses, which are huge, for example Coronavirus or Brexit, global businesses will have their own short-term challenges as well. So, he wants businesses to lift their head and spot the trends; consumers and citizens are asking for us to do things very differently, and people are starting to innovate and create new business models that satisfy that demand. And so, if you sleepwalk into next three to five years, you’ll suddenly wake up into the next business crisis for you, which is that your marketplace has disappeared. He cited some examples – You used to be in coal, but world’s moved to wind. You used to be in diesel cars, the world’s gone electric. You used to be in a meat based diet, the worlds gone to a plant based. He said that you only have to read one provocative report online by RethinkX, a think tank that postulated that 50 percent of the US Beef industry will be wiped out next decade, not just by a plant based diet, but largely by lab based grown meat, partly for ethical safety and quality reasons, such as coronavirus, but also because it will ultimately be cheaper than normal meat. Anybody not preparing for these radical shifts again will be left behind. So his advice is ask that question. Why? Ask that question? What? Ask that question. How? And you’ll be prepared for the radical change?
Our next guest was Natasha Pergl, SAP UK’s Sustainability Business Innovation Lead, who had just returned from taking part in Leg 7 of eXXpedition, the initiative that SAP are Partners of, that is exploring the science of and solutions to ocean plastic.
Natasha explained that eXXpedition is a series of 30 voyages that will see 300 women in total sail around the world looking at the plastic and toxics in our ocean. The initiative was co-founded by Emily Penn, who is a skipper and ocean advocate. She said that she enjoyed sailing and in terms of the background of eXXpedition and SAP, it’s one of their purpose driven partnerships to help businesses be more sustainable. SAP wanted to share the science that was conducted on board to their customers because it helps better understand the problem of plastics, and how much are actually in the ocean.
Natasha told us the story of when they visited the Galapagos, the eXXpedition team took them to a beach that was not visited by tourists where they carried out a beach clean for a couple of hours across about a 100-meter area of the sand. They were shocked to find a bottle with a toothbrush inside with the lid cap screwed on, which can only have come from the ocean. Then likewise, when they arrived at Easter Island, they did the same kind of research and found that one the beaches had tiny pieces of microplastics. Easter Island is 2,300 miles away from the coast of Chile, the world’s most remote inhabited island. So, she said that it was very shocking to see that problem first-hand. Whilst on the voyage, Dr. Winnie Courtene-Jones, eXXpedition’s science lead, conducted two types of science activities; one was using niskin bottles, which you drop into the ocean and you’re looking at microplastics that are found in the water column, deeper than the surface. And then you’re also looking at the surface as well. Natasha explained that they had the opportunity to analyse those pieces of plastic onboard. In South Pacific Gyre, where the microplastics tended to accumulate they found five times more plastic than other parts of the ocean.
EXXpedition presented some of their science findings to the local communities who don’t necessarily have a good waste infrastructure. Natasha explained that it was quite hard to be able to talk about the findings to these communities because you’re seeing them realise the impacts of what’s floating in from the sea, which is very dear to them because it’s part of their home, their background and their history.
Natasha added that this made her feel uncomfortable and accountable, she said that it makes you realise that it’s everybody’s problem. In the UK, according to Natasha, sometimes we tend to say, ‘oh, blame the retailers and let’s take our plastic back to supermarkets’, but when you’re in that environment, you realise everyone has this responsibility to shop responsibly and make much more conscious decisions.
When asked about why it was an all-women crew, Natasha said that women are still underrepresented in sailing and also STEM careers and science careers and the eXXpeditioners have a passion about providing those female role models in those fields through all the women that take part on board. As well as that, Emily Penn did a test on her own blood to see what plastic or toxics were coming up, and of the 30 or so banned chemicals in the U.S., actually twenty nine came up, which made her realise that this has got a big impact on women and actually a big impact on hormones due to these endocrine disruptors and plastic mimicking our own hormones and the impacts of what that could mean if you’re pregnant or you’re passing this on to children.
At the heart of this problem is people and those people are making decisions in their everyday life. Natasha said that it was amazing to be able to understand the problem first-hand, to actually take part in the science and to be able to then take those insights and communicate those through stories and through sharing the findings with all of the businesses that she works with, because SAP’s goal is really to have a zero waste ambition. She said that at SAP, they really want to help businesses maximise the finite resources that we have available to us on earth, especially in support of their clean ocean commitment, which is the reason why they wanted to partner with Emily to connect to the problem.
Most of Natasha’s role before her trip was understanding the challenges business face in moving to a circular economy from a linear system that is broken but works very well today both for growth and financial advantage. So, she has been able to connect to the issue whilst on board and sees her main role is definitely around communication and working with SAP to help bring people together and solve this because there isn’t just one solution to the problem.
Natasha added that she is very hopeful that we’re not too late and is very optimistic about this. She said that she thinks that with people connecting through collective action, that we’re going to be able to make a difference. Natasha referred to the statistic from Ellen MacArthur states that by 2050 there is the danger that there’ll be more plastics than fish in the oceans, but she thinks that through working together, technology innovation, we can help to make a difference because it’s by doing this that we will have better transparency. She added that all the issues around the coronavirus have accelerated the need to move to a different way of working, travelling and purchasing.
Natasha said that government plays an important role and referred to the UK Government’s packaging tax that will come into force in 2022 and this will impact consumer product companies, retailer and others that produce goods as we’ve seen that if there’s just voluntary measures in place then businesses don’t have that incentive to move quickly. So, they were responding to citizen action and protest and sometimes they come into force with regulation after global protests. When it comes to waste management, we know how difficult it is to recycle the UK, and government needs to play a part in helping to make that easier and help to mandate the type of infrastructure we need in the future.
Natasha said that for her, the most challenging thing was, as someone that’s never sailed before and taking on the challenge of crossing an ocean in two weeks, was really the first few days. She said that she was overwhelmed, meeting lots of new people and still being a professional part of the crew, including taking the helm, cooking, cleaning. She added that it really helps you to appreciate nature and actually understand more about the problem of plastics. And then for Natasha the best bit was really the interactions she had with the women on board and also learning how to sail, as well as being blown away by nature.
Her final message was that we all have a responsibility and that starts with the choices that you make, the things that you buy to eat and everyday items and do you need to buy as many clothes. Natasha made the point that it really starts at home, but there is also a big part to play around education, there’s a lot of resources out there, for example, SAP and the Media and also the eXXpedition website. She also encouraged listeners to think about their role in business and how you can use your skills to contribute to the circularity of design to make better products or help to make regulation go faster.
Julian explained that as a business, they have a very clear sustainability strategy, called ‘This is Forward’, that focuses their efforts on six key areas where action is needed. For example, at Coca-Cola EP, they’re looking at ways to reduce the amount of sugar in the products that they sell, as well as wanting to get the packaging to a zero-waste position in an attempt to get more recycled and none going to waste. Increasingly, Julian said, they’re putting a lot of focus on climate and there’s a lot of talk at the moment on how businesses and governments can move the economy towards a net zero greenhouse gas emissions situation.
Julian said that there are three other really big key areas of focus when talking about packaging. The first is making sure their packaging is as sustainable as it can be and that’s a focus on resource efficiency, but also making sure everything they put on the market is recyclable and has as much recycled content as possible. They have just transitioned one of their products, Smartwater, to 100% recycled PET bottles and he said they are going to move the rest of their PET bottles to 50% recycled content by the end of the summer of 2020. He added that the current recovery and recycling infrastructure in Britain isn’t good enough to allow them to move everything to 100%. So, the second pillar of their strategy is all about championing a reform of the recycling systems in the UK, which includes being an advocate of the introduction of new systems such as deposit return schemes, which are prevalent in other markets that they operate. The third part of their strategy is asking how they communicate the importance of recycling to their consumers both on their packs and through their advertising campaigns?
At Coca-Cola EP they have taken out over 22% of sugar across their portfolio plus two thirds of what they sell is low or no sugar. They are also looking at how to stretch their business to go further and faster, but equally, Julian said that they are proud of the efforts that they have made to reduce the carbon impact of their entire value chain, which has been reduced by more than one third in the last five years.
When asked why they don’t simply stop selling products like Classic Coke and instead just focus on Diet Coke or Coke Zero, Julian said that it comes down to the fact that they are there to produce and sell the products that their consumers want to buy. They want to make it as easy as possible for them to make the right choices for them and their family. He continued that for many people, products like Coke Classic play a really import part in their diets. He said that they have seen that with the strength and popularity of Coke Classic in recent years – when the UK government opted to introduce soft drinks tax in 2018, they took the decision not to reformulate Coke Classic, but to really make sure that Coca-Cola Zero Sugar was as close as you could get to the taste and mouth feel of the iconic brand, but obviously with no sugar. They have seen the popularity and strength of Coke Classic has remained whilst there has been dramatic growth in their Coca Cola zero sugar. In fact, Great Britain is the first country in the world where more than half of the Coca Cola that is sold in the market is the zero sugar options.
Julian said that data is at the heart of everything that Coca-Cola EP does as a business, particularly in this space on sustainability. Julian added that if you don’t measure it, you don’t know what it is you’re going after to tackle. So, data, facts and insights are critical to driving the business changes that they want in Coca-Cola EP and collaboration is absolutely a key part of that. He said that many aspects of policy development on sustainability require collaboration within sectors and across sectors, particularly on issues like climate change or in the recovery of packaging. He said that the drive to introduce the deposit return schemes across the UK, that businesses are having to come together to drive that agenda forwards and so they are working with other producers of beverages but also trade associations and governments.
Julian said that businesses here in the UK have really been at the forefront of the discussions about the climate crisis. He said his organisation is part of the Prince of Wales’ Corporate Leaders Group and they have been very active and vocal in encouraging governments to adopt net zero policy frameworks. He said governments across Britain have also led the way in this respect by enshrining in law the concept of net zero. But, does it go far enough? Is it quick enough? There is a debate to be had about that, but Julian said we have to get started and embrace the concept and we have to drive forwards with what will be some pretty dramatic changes for businesses, but also for citizens as we migrate as quickly as we can towards this net zero concept.
Julian thinks that what we’re certainly seeing in the UK is that governments across Britain are embracing many of concepts of sustainable business, the circular economy and waste management already. It’s taken a long, long time to get issues such as extended producer responsibility or deposit return schemes or reform of household waste collection high back up on the agenda for businesses and for politicians. Julian said that the Environment Bill is going through Westminster, he added that we’re expecting to see regulation on implementation of a deposit return scheme for beverage containers in Scotland, and that comes with challenges, but also opportunities for business as well. Equally the Welsh government are also consulting on their own policy development for a circular economy. So, he thinks that after years when there has been a bit of a policy void here, the politicians have in recent years stepped up.
Julian’s final message was that one of the big changes that we’ve all seen in recent years is how sustainability really has become mission critical for any forward thinking, responsible business. He believes that that has to be at the heart of all your decision making as a commercial organisation and we’re seeing good examples of companies like Coca-Cola EP trying to embrace some very difficult issues and show genuine leadership in terms of how we respond and take up the challenges that are there for society.