Interview with Peter Bakker, President and CEO of the World Business Council for Sustainable Development

Delivering Real Business Solutions for Sustainability Challenges

The World Business Council for Sustainable Development (WBCSD) works with companies that have understood there can be no more business as usual. Backed by 200 of the world’s leading corporates, the organisation forges a pathway for a sustainable future. Peter Bakker, President and CEO of WBCSD, explains how.

 

The World Business Council for Sustainable Development (WBCSD) is today the leading business voice on sustainability. Can you tell us about the organisation’s beginning and its major milestones and achievements?

Our origins date back to the Rio de Janeiro Earth Summit of 1992 that gave rise to the United Nations climate convention. Back then though, there was only a cautious desire to involve corporates in sustainability issues, and most of the 5,000 delegates were from governments. Only 13 businesspeople were present. It is true that business has negative impacts, but it is also true that it drives a lot of innovation and progress. The need was felt for an organisation that would drive forward this conversation, and the Business Council for Sustainable Development was born. In 1995, the Council merged with the World Industry Council for the Environment (WICE), a unit of the International Chamber of Commerce (ICC) and we became the World Business Council for Sustainable Development.

Next year we will celebrate 25 years of existence, and currently bring together some 200 of the leading companies in the world. Our member companies come from all business sectors and all major economies, representing a combined revenue of more than US$8.5 trillion. Our mission is to accelerate the transition to a more sustainable world. We, the WBCSD, together with our members, have emphasised for more than 10 years now that business as usual is no longer an option, and we focus on designing business solutions for sustainability challenges to be implemented by our member companies. Our landmark publication Vision 2050, which we are in the process of refreshing, gives a clear “North Star” to business to achieve a world where almost 10 billion people live well within planetary boundaries.

We now feel that sustainability is high on the business agenda and also on people’s radars as the understanding of what it means has matured, which can bring added momentum to our mission and vision.

 

What are your most important priorities at the moment?

We believe that the world will go through a number of important system transformations in the next 10 to 15 years – areas such as mobility, waste, energy and food will radically change. We today have six work programmes that match these big six system transformations. These are circular economy; Cities and Mobility; Climate and Energy; Food, Land and Water; People; and Redefining Value.

 

10 to 15 years seems a short time to completely transform our current systems. How can we make that happen?  

I think right now we are really gaining momentum for the simple reason that people are feeling the effects. In the summer 2018, we saw massive wildfires all across Europe and especially in Sweden, a typically cool country, which can be linked to climate change. This year we are witnessing a pushback on plastic. We have all seen images in the media of plastic waste that spoils beaches, pollutes oceans and kills animals who eat the plastic. The European Union then voted for a ban on single-use plastics to come into force by 2021 in all EU member states, and 32 companies have come together and formed the ‘Alliance to End Plastic Waste’, committing over US$1 billion to end plastic waste. Why are businesses doing that? They know that if they don’t do it, they will be out of business within five years. I am pretty sure that the next topic that will be on everyone’s agenda is food. Most people will want to know that the products they give their children to eat are healthy and nutritious.

While there is certainly increased demand for sustainable products, we are also seeing the emergence of a new political group particularly in the US – the climate change deniers. What impact are they having on progress and the actions of big corporates?

I would never argue it is helpful but when we speak to American businesses they all say the same thing: More than 50% of our revenue is coming from outside the US, and more than 50% of our supply chains run across the world. They are saying ‘we are global companies, and therefore we need to respond to global pressure’.

How do consumers view sustainable products today – are they still only a nice to have but not a must have?

Attitudes are changing. The rise of electric vehicles in a number of countries around the world, the ever-growing variety of sustainable products in supermarkets and people’s desire to eliminate plastic bags are proof of that. However, I would argue that this change is not happening fast enough. We believe that to win over consumers, we need to focus on sustainable lifestyles and making it easier and more aspirational to make sustainable choices. One of the best ideas I have seen is the 50 litres home. In America, a person uses around 500 litres of water every day, in Europe it is 300 litres a day. Last year, when the water crisis hit Cape Town, government restricted water usage to 50 litres per person per day. The 50 litres home was born out of that concept. Initiated by Procter & Gamble, it brings together companies, policy-makers and communities who are developing and scaling innovations for the home that help solve the urban water crisis. They have come up with a whole suite of solutions that allow us to continue living our lives as we have always done it. We can still take a 10-minute shower, but the water will be cleaned afterwards and pumped back into the system. This goes hand in hand with the development of new shampoos and shower gels that are easier to filter out. It also includes the development of new detergents so that clothes in the washing machine can be washed in 20 minutes at 30 degrees rather than two hours, which, I believe, is something hardly anyone would say no to. Long story short: we will not succeed by telling people what not to do; we need to make it attractive and irresistible for them to do it.

Which countries are standing out as the ones leading the transition to sustainable systems?

There are countries that are ahead of the curve and others who are happy to be followers or are focusing on other priorities. The EU and Canada are good examples when it comes to climate commitments in the West, but it is also interesting to talk about China, especially for its role in the field of energy transition or its lead in related technologies such as electric vehicles. In fact, they have cornered the market for batteries of electric vehicles. Chinese companies are now looking at Europe. For example, Shanghai Automotive Industry Corporation revived the MG brand, and they are developing electric vehicles on the back of it. Chinese automaker and EV specialist Beijing Auto (BAIC) already announced they will enter the European market in the near future.

Some commentators say that we are currently witnessing a sustainability race comparing it to the arms race. Do you agree with this comment?

To a degree, yes, and once all companies understand that transition is inevitable, it will become a real race. I think by 2020 we will see the first companies in various sectors that will position themselves as market leaders in the new era of sustainability, so those companies who have not yet realised that there is no way back, need to start working on sustainable solutions that they can bring to the market.

Energy is another big topic on the sustainability agenda. What’s driving the transition here?

It might not be easy but there is a strong willingness to forge ahead on the sustainability path. For example, Shell publishes every couple of years its scenarios for the future. They recently published the Sky scenario, which outlines a technologically, industrially, and economically possible route forward that is compliant with the UN’s Paris climate agreement, effectively limiting the global average temperature rise to well below 2°C from pre-industrial levels.Another example is Statoil, which changed its name to Equinor last year. The company wants to position itself as a holistic energy company, which, the management believes, would also help in boosting its image as an attractive employer. The other big driving force behind this transition are the capital markets. Companies are beginning to understand that having a coal-fired power plant might not be acceptable to investors in 10 or 20 years. The risk of it becoming a stranded asset is increasingly weighing into the conversation. I was in India a while ago and I met an entrepreneur who was putting all his money into renewable energy. Although coal is very cheap in India, he told me that on the global financial market the cost of capital for a coal-fired plant is much higher compared to renewable solutions. Many global investment houses and pension funds are divesting from fossil-fuel investments, which means there is no incentive to hold on to the old system.

 

What tools have you developed to help companies manage this transition?

We have developed quite a number of different tools. Last year in particular, we have worked a lot on the way companies perform their risk management. Normally, a company would only look at its balance sheet and its financial risks. Together with the Committee of Sponsoring Organizations of the Treadway Commission (COSO), we have developed a framework that allows companies to also integrate environmental, social and governance related risks in their risk assessment.

Right now, the WBCSD runs six programmes. Looking to the future, where would you want to see everything in five years’ time, and are there any new areas that you will start focusing on in the coming years?

I think health and wellbeing will become important topics in the near future. There are multiple factors at play here and it concerns everything from our dietary choices to bad air quality. This also brings me to my last point: we need to think more holistically about systems transformation. It is not just a matter of changing from one source of energy to another; it is about creating a whole new system. I think in about five years from now we should have understood much better how we can get there, whereby the lessons that we now learn from the energy transition, the mobility transition, the food transition, and so forth, should be shared to accelerate the transition to a sustainable world.