In today’s episode we meet the authors of “Net Positive: how courageous companies thrive by giving more than they take” – the best selling book that Financial Times named as one of the best business books of the year. Andrew Winston and Paul Polman teamed up to to write the book that has at its core the argument that the companies of the future will profit by fixing the world's problems, not creating them.
Paul Polman is the ex-Unilever CEO who increased his shareholders' returns by 300% while ensuring the company ranked #1 in the world for sustainability for eleven years running. Teaming up with Andrew Winston, one of the world's most authoritative voices on corporate sustainability, they show business leaders how to take on humanity's greatest and most urgent challenges—climate change and inequality—and build a thriving business as a result. Paul Polman works to accelerate action by business to achieve the UN Global Goals, which he helped develop and has been described by the Financial Times as “a stand out CEO of the past decade”.
Andrew Winston is a globally-recognized expert on megatrends and how to build companies that thrive by serving the world. Named to Thinkers50 list of the top management thinkers in the world, he is a best selling author and received degrees in economics, business, and environmental management from Princeton, Columbia, and Yale. Andrew recently wrote in the Sloan Review how ESG — which stands for environmental, social, and governance — has become the dominant term. Within the narrow world of the sustainability expert community, the battle royale is raging about sustainability versus ESG and the implications of shifting semantics.
Welcome to Farm Food Facts, the webcast and podcast of the US Farmers and Ranchers in action. In today's episode, we meet the authors of'Net Positive: How courageous companies thrive by giving more than they take'. It's the best selling book that Financial Times named as one of the best business books of the year. Andrew Winston and Paul Polman teamed up to write the book that has its core. The argument that the companies of the future will profit by fixing the world's problems and not by creating them. Polman is the ex Unilever CEO who increased his shareholders returns by 300% while ensuring that the company ranked number one in the world for sustainability for 11 years running teaming up with Andrew Winston, one of the world's most authoritative voices on corporate sustainability. They show business leaders how to take on humanity's greatest and most urgent challenges, climate change and inequality, and build a thriving business. As a result, Paul works to accelerate action by business to achieve the UN global goals, which he helped develop. And in fact has been described by the FA financial times as a standout CEO of the past decade. Andrew is a globally recognized expert on mega trends and how to build companies that frankly thrive by serving the world named to thinkers. 50 list of top management thinkers in the world. He's a bestselling author and received degrees in economics in business and environmental management from Princeton, Columbia, and Yale. Andrew recently wrote in the Sloan review, how ESG, which stands for environmental, social and governance has become the dominant term within the narrow world of the sustainability expert community. The battle Royal is raging about sustainability versus ESG and the implications of shifting these semantics gentlemen, welcome to Farm Food Facts.Paul:
Thanks for having me.Andrew:
Glad to be here. Thank you so much,.Phil:
Andrew. You first, what is Net Positive and why is it relevant to agriculture?Andrew:
Well, so stepping back for a second, I think that we're finding ourselves as a world in a pretty challenging situation. You know, our, our big challenges, the, the two, we focus on the existential challenges we focus on in the book, inequality and climate have been getting worse exponentially. And they're moving very, very quickly. So we're, we're very low on time. So, you know, Paul and I believe that we need to move much faster. Business has this critical role to play and can step up and help lead the change. But the, the ambition has to rise for years and years. It's been, you know, companies abiding with the law or maybe trying to improve their footprint, you know, incrementally, and we need to do something more. Um, so we're defining net positive and net positive business as one that improves the wellbeing of everyone that they touch, that solves the world's problems, doesn't make them worse. And that's how the company profits and thrives. And, and the, one of the key kind of principles of this business is taking real ownership and responsibility for how your business impacts the world throughout its value chain, um, whether it's intended or not. And there's huge opportunity in this. There's obviously huge footprint issues, but there's huge opportunity to fix these problems and actually profit from doing it. And I think food and ag, you know, food and ag is one of the biggest sectors in terms of emissions. It has the biggest, one of the biggest impacts on our society. So the opportunity is just vast, right? For agriculture to move from being a net emitter to using things like regenerative agriculture, better practices that I know are, are being discussed very heavily in the agriculture industry and for the value chain to work together for the food companies and food processors, to work with the farmers and change the whole system so that the footprint is better. And we're actually using agriculture to improve the world and not create more damage.Phil:
And when we look at what's gone on in the past couple years because of the pandemic, it's really highlighted that people need to be working together more. Paul let's talk about implementation. How should businesses get started to be net positive?Paul:
Now the first thing that we want to do Phil is thank you. And thank Erin, because you actually are setting the example with the US Farmers and Ranchers in action. And you're doing that with the decade of ag where you're looking at changing the way we can get to climate and nature, positive solutions. You form the coalitions of 1.6 or 1.8 million farmers. So you have a critical mass. You're actually looking at how to turn it into regenerative agriculture and making it carbon positive. So you're well on your way, I believe to being in that positive company, you know, Nelson Dale said, it always seems impossible until it is done. And I think that is the case here as well. Um, it starts in our book with the human transformation, which we think is at the base of the company or systems transformations, Rumi, who was a 13th century poet said it very well when he said yesterday I was smart. I tried to change the world today. I'm wise, I'm starting to change myself. So unlocking the company soul, as we call it, putting purpose in the middle is probably the most important thing in Unilever. We went back to the core of the company. It started with, uh, Lord lever trying to address the issues of hygiene, uh, making hygiene commonplace as he called it. We built on that and created a core purpose, making a sustainable living commonplace. Once you have that purpose in your company, why you are here, how you are going to make a difference in this world, then you need to look at the biggest impact that you can make. The first thing you do is within your total value chain well beyond scope one and two, you look at your total impact. Uh, for us, a net positive company is a company that takes responsibility of all of its impact or consequences intended or not many companies like to outsource their value chain and also outsource their responsibility that doesn't work anymore. You're a food company like Unilever. Most of the climate emission is in deforestation or food waste in the value chain or degrade at land. So look at the whole thing and set targets. That science requires us to set here. Again, many companies are setting targets that they think they can away with, that they can get away with. They play not to lose versus playing to win. So setting ambitious targets is important. If it doesn't make you feel uncomfortable, or if you already have the answers, then these targets are not good enough. Once you've set these targets, make them public, become human and say, we can't do it alone. These are enormous transformations that need to happen also in agriculture. And they've acquired the partnerships, many of the partnerships that you are initiating and are being involved in. So it, it takes that courage that we need to, to establish these partnerships. And ultimately you need to work with governments and civil society as well. There's a lot of rules, laws, regulations, or frameworks that are actually pushing us in the wrong direction. So how can we get all together? Moving this forward, a good example would be the P for subsidies that you find in the world, well, over 600 billion in agriculture, still that actually drive you to the wrong practices. How can the European cap policy is very debatable? So how can you get these broader systems changes? And these are also at the same time as we explain it, the hallmarks of a net positive company.Phil:
So Paul, those, um, naysayers, whether it be the CEO of a CPG company or government or anything else, um, what, what would you like to, you know, grab them by the lapels and, and say to them to get them to be net positive.Paul:
So most of the companies are aware of what needs to be done. I think we have seen an enormous change also since COVID in the companies making climate commitments and looking at the issues of human rights in their value chain and looking at their governance fair representation of, of the different groups of society in their companies were broadly moving. Although there are naysayers, uh, they are increasingly becoming a minority in my opinion. So the issue is not what direction we need to go. There is 95% of the CEOs don't want to go back to where we came from before. COVID, we've all discovered that we can't have healthy people in an unhealthy planet. We've also all discovered that we can't have infinite growth on a finite planet. So there's increasingly we see there's net positive thinking coming in commitments by Nale or Unilevers to move to regenerative agriculture by Walmart to protect a million square miles of ocean by Microsoft to take carbon out of the air since they started in 1975 and so forth. So what we focus on really was this book is get a critical mass of companies to get together. Increasingly in these partnerships that we talked about to accelerate the move to net positive, the biggest reason for doing that next to the moral reasons of making this world function for everybody and preserving it also for future generations, which is absolutely key is that we now are at the point in the history of humanity, unfortunately, but, but perhaps helpful where the cost of not acting is actually becoming higher than the cost of acting. Even the farmers incurring enormous costs as a result of the, the disruptions in your value chain. We see the enormous volatility and pricing is becoming a food security issue because our systems aren't working. So people are even more sensitized, I think. And we're at the point that, uh, you take COVID, we've spent 17 trillion in Europe and the us alone to save lives and livelihoods. We have lost 25 trillion, according to the IMF, this decade alone in global economies. We're nowhere near out of the woods that is infinitely more fill than what it would cost us to address the issues. Restoring biodiversity has a return of 18 times for every dollar invested, moving to regenerative agriculture. According to most studies that have been done give you return of 1.5 to two times the investment. These are opportunities that smart companies cease, and these are opportunities that the financial community increasingly wants to invest in.Phil:
Well, you're a great role model for what a CEO can do and be successful at Andrew what's, what's the role of farmers and ranchers in getting them to be net positive?Andrew:
Well, I mean, we've talked quite a bit about the, the idea of regenerative agriculture. I don't think this is new to the community. I was speaking at a national farmer's union event right before the pandemic and it was on the agenda. It was like the main session at launch, and it wasn't a sustainability event. It was just their annual event and they were talking regenerative agriculture. So I, I don't think we have to kind of lecture people on that, that there's this opportunity for farmers and ranchers to change their practices in a way that starts to sequester carbon that reduces runoff, that just creates a much more positive impact on the land, um, and on the people living, living near and on it. Um, but I think there's actually something kind of more philosophical, which is, you know, these big companies, the food companies are setting more and more of these goals and are starting to seek out being that positive, but they just can't possibly do that without the supply chain, as Paul was talking about without the farmers and ranchers. So, and they're very short focused kind of short term focused in, in big companies. And I think there's something about the farming and ranching community that just has a much longer view, right? You're thinking about planting cycles, you're talking about many years, you're talking about families handing down farms. And I think there's kind of a, a mental model that this sector can really help the, the big companies deal with and, and think in a much larger way about the value that the whole business is providing to society and to think in the longer term value creation, because that's what really separates in a way, the companies seeking that positive. And those stuck in the in today's model is thinking about long term value that serves many, many stakeholders, not just the shareholder. And I think, I think farms and ranches are right at the heart of that and right down in, in the actual dirt, right. Doing the real work.Phil:
So it's interesting to me because what you just articulated, I never thought about before, and probably a lot of our viewers have an either that when we look at farmers and ranchers, they, um, have been, you know, generation after generation, after generation. They think very long term. And especially with public companies, they, you know, think very short term. And it's interesting. And my question is, you know, how can we get them to understand each other, um, each other's values and try to get some of these, uh, CPG companies and retailers to think more long term?Andrew:
Well, I, I I'll let Paul cuz Paul's doing a lot of work on this. I'm bringing together sectors. I, you know, I'll just say it, it kind of ties to everything we've been talking about about partnership and bringing together different perspectives. So you're, you're kind of listening to each other. Right. And I think some of that, I tell, tell this to companies all the time, some of that's about bringing in younger voices. I find when you see these conversations in the farming community, when there's the younger members of the families, the ones kind of taking it over, they tend to think in more sustainable terms, there's more at stake for them. Um, and I think companies and, and governments all have to start listening to younger people, the young millennials, the gen Z, and they bring in a longer term perspective. I think that's one of the main things that can help, but it means you're, you're coming together in partnerships with civil society, government and business and respecting each other and kind of building trust with each other. That's the only way we're gonna solve these really big problems. But I think Paul kind of does this on the ground with, withPaul:
Sectors. So Paul, how do you do it? Yeah. So, so the, the, the thing I wanted to mention before on why agriculture is so important is that we have seen until now the energy transition of fighting this probably most existential challenge that we have climate changes. We've seen it as an energy transition, but more and more people understand that nature based solutions are really the answer. If, if, if we can capture carbon in the ground, if we can restore biodiversity, you're solving what is 25% of the problem, which is the food value chain. And you're turning that rapidly into 30% of the solution. And it needs to partnership like Andrew says across the value chain to tackle issues like food security to get the right food waste to bring food waste under control, to attack issues like stunting that still affects 160 million people to take care of the crisis and, and respond to that in an effective way with the terrible drama unfolding, not far from here in the Ukraine, all these things are challenges being thrown at us that require that stronger cooperation. And as you rightfully say, you cannot solve that in the Redway of quarterly reporting. So what, one of the systems changes that we need indeed is to move these financial markets to the longer term, we are creating a movement in the financial market actually, uh, believe it or not, where more and more I seeing the benefits that they need to have a return over the longer term for, for pensions. That is probably the biggest, uh, amount of money that, that is being invested longer term. But it also, they are also starting to realize that these pensioners need to have a world that they can live in. So increasingly we are seeing alignments between actually the financial market rapidly moving from risk mitigation to seizing the opportunities that this greener more inclusive economy offers and actually pushing for longer term. Interestingly, if I may, may say more of pressure now seems to come from some of the boards that haven't quite adjusted yet, boards are often grew up in another time, did a very good job, but the challenges are different. Now. Very few boards represent society even still today. Uh, very low levels of climate, uh, or ESG competence on the boards. And most of the CEOs or CFOs feel that the pressure comes from that. The third area that we need to work is actually the legislative environment to provide that space. The work that you're seeing happening with the sec in Europe here is the taxonomy, the sustainable standard board, where we work together in not only looking at optimizing financial returns and its narrow definition of often melted Friedman. It frankly, hasn't worked. If, if you look at where we are, but also include social or human or environmental returns. So these are some of these, uh, efforts. And again, these system changes. These broader system changes need to happen in partnership. And for this partnership you need trust in order to get trust, you need to be trustworthy. So companies themselves need to show that they can operate, uh, in, in a responsible way, uh, before they can work together. And one of the chapters in our book, which is interesting to read is what we call the elephants in the room, which are really the tougher challenges. You cannot make big commitments on climate changes, but then have your trade association lobby. The other way. You cannot say you care about people who see their purchasing power ERO, and then move your CEO salaries up at high levels. What about your human rights in the value chain corruption that has crept in, in politics, the money in politics, but also in your value chains. These are some of the tougher challenges and these challenges for the food industry would be really, how can you shift consumers to more sustainable proteins? How can you use, you know, what is the role of biofuel when there is a food security crisis, um, did, how can we get GMO or, or technology faster implemented on increasing crop and crop yields and output, if you want to. So, the role of peripheral subsidies that are everywhere still in this category that I talked about, so you need to form these partnerships to move these boundaries away together, that then allows us, or gives us the breeding space to do the right thing. Fortunately, we have 10, 15 at best 20 years to address this issue, but we need to start today to allow to that longer term planning, any farmer that is listening knows that they cannot turn it on in, in one or two minutes. And I have to acknowledge, I just bought a farm in England. So I, I belong to the group and I see the challenges clearer now than even before this needs a multiple year planning, uh, and, and everybody working in that direction to get truly to what you might call regenerative agriculture.Phil:
Well, thank you both very much for joining us today on farm food facts for your commitment to us F a and for writing this very important book. I thank you.Andrew:
Thank so much.Paul:
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