WEBVTT
00:00:00.160 --> 00:00:03.359
Welcome back to another episode of The State of Sustainability.
00:00:03.520 --> 00:00:07.519
I'm your host, Stef Hamid, founder and CEO of Altruistic.
00:00:07.759 --> 00:00:10.400
In this episode, we speak with David Croft.
00:00:10.640 --> 00:00:23.199
David has recently stepped down from his role at Wreckett, maker of Detoll, Neurofen, and Durex, where he was leading their sustainability function, having had a long career in this space, spanning a wide range of organizations.
00:00:23.440 --> 00:00:30.559
He's had sustainability leadership roles at Diaggio, Waitros, Cadbury's, some of the real trailblazers in this space.
00:00:30.719 --> 00:00:38.079
This was a super fun conversation where we touch on a wide range of topics centered around the increasing focus on resilience.
00:00:38.240 --> 00:00:44.159
We talk about what resilience means for business and for sustainability professionals on the road ahead.
00:00:50.240 --> 00:00:51.840
David, welcome to the show.
00:00:51.920 --> 00:00:53.280
I'm so glad to have you with us.
00:00:53.600 --> 00:00:56.000
Nice to speak to you and nice to see you again, actually.
00:00:56.079 --> 00:00:56.320
Yes.
00:00:56.719 --> 00:01:05.920
You have a wealth of experience across a range of interesting organizations that have been doing impactful work for decades now, actually.
00:01:06.159 --> 00:01:11.120
And I thought that the best way to bring this through would be to talk about two themes.
00:01:11.519 --> 00:01:17.280
One is this mythical triple win, uh and I'll I'll describe what I mean in a moment.
00:01:17.439 --> 00:01:24.079
And the second is just how the sustainability profession has developed over the time that you've been part of it.
00:01:24.400 --> 00:01:36.159
The way that I define a triple win in a sustainability context is where it's a win for the supplier, it's a win for the business, and it's a win for the planet.
00:01:36.319 --> 00:01:40.159
And I think that you could probably add on another win and say there's a customer as well.
00:01:40.319 --> 00:01:43.680
You could you could make it a quatra or a tetra win as well.
00:01:43.920 --> 00:01:55.439
But the reason that I talk about triple win is because I think we're increasingly recognizing in the sustainability space that the value that you bring to the ecosystem is just as important as the value you bring to the business.
00:01:55.599 --> 00:02:03.599
And I know that that's been quite a core part of how you have seen your role and your responsibility, not just at Wrecket, but more generally.
00:02:03.840 --> 00:02:11.120
Could I just hand it over to you, maybe to just tell me a little bit about how you see win-win-win playing out?
00:02:11.759 --> 00:02:19.520
Yeah, I think you have to find multiple value points, both for your own organization, but also beyond.
00:02:19.680 --> 00:02:30.240
I mean, it makes no sense to me to have an unsustainable system economically, environmentally, socially, for any of the actors involved.
00:02:30.400 --> 00:02:38.800
And that usually means that everybody has to compromise a little bit, so that the whole eventually is greater than the sum of the parts.
00:02:39.120 --> 00:02:55.919
There's no point in screwing down a supplier's price if in the long term that supplier then becomes less effective, less resilient, less delivering on quality, compromising perhaps on many, many things from an environmental or social perspective.
00:02:56.080 --> 00:03:00.879
The sort of things that actually we've seen an awful lot of over the last 30 years.
00:03:01.199 --> 00:03:09.199
It makes no sense to me to run a supply network only for the benefit of one entity in that supply network.
00:03:09.360 --> 00:03:22.319
And so you're if you want to build resilience, I think you have to build A, that compromise and B multiple value opportunities for different actors on the line.
00:03:22.479 --> 00:03:27.280
And that also has to include the wider ecosystem that it's part of.
00:03:27.439 --> 00:03:35.280
And we talk about that from an environmental perspective because we see ongoing challenges to natural resources.
00:03:35.360 --> 00:03:39.599
We see impacts from things like climate change and so on and so forth.
00:03:39.759 --> 00:03:48.719
But there's also a social impact, the communities that are parts of the landscapes that we within that global value chain are also part of.
00:03:48.879 --> 00:03:51.520
The best example are things like water.
00:03:52.080 --> 00:03:59.919
If you're abstracting water, then that has an impact way beyond your own immediate use of it.
00:04:00.240 --> 00:04:12.159
For me, it makes absolute sense to put consideration back into the landscape where you take that water from to try and build resilience.
00:04:12.240 --> 00:04:24.480
And that resilience is not just for my benefit, for my supply chain's benefit or my suppliers' benefit, it's also for the communities within that ecosystem, that landscape.
00:04:24.639 --> 00:04:36.160
It's for nature within that landscape, all of which are part of the increasingly visible, interdependent elements of that ecosystem that we're all dependent upon.
00:04:36.399 --> 00:04:53.920
Now, if we think about the economic aspects of things, which is more really where I think your question was started from, making things work with suppliers, particularly when I think about primary producers, is really critical.
00:04:54.240 --> 00:05:06.240
If a primary producer, a farmer, isn't surviving economically, then whatever we're buying from them is not resilient in its supply network.
00:05:06.480 --> 00:05:40.079
And so over many occasions over the past 20, 30 years now, I've spent time with farmers and in farming communities really trying to understand what their challenges are and how we could work together to strengthen the supply network to benefit them, but in doing so to also benefit my network and ultimately my businesses and also the customers that we serve.
00:05:40.319 --> 00:06:22.560
Fair trade in Cocoa, for example, working with thousands, literally thousands of smallholder farmers in West Africa to improve their productivity, which meant their income was higher, our supply network was more resilient, our dependency on the location meant that it was worthwhile investing disproportionately, perhaps compared to others, but to make certain that we had the right quality, quantity, and at a cost that remained affordable within the whole economic structure of the chocolate bar supply network.
00:06:22.879 --> 00:06:33.439
Because as we've seen in the last couple of years, when cocoa prices start to get above$8,000,$10,000 a ton, then people start buying less chocolate.
00:06:33.519 --> 00:06:44.800
And that means the ROI for the significant investment that big chocolate companies make on millions of pounds worth of production lines just doesn't stack up for them or their investors.
00:06:45.279 --> 00:06:52.800
You need to work with the farmers to support productivity, which means more money in their pocket, a more resilient supply chain to us.
00:06:53.040 --> 00:07:10.959
And increasingly, it also means they can farm in a way that maybe also looks after nature in a different way, that is not as dependent upon intensive chemistry, which they may never have access to in the first instance because it's too expensive.
00:07:11.279 --> 00:07:14.319
But fundamentally, it puts more money into their pocket.
00:07:14.480 --> 00:07:25.199
In the case of cocoa farming, it means kids are going to school, it means the supply chain is more resilient, and ultimately the whole system works more effectively.
00:07:25.439 --> 00:07:36.959
But in order to do that, you have to see it end-to-end, as opposed to your small part of it, and only seeing that on a spreadsheet that exists on your laptop.
00:07:37.279 --> 00:07:41.279
David, I want to go a little deeper into resilience as a business advantage.
00:07:41.360 --> 00:07:58.720
And what I'm going to say next may sound a little provocative to some of our sustainability professional listeners, but I would say if you look at the volatility of prices of key commodities over the last several years, that volatility is all over the place.
00:07:58.959 --> 00:08:08.879
And I would expect that, and by all over the place, I mean things 150, 200 days of volatile prices for key commodities in a given year.
00:08:09.040 --> 00:08:18.000
And I would argue that that volatility is only likely to increase as we continue to breach key planetary boundaries to a greater degree.
00:08:18.240 --> 00:08:24.319
And so I would sort of suggest that you could have resilience or you could have agility.
00:08:24.560 --> 00:08:29.839
And I think that to some extent both of them can go hand in hand, and to some extent they might be conflicting.
00:08:30.000 --> 00:08:45.360
For instance, an a resilient procurement strategy might involve more vertical collaboration, as you say, more engagement, working more closely with certain suppliers, making investments for the long term to increase their resilience against that volatility.
00:08:45.600 --> 00:09:03.840
On the other hand, an agile procurement strategy might say, I need to be able to procure from whoever is able to meet my demand needs whenever they do so, which means that I need to be able to play across the whole globe, global supply network, and therefore not actually invest too deeply in any one supplier.
00:09:04.080 --> 00:09:08.159
Would you say that these are opposing forces, they can work hand in hand?
00:09:08.320 --> 00:09:10.960
Why would you go for resilience versus agility?
00:09:11.279 --> 00:09:16.240
I think it depends on the strategic nature of the material that you're talking about.
00:09:16.720 --> 00:09:25.840
If you have a strategic reliance upon something, then yes, you could chop and change on a frequent basis.
00:09:26.000 --> 00:09:44.799
But in doing so, and I've seen this numerous times in the past from manufacturing suppliers through to raw materials, from an agricultural origin or even extractive, if you chop and change, you don't build up any great understanding of what's going on at the base of that supply chain.
00:09:44.879 --> 00:10:08.320
And ultimately, the pressures that we're starting to see on all of those supply networks, at whatever level of the supply network, whether it's economic, environmental, you name it, means that if your game is to chop and change across multiple suppliers, I think almost inevitably the price is going up and the span of opportunity is getting narrower.
00:10:08.799 --> 00:10:30.399
For me, that's why it makes sense, not necessarily for everything, but for the real key strategic materials, is to think more vertically engaged and to work to build resilience into not just one, but let's say two or three locations, suppliers, whatever way you want to describe it.
00:10:30.639 --> 00:10:35.440
Nobody wants to get into single sourcing because then that is a risk in a different direction.
00:10:35.759 --> 00:10:48.240
But if we think about where agricultural suppliers are coming from, they're increasingly impacted by a range of environmental and particularly biodiversity and nature impacts.
00:10:48.559 --> 00:10:51.600
We're all dependent on that for everything that we have.
00:10:51.759 --> 00:10:56.080
I mean, I'm looking around my house today and thinking, where's supper coming from tonight?
00:10:56.320 --> 00:11:03.120
Well, actually, if I can't get the food that I'm reliant upon from local sources, then can I get it imported?
00:11:03.200 --> 00:11:04.240
Which supermarket do I get?
00:11:04.480 --> 00:11:05.679
The same questions are made.
00:11:06.000 --> 00:11:11.360
Supermarkets will ship things around the world in order to maintain supply for us.
00:11:11.840 --> 00:11:20.399
But increasingly that's getting harder and harder because the origins aren't there, the costs of doing so are more are growing.
00:11:20.720 --> 00:11:23.679
There are political imperatives that prevent it.
00:11:23.919 --> 00:11:31.600
And so we have to either accept that we're not going to get everything all of the time, or we need to make different choices.
00:11:31.840 --> 00:11:37.360
Now, as a procurement organization, we're in you're in a position where you can make those choices.
00:11:37.679 --> 00:11:47.600
And you can invest and work with certain key suppliers to build that strategic resilience, which then underpins your business.
00:11:47.919 --> 00:11:57.919
I'm not advocating going back to vertical integration, where companies at one end of the supply network own farming activity.
00:11:58.159 --> 00:12:12.799
To be honest, most of those companies who had that in the past sold it off in the 90s and the noughties, and frankly, don't necessarily even have the organizational skill set to run that type of supply network any longer.
00:12:13.120 --> 00:12:22.720
Equally, there are an awful lot of those, what we would have termed commodity supply chains, that are based on millions, literally millions, of smallholder farmers.
00:12:23.519 --> 00:12:33.120
And so trying to own land where all those smallholderholder farmers might be tenants and farming for you just doesn't make any sense.
00:12:33.440 --> 00:13:00.399
But there are new ways of working with those even those millions of smallholder farmers through farmer infrastructure, building co-ops, rewarding farmers for the quality, consistency, and ongoing delivery, not just of the product, but perhaps even more, rewarding them for how they farm, not just the productive element of how they farm.
00:13:00.559 --> 00:13:06.159
And I think going forward that creates multiple opportunities for resilience.
00:13:06.480 --> 00:13:24.159
Resilience in the supply of the material, underpinned by resilience of the local landscape, which benefits continuous supply, but adds actually extra benefit to the farmer, but also to perhaps myself as the customer.
00:13:24.720 --> 00:13:27.759
At some point, I'd be buying carbon credits.
00:13:28.159 --> 00:13:41.840
Is it not more effective to pay the farmer of that key raw material to farm in a certain way to sequester that carbon that I will then use as well?
00:13:42.080 --> 00:13:45.919
I'm creating a more virtuous circle by doing that.
00:13:46.080 --> 00:13:53.600
And so for me, resilience goes beyond the simple, consistent supply of the product.
00:13:53.759 --> 00:14:08.960
It's how you then start to add additional value points that are beneficial to different actors along the chain, but create opportunity through that virtuous cycle that I was trying to describe.
00:14:09.200 --> 00:14:14.480
And David, there are two aspects to this virtual cycle that I'm hearing from you.
00:14:14.720 --> 00:14:18.240
One is the investment in the ecosystem.
00:14:18.559 --> 00:14:26.960
And I kind of think, for instance, this is, you know, almost like if you think of Ghanaian coco, this is the Ghanaian cocoa ecosystem, for example.
00:14:27.200 --> 00:14:37.679
And the second piece is the investment in the individual supplier in terms of making that supplier financially and economically survivable.
00:14:37.840 --> 00:14:42.399
And I think that for many primary producers, that's an increasingly important area.
00:14:42.639 --> 00:14:57.120
We touched a little on latex, but I remember that when you and I last spoke, there was a really amazing set of insights that you'd gathered and acted upon in the context of LaTeX for Wreck It, uh, where you sort of brought both of these elements into action.
00:14:57.279 --> 00:14:59.279
Could you describe that for our listeners?
00:14:59.360 --> 00:15:01.200
Like what was the problem statement?
00:15:01.360 --> 00:15:02.399
What was the finding?
00:15:02.559 --> 00:15:04.879
What was the what was the initiative?
00:16:03.710 --> 00:16:06.350
Well, I first of all, I don't think it's unique to Wreckit.
00:16:06.430 --> 00:16:08.830
I've seen it on multiple occasions.
00:16:09.070 --> 00:16:14.190
But you know, the starting point is do you have consistency of supply?
00:16:14.430 --> 00:16:27.790
You know, what is the pressure you face, particularly on agricultural type commodities, that is increasingly visible because land use change is continuing and growing at pace.
00:16:28.029 --> 00:16:41.550
The ability of that land to support productive outputs is getting tougher because of impacts on nature, possibly climate change, but maybe water stress, uh soil health, a whole range of things.
00:16:41.790 --> 00:16:47.790
Thirdly, as a result, people who own that land are considering what's the crop that they want to grow on it?
00:16:47.950 --> 00:16:50.670
What's the highest value crop that they want to grow on it?
00:16:50.830 --> 00:17:00.909
Well, if that's not the thing that you want to buy, then then you've got a threat to the origins that perhaps you've relied upon for a century or more in some cases.
00:17:01.070 --> 00:17:03.790
We're seeing that happen consistently.
00:17:04.029 --> 00:17:06.109
Latex was part of that discussion.
00:17:06.269 --> 00:17:13.149
By moving supply, by shifting, we reduced one of those risks of land use change.
00:17:13.549 --> 00:17:30.829
We also invested in the farming activity, helping farmers to strengthen the quality that they were delivering, and that meant consistency of latex coming through at the high quality that that was needed.
00:17:31.069 --> 00:18:13.949
But it also meant that the approach to farming also meant higher productivity and created the potential for adding both a nature resilience in terms of preserving, strengthening biodiversity at a time when frameworks such as TNFD are asking people to consider nature literally on the balance sheet and think of the dependency and the impacts that you have, and then think through well, how can you support that at a point of origin so that you have consistent and resilient business growth potential going forward?
00:18:14.189 --> 00:18:21.069
Because if you haven't got that, then there's a challenge to your business growth and performance.
00:18:21.389 --> 00:18:27.309
In doing so, you can also think about how you can create carbon opportunities.
00:18:27.629 --> 00:18:50.750
Because again, the way you can farm, perhaps using charcoal as a soil health improver, perhaps planting around the farm, perhaps thinking about different hedging opportunities and so on and so forth, can add carbon opportunity that the farmer then creates that you can take advantage of.
00:18:50.990 --> 00:19:10.349
And so instead of buying, in that case, a kilo of latex, you're buying a kilo of latex farmed in a certain way that gives you confidence and resilience of nature that tackles your biodiversity risk, potentially also buying carbon and reinvesting the value of that carbon to the farming community.
00:19:10.589 --> 00:19:16.909
What that does is something that I think we have to think very carefully about how we can take it to scale.
00:19:17.309 --> 00:19:22.429
Because it's fundamentally thinking about land in a different way.
00:19:22.990 --> 00:19:43.869
The productive value of land is not just the kilo of something that it grows, it's about what that land also acts and does sequesters carbon, strengthens nature, preserves biodiversity, adds additional nature-based solutions.
00:19:44.029 --> 00:20:01.230
For example, helping to support and manage the water catchment, reducing pollution if you're farming in a slightly different way, or actually reducing pollution because you farm in a certain way that uses things like reed beds to take out organic or other pollutants.
00:20:01.469 --> 00:20:07.230
It could also be about helping manage the catchment area more broadly, stopping downstream floods.
00:20:07.469 --> 00:20:19.069
And that's why thinking about landscapes and resilient landscapes that we are all part of as a business, because it's part of our supply network, as a business, because that's where our factory sits.
00:20:19.230 --> 00:20:25.069
We're all but as individuals as well, we're all part of those natural landscapes.
00:20:25.309 --> 00:21:02.829
And if we can see how we interact with them and think about how we can add value to them, then you create a very different and much more resilient landscape model, and frankly, a different economic model, where the value of land is much more than the one single longstanding historical financial capital outcome from it, because it's creating additional value, and that's without getting into issues such as the social impact, the human impact of land, the visual impact of land.
00:21:03.230 --> 00:21:05.069
All of those come as well.
00:21:05.309 --> 00:21:23.629
But frankly, there are emerging markets already for carbon and nature credits, and they're the things that we can work to first in terms of how we think about the landscapes that we are part of, and particularly the landscapes that our value chains are dependent upon.
00:21:24.189 --> 00:21:27.789
David, I want to dive into a couple of areas on this.
00:21:28.029 --> 00:21:31.949
One is we're talking about an exchange of value.
00:21:32.109 --> 00:21:43.789
There's not just the latex coming one way, but there's also resources going back to the producer to ensure that the land is preserved and managed in a way aligned with nature.
00:21:44.109 --> 00:21:48.269
Is the market-based mechanism here that we're looking at, is it an offset?
00:21:48.429 --> 00:21:49.389
Is it an inset?
00:21:49.549 --> 00:21:54.829
I know there's a lot of, there's a there's a religion now around these things, but what is the actual token?
00:21:54.990 --> 00:22:00.269
And then I'd love to uh follow that on with a couple of questions around how you make the case internally.
00:22:00.429 --> 00:22:04.029
But let's start with what kind of token are we talking about here?
00:22:04.349 --> 00:22:08.269
It is an inset if if you're already part of that value chain.
00:22:08.429 --> 00:22:17.629
But there are other potential values that are accrued by others that are dependent upon or impacted through that landscape.
00:22:17.869 --> 00:22:19.949
So let's forget about latex.
00:22:20.109 --> 00:22:23.069
Let's think about it from a northern hemisphere perspective.
00:22:23.309 --> 00:22:31.309
Downstream flood risks are an increasing part of what we see in Western Europe, in the UK, in the US.
00:22:31.549 --> 00:22:49.389
Heavy rains, which are becoming more and more commonplace because of climate change, and will are leading to uh saturated water tables at certain times of the year, downstream flooding, which is causing massive impact on cities, and therefore massive economic impact.
00:22:49.549 --> 00:22:54.669
It may not close a factory, but it might mean you can't get to the factory to work in it.
00:22:55.069 --> 00:22:58.029
Thinking about the landscape and the catchment.
00:22:58.589 --> 00:23:02.829
That location is part of leads you to think upstream.
00:23:03.549 --> 00:23:17.389
And that's where land management, farmland, can add value to the people who are living in that city, to the insurance companies who are paying out for that risk.
00:23:17.709 --> 00:23:22.909
That market is still emerging because it is a very diverse market.
00:23:23.389 --> 00:23:41.629
But it is certainly an area of opportunity where nature-based solutions upstream can reduce downstream flood risk, can add value for the landowner upstream, and particularly if it's moorland, it has very limited existing economic land value, perhaps.
00:23:41.869 --> 00:23:45.709
Sheep farming doesn't make people a lot of money these days, I have to say.
00:23:46.029 --> 00:23:55.389
So planting some trees, I don't say reforest the whole country, but planting some trees sequesters some carbon and helps to manage the downstream flood risk.
00:23:55.549 --> 00:24:02.269
There are growing examples of this throughout the world, but I've seen a number of them in Western Europe.
00:24:02.589 --> 00:24:05.629
The challenge is that the market is still diverse.
00:24:05.789 --> 00:24:09.309
The insurance companies could play a part in stimulating that.
00:24:09.549 --> 00:24:14.349
But think of the way we're trying to engineer flood management otherwise.
00:24:14.509 --> 00:24:16.750
We're building concrete walls.
00:24:16.990 --> 00:24:22.750
We're saying you can't afford to live there because your insurance risk is going to be too high for the house.
00:24:22.909 --> 00:24:40.429
So we're making technological changes downstream when perhaps we should be thinking about nature-based solutions upstream that have bigger, long-term, and equally impactful results.
00:24:40.669 --> 00:24:49.469
It just takes a little bit longer and a little bit thinking outside the box that we all live in to consider the landscape that we're a part of.
00:24:50.349 --> 00:25:04.669
David, when you need to make the case to your finance colleagues for, let's say, uh spending more with a certain part of the supply chain than might need to be done on a simply here and now basis.
00:25:05.069 --> 00:25:15.469
Is the case made on the angle of saying, look, from a resilience perspective, this investment is going to de-risk us in the future and de-risk disruption in the future?
00:25:15.709 --> 00:25:32.109
Or is it is it maybe just two separate budgets where you say there's a budget for offsets that we might need to spend because we can't meet our climate commitments, and we're able to tap into that budget and divert that towards existing suppliers, which is a win-win in other ways.
00:25:32.349 --> 00:25:34.109
How do you make this case?
00:25:34.669 --> 00:25:35.789
It can be both.
00:25:36.029 --> 00:25:47.309
Typically, I would say that the resilience of certain key strategic supplies is one of the most motivating start points.
00:25:47.949 --> 00:25:55.389
Most large organizations, when you look through their risk registers, will look at sourcing of key raw materials.
00:25:55.709 --> 00:26:06.269
The procurement teams spend most of their time thinking about how do they get that at best value over a reasonable period of time.
00:26:06.829 --> 00:26:23.149
Where we see the economic impacts of that becoming more and more challenging, then it is easier to make the case for investing in key supply networks to build resilience amongst them.
00:26:23.549 --> 00:26:31.629
If then you can say, but we're also already going to be investing or are investing in carbon, for example.
00:26:31.949 --> 00:26:35.629
Or in the future we might be buying biodiversity credits.
00:26:36.029 --> 00:26:45.709
More often than not, when I've raised it, there is a huge appetite for focusing the investment on key origins.
00:26:46.349 --> 00:26:52.509
And so you maximize the investment that you make by doubling down.
00:26:52.909 --> 00:27:26.029
One, because you're buying the material from there, two, because you're investing in that to give stronger supply networks, three, you're further investing in it if you're returning cash in other ways through carbon or biodiversity benefits that have a net benefit, of course, to me as a customer, because I have targets to hit, I have risks to mitigate that investors expect to see mitigating actions on.
00:27:26.669 --> 00:27:40.189
It makes more sense, and frankly, I've never had any pushback when we've said resilient supply and it's more sustainable and it benefits us because of these extra value points.
00:27:40.429 --> 00:27:47.789
In fact, when you add those extra value points in, it makes the ROI for doing the work even easier to support.
00:27:48.429 --> 00:27:55.149
Oftentimes, if you think about these in three separate silos, the individual ROI may not work.
00:27:55.309 --> 00:28:01.869
If you think in silo budgets, the individual ROI for each of them might not work today.
00:28:02.109 --> 00:28:18.029
But when you group it together, and particularly when you talk to people in the business, the XCO, who are supposed to and do have strategic overview, then you rise above those silo budgeting approaches that we all have.
00:28:18.189 --> 00:28:23.469
I'm deliberately not saying silo management because it's a really dirty word in organizations.
00:28:23.709 --> 00:28:27.629
But silo budgeting has exactly the same impact.
00:28:28.189 --> 00:28:33.149
You have to rise above silo budgeting and silo management to see the bigger picture.
00:28:33.309 --> 00:28:38.990
And then at a strategic level, the ROI absolutely makes sense and you get the sign-off.
00:28:39.309 --> 00:28:48.509
I think something that's really helped with this, David, is I've noticed senior procurement leaders have really developed in this direction over the last several years.
00:28:48.669 --> 00:29:04.349
Like if you look at the quality of engagement, insight, and storytelling that a chief procurement officer at a major consumer goods business has today, it's unrecognizable versus what you might have seen even six, seven years ago, I would say.
00:29:04.509 --> 00:29:07.069
And you know, there's a number of great examples.
00:29:07.469 --> 00:29:13.069
But I'd like to actually move towards the sustainability leader role.
00:29:13.309 --> 00:29:33.469
And you have been in this space for a while across different organizations and have had the benefit of seeing sustainability leadership roles evolve a huge deal since the first one you walked into at Cadbury's uh years ago over to the one that you've you've recently stepped down from at Wrecket.
00:29:33.869 --> 00:29:38.029
What would you say are the big shifts that you've seen in the nature of the role?
00:29:38.189 --> 00:29:43.549
What was expected of a sustainability leader uh when you first joined the profession?
00:29:43.709 --> 00:29:45.789
And what do you think is expected now?
00:29:46.189 --> 00:29:54.429
Well, I think I think your first point about the procurement teams deserves a comment as well, because I think you're absolutely spot on.
00:29:54.589 --> 00:30:10.509
The role of procurement has evolved because where they could mine efficiencies, where they could use pressure in the relationships, those days of running out of steam, that wave has been surfed.
00:30:10.829 --> 00:30:21.549
Now, to get more value, you really have to understand the nature of that supply network, the pressures that suppliers face at every aspect of that.
00:30:21.789 --> 00:30:26.269
And the best procurement people understand that and then work with it.
00:30:26.589 --> 00:30:39.869
Now you could say that's applying the frame of sustainability, the externalities that sustainability is grounded upon, I think, into a procurement type of activity.
00:30:40.029 --> 00:30:46.589
And for me, that's part of the step change that is going on for sustainability professionals.
00:30:46.829 --> 00:30:55.789
In the past, if I went back 20, 30 years ago, sustainability people knew about things that nobody else in the business knew about.
00:30:56.029 --> 00:31:06.909
And it was the new coming thing, and it was about perhaps human rights, perhaps it was about climate change, perhaps it was about nature dependency or resiliency and nature impacts.
00:31:07.149 --> 00:31:15.149
And they were trying to make a case inside a business for the business to tackle that and be more effective as a result.
00:31:15.469 --> 00:31:23.469
What they weren't necessarily doing is thinking about the business value that was going to be created and how to create business value.
00:31:23.789 --> 00:31:46.429
And for me, the step change is that sustainability is about really thinking and navigating all of the externalities that have always been with us in business, but only recently have become more and more visible and impactful on business performance.
00:31:46.669 --> 00:32:17.549
And so if you don't, as a sustainability person, understand how it affects business performance and therefore the levers you need to pull to create a different business value set from it, and how to have that conversation in a language of business value or brand value, then you're not going to succeed in managing effectively the embedding of sustainability in the business.
00:32:17.709 --> 00:32:20.990
Now, this is different from the compliance agenda.
00:32:21.149 --> 00:32:23.069
This is different from doing the reporting.
00:32:23.230 --> 00:32:24.909
That's clearly has to be done.
00:32:25.149 --> 00:32:33.869
But good businesses were already identifying the KPIs, identifying the material issues, reporting on their performance around them.
00:32:34.029 --> 00:32:41.629
There's just now a clearer, stronger, more effective platform of reporting that brings that together.
00:32:41.949 --> 00:32:51.069
But fundamentally, sustainability only succeeds if it embeds itself in a business, just like everything else that has happened in the past.
00:32:51.230 --> 00:32:53.789
I don't know whether you've heard of the Bradley Curve.
00:32:53.949 --> 00:33:00.909
The Bradley Curve was invented by DePont probably about 40 years ago now, about people's safety.
00:33:01.230 --> 00:33:04.750
And at the time, there were lots of workplace accidents.
00:33:04.990 --> 00:33:16.349
And the Bradley Curve talks about shifting from an unmanaged to a compliance level to an independent level where we all look after our own safety.
00:33:16.429 --> 00:33:27.549
In other words, I remember to put my hard hat on before I go into the room, to an interdependent level where I wouldn't go into the room without a hard hat on, but neither would I ever let you walk in either.
00:33:27.869 --> 00:33:31.309
Most businesses haven't got to that stage yet.
00:33:31.629 --> 00:33:38.750
Most of them are still at the compliance level, which is telling people, make certain you put your hard hat on.
00:33:40.029 --> 00:33:44.990
We need sustainability to embed itself in a similar process.
00:33:45.309 --> 00:33:51.629
So it's not the people in an organization with the job title sustainability who do it.
00:33:51.869 --> 00:34:22.030
It's the procurement people, it's the brand people, it's the product innovators, it's the finance team who think about these externalities and embed the management and the agility around these new externalities into business processes so that the business can be effective and agile against these new challenges and actually to embrace them and create opportunity by it.
00:34:22.269 --> 00:35:01.150
In order to do that, you don't just have to understand or have a PhD in climate change, you have to understand how that's going to affect your particular organization, and I don't just say business, but your organization and work out how you help that organization to manage and contribute to managing climate change so that as an organization it is a more resilient organization, so that as a business, it is a more effective business with longer-term growth potential and all that comes with that.
00:35:01.469 --> 00:35:12.989
So the challenge for sustainability people is almost to forget the PhD on climate change and think about what does your MBA tell you about how you need to talk about this and work this inside the business.
00:35:13.230 --> 00:35:24.670
Because if you don't do that, you can't hope to embed it within the business and to make the business more effective around all of these subjects that we talk about.
00:35:24.909 --> 00:35:28.269
I think changing language and changing approaches.
00:35:28.589 --> 00:35:31.630
I think, David, that's an excellent note for us to end on.
00:35:31.710 --> 00:35:40.509
And I think the idea of taking a Bradley curve approach to sustainability within your organization and your ecosystem is also a really fine one.
00:35:40.589 --> 00:35:44.029
I'm I'm going to steal that if it's not already out there.
00:35:44.429 --> 00:35:52.750
I was a consultant uh to the oil and gas industry once upon a time, uh, which is are the sins I'm working off now.
00:35:53.230 --> 00:36:03.949
And I think actually the oil and gas, you know, if you think about how the oil and gas industry embraced health and safety, because they had, you know, at some point a very poor record in that space.
00:36:04.110 --> 00:36:11.069
And then it's the only building where I've been told off for not holding the railing while walking down the stairs by a random person.
00:36:11.230 --> 00:36:21.949
And that is basically your badly curve in action where someone stops me uh in an office of maybe 1,500, 2,000 people or more and says, hey, you should be holding the railing.
00:36:22.190 --> 00:36:29.309
And I remember actually every meeting used to start with a safety observation as well in one of these clients.
00:36:29.710 --> 00:36:54.909
Um, and it's I think no surprise that at least you know, 2016-2015, some of the most ambitious sustainability strategies that I saw were coming out of organizations like Shell, because I think they were taking the mindset that they'd applied to health and safety and trying to come up with a parallel or an equivalent uh agenda, which then involved role modeling, incentives, and structures and so on as well.
00:36:55.069 --> 00:37:01.949
So I think there's a lot to be learned from I would say internal efforts that have worked in parallel spaces.
00:37:02.269 --> 00:37:02.909
I agree.
00:37:03.150 --> 00:37:08.269
That sort of parallel learning, parallel application, I think is really key.
00:37:08.509 --> 00:37:14.989
And just as you were talking, I was thinking then about, you know, I talked a moment ago about compliance and reporting.
00:37:15.230 --> 00:37:21.549
Yes, it's to give visibility for what's working or what's not working, what the challenges are.
00:37:21.789 --> 00:37:40.589
One could equally argue that by strengthening the way non-financial reporting works, putting it onto the same footing as financial reporting, arguably the key actor in the conversation is the CFO and the board.
00:37:40.909 --> 00:38:00.909
Because it's making those non-financial risks or opportunities, and resilience is an opportunity, much more visible, and the company's management and treatment of them much more visible to the key strategic leaders in the business.
00:38:01.230 --> 00:38:04.110
And so it's not about a chief sustainability officer.
00:38:04.349 --> 00:38:09.069
I think the days for chief sustainability officers are probably numbered.
00:38:09.309 --> 00:38:27.150
It's about how the CFO sees these impacts affecting the business and then can plan alongside all of the other financial pressures to address them, to mitigate them, but most importantly, to create opportunity for them.
00:38:27.389 --> 00:38:34.190
The same is true for the brand directors, the same is certainly true for supply chain and procurement leads.
00:38:34.429 --> 00:38:53.469
Ultimately, it is a leadership conversation about a new set of increasingly visible externalities that a business, if it's going to succeed, has to understand how to manage them and how to embrace them to create greater success for itself.
00:38:53.789 --> 00:38:54.429
Yes.
00:38:54.750 --> 00:38:56.190
Very well said, David.
00:38:56.429 --> 00:38:59.309
David, thank you so much for joining us on this episode.
00:38:59.549 --> 00:39:01.069
Really enjoyed having you here.
00:39:01.230 --> 00:39:07.230
I think we sort of started the conversation uh with this sort of big picture idea of the triple win.
00:39:07.389 --> 00:39:14.349
We then went deep into the weeds on resilience and what resilience means, why resilience adds value.
00:39:14.670 --> 00:39:30.750
We talked a little bit about how you make the case for resilience within an organization and how you can really unlock the potential for the business to invest in partnerships across the value chain that can be a win for nature, a win for the supply chain, and a win for the business.
00:39:30.909 --> 00:39:52.269
And then we sort of brought it all the way home to talking about the sustainability profession and what we think the sustainability profession has focused on now that it maybe was doing less of before, and how the migration from, let's say, being a PhD in climate change to being an MBA in business change has been one of the most important shifts for sustainability professionals to undergo.
00:39:52.589 --> 00:39:54.509
So such a rich conversation, David.
00:39:54.589 --> 00:39:56.429
Thank you very much on behalf of our listeners.
00:39:56.509 --> 00:39:58.670
And I'm already looking forward to our next chat.
00:39:58.909 --> 00:39:59.469
Me too.
00:39:59.630 --> 00:40:00.750
Nice to see you again, Seth.
00:40:00.829 --> 00:40:01.710
Speak soon.
00:40:02.750 --> 00:40:05.710
I hope you enjoyed this episode of the State of Sustainability.
00:40:05.789 --> 00:40:09.869
If you like our content, please hit follow so you never miss an episode.
00:00:00.160 --> 00:00:03.359
Welcome back to another episode of The State of Sustainability.
00:00:03.520 --> 00:00:07.519
I'm your host, Stef Hamid, founder and CEO of Altruistic.
00:00:07.759 --> 00:00:10.400
In this episode, we speak with David Croft.
00:00:10.640 --> 00:00:23.199
David has recently stepped down from his role at Wreckett, maker of Detoll, Neurofen, and Durex, where he was leading their sustainability function, having had a long career in this space, spanning a wide range of organizations.
00:00:23.440 --> 00:00:30.559
He's had sustainability leadership roles at Diaggio, Waitros, Cadbury's, some of the real trailblazers in this space.
00:00:30.719 --> 00:00:38.079
This was a super fun conversation where we touch on a wide range of topics centered around the increasing focus on resilience.
00:00:38.240 --> 00:00:44.159
We talk about what resilience means for business and for sustainability professionals on the road ahead.
00:00:50.240 --> 00:00:51.840
David, welcome to the show.
00:00:51.920 --> 00:00:53.280
I'm so glad to have you with us.
00:00:53.600 --> 00:00:56.000
Nice to speak to you and nice to see you again, actually.
00:00:56.079 --> 00:00:56.320
Yes.
00:00:56.719 --> 00:01:05.920
You have a wealth of experience across a range of interesting organizations that have been doing impactful work for decades now, actually.
00:01:06.159 --> 00:01:11.120
And I thought that the best way to bring this through would be to talk about two themes.
00:01:11.519 --> 00:01:17.280
One is this mythical triple win, uh and I'll I'll describe what I mean in a moment.
00:01:17.439 --> 00:01:24.079
And the second is just how the sustainability profession has developed over the time that you've been part of it.
00:01:24.400 --> 00:01:36.159
The way that I define a triple win in a sustainability context is where it's a win for the supplier, it's a win for the business, and it's a win for the planet.
00:01:36.319 --> 00:01:40.159
And I think that you could probably add on another win and say there's a customer as well.
00:01:40.319 --> 00:01:43.680
You could you could make it a quatra or a tetra win as well.
00:01:43.920 --> 00:01:55.439
But the reason that I talk about triple win is because I think we're increasingly recognizing in the sustainability space that the value that you bring to the ecosystem is just as important as the value you bring to the business.
00:01:55.599 --> 00:02:03.599
And I know that that's been quite a core part of how you have seen your role and your responsibility, not just at Wrecket, but more generally.
00:02:03.840 --> 00:02:11.120
Could I just hand it over to you, maybe to just tell me a little bit about how you see win-win-win playing out?
00:02:11.759 --> 00:02:19.520
Yeah, I think you have to find multiple value points, both for your own organization, but also beyond.
00:02:19.680 --> 00:02:30.240
I mean, it makes no sense to me to have an unsustainable system economically, environmentally, socially, for any of the actors involved.
00:02:30.400 --> 00:02:38.800
And that usually means that everybody has to compromise a little bit, so that the whole eventually is greater than the sum of the parts.
00:02:39.120 --> 00:02:55.919
There's no point in screwing down a supplier's price if in the long term that supplier then becomes less effective, less resilient, less delivering on quality, compromising perhaps on many, many things from an environmental or social perspective.
00:02:56.080 --> 00:03:00.879
The sort of things that actually we've seen an awful lot of over the last 30 years.
00:03:01.199 --> 00:03:09.199
It makes no sense to me to run a supply network only for the benefit of one entity in that supply network.
00:03:09.360 --> 00:03:22.319
And so you're if you want to build resilience, I think you have to build A, that compromise and B multiple value opportunities for different actors on the line.
00:03:22.479 --> 00:03:27.280
And that also has to include the wider ecosystem that it's part of.
00:03:27.439 --> 00:03:35.280
And we talk about that from an environmental perspective because we see ongoing challenges to natural resources.
00:03:35.360 --> 00:03:39.599
We see impacts from things like climate change and so on and so forth.
00:03:39.759 --> 00:03:48.719
But there's also a social impact, the communities that are parts of the landscapes that we within that global value chain are also part of.
00:03:48.879 --> 00:03:51.520
The best example are things like water.
00:03:52.080 --> 00:03:59.919
If you're abstracting water, then that has an impact way beyond your own immediate use of it.
00:04:00.240 --> 00:04:12.159
For me, it makes absolute sense to put consideration back into the landscape where you take that water from to try and build resilience.
00:04:12.240 --> 00:04:24.480
And that resilience is not just for my benefit, for my supply chain's benefit or my suppliers' benefit, it's also for the communities within that ecosystem, that landscape.
00:04:24.639 --> 00:04:36.160
It's for nature within that landscape, all of which are part of the increasingly visible, interdependent elements of that ecosystem that we're all dependent upon.
00:04:36.399 --> 00:04:53.920
Now, if we think about the economic aspects of things, which is more really where I think your question was started from, making things work with suppliers, particularly when I think about primary producers, is really critical.
00:04:54.240 --> 00:05:06.240
If a primary producer, a farmer, isn't surviving economically, then whatever we're buying from them is not resilient in its supply network.
00:05:06.480 --> 00:05:40.079
And so over many occasions over the past 20, 30 years now, I've spent time with farmers and in farming communities really trying to understand what their challenges are and how we could work together to strengthen the supply network to benefit them, but in doing so to also benefit my network and ultimately my businesses and also the customers that we serve.
00:05:40.319 --> 00:06:22.560
Fair trade in Cocoa, for example, working with thousands, literally thousands of smallholder farmers in West Africa to improve their productivity, which meant their income was higher, our supply network was more resilient, our dependency on the location meant that it was worthwhile investing disproportionately, perhaps compared to others, but to make certain that we had the right quality, quantity, and at a cost that remained affordable within the whole economic structure of the chocolate bar supply network.
00:06:22.879 --> 00:06:33.439
Because as we've seen in the last couple of years, when cocoa prices start to get above$8,000,$10,000 a ton, then people start buying less chocolate.
00:06:33.519 --> 00:06:44.800
And that means the ROI for the significant investment that big chocolate companies make on millions of pounds worth of production lines just doesn't stack up for them or their investors.
00:06:45.279 --> 00:06:52.800
You need to work with the farmers to support productivity, which means more money in their pocket, a more resilient supply chain to us.
00:06:53.040 --> 00:07:10.959
And increasingly, it also means they can farm in a way that maybe also looks after nature in a different way, that is not as dependent upon intensive chemistry, which they may never have access to in the first instance because it's too expensive.
00:07:11.279 --> 00:07:14.319
But fundamentally, it puts more money into their pocket.
00:07:14.480 --> 00:07:25.199
In the case of cocoa farming, it means kids are going to school, it means the supply chain is more resilient, and ultimately the whole system works more effectively.
00:07:25.439 --> 00:07:36.959
But in order to do that, you have to see it end-to-end, as opposed to your small part of it, and only seeing that on a spreadsheet that exists on your laptop.
00:07:37.279 --> 00:07:41.279
David, I want to go a little deeper into resilience as a business advantage.
00:07:41.360 --> 00:07:58.720
And what I'm going to say next may sound a little provocative to some of our sustainability professional listeners, but I would say if you look at the volatility of prices of key commodities over the last several years, that volatility is all over the place.
00:07:58.959 --> 00:08:08.879
And I would expect that, and by all over the place, I mean things 150, 200 days of volatile prices for key commodities in a given year.
00:08:09.040 --> 00:08:18.000
And I would argue that that volatility is only likely to increase as we continue to breach key planetary boundaries to a greater degree.
00:08:18.240 --> 00:08:24.319
And so I would sort of suggest that you could have resilience or you could have agility.
00:08:24.560 --> 00:08:29.839
And I think that to some extent both of them can go hand in hand, and to some extent they might be conflicting.
00:08:30.000 --> 00:08:45.360
For instance, an a resilient procurement strategy might involve more vertical collaboration, as you say, more engagement, working more closely with certain suppliers, making investments for the long term to increase their resilience against that volatility.
00:08:45.600 --> 00:09:03.840
On the other hand, an agile procurement strategy might say, I need to be able to procure from whoever is able to meet my demand needs whenever they do so, which means that I need to be able to play across the whole globe, global supply network, and therefore not actually invest too deeply in any one supplier.
00:09:04.080 --> 00:09:08.159
Would you say that these are opposing forces, they can work hand in hand?
00:09:08.320 --> 00:09:10.960
Why would you go for resilience versus agility?
00:09:11.279 --> 00:09:16.240
I think it depends on the strategic nature of the material that you're talking about.
00:09:16.720 --> 00:09:25.840
If you have a strategic reliance upon something, then yes, you could chop and change on a frequent basis.
00:09:26.000 --> 00:09:44.799
But in doing so, and I've seen this numerous times in the past from manufacturing suppliers through to raw materials, from an agricultural origin or even extractive, if you chop and change, you don't build up any great understanding of what's going on at the base of that supply chain.
00:09:44.879 --> 00:10:08.320
And ultimately, the pressures that we're starting to see on all of those supply networks, at whatever level of the supply network, whether it's economic, environmental, you name it, means that if your game is to chop and change across multiple suppliers, I think almost inevitably the price is going up and the span of opportunity is getting narrower.
00:10:08.799 --> 00:10:30.399
For me, that's why it makes sense, not necessarily for everything, but for the real key strategic materials, is to think more vertically engaged and to work to build resilience into not just one, but let's say two or three locations, suppliers, whatever way you want to describe it.
00:10:30.639 --> 00:10:35.440
Nobody wants to get into single sourcing because then that is a risk in a different direction.
00:10:35.759 --> 00:10:48.240
But if we think about where agricultural suppliers are coming from, they're increasingly impacted by a range of environmental and particularly biodiversity and nature impacts.
00:10:48.559 --> 00:10:51.600
We're all dependent on that for everything that we have.
00:10:51.759 --> 00:10:56.080
I mean, I'm looking around my house today and thinking, where's supper coming from tonight?
00:10:56.320 --> 00:11:03.120
Well, actually, if I can't get the food that I'm reliant upon from local sources, then can I get it imported?
00:11:03.200 --> 00:11:04.240
Which supermarket do I get?
00:11:04.480 --> 00:11:05.679
The same questions are made.
00:11:06.000 --> 00:11:11.360
Supermarkets will ship things around the world in order to maintain supply for us.
00:11:11.840 --> 00:11:20.399
But increasingly that's getting harder and harder because the origins aren't there, the costs of doing so are more are growing.
00:11:20.720 --> 00:11:23.679
There are political imperatives that prevent it.
00:11:23.919 --> 00:11:31.600
And so we have to either accept that we're not going to get everything all of the time, or we need to make different choices.
00:11:31.840 --> 00:11:37.360
Now, as a procurement organization, we're in you're in a position where you can make those choices.
00:11:37.679 --> 00:11:47.600
And you can invest and work with certain key suppliers to build that strategic resilience, which then underpins your business.
00:11:47.919 --> 00:11:57.919
I'm not advocating going back to vertical integration, where companies at one end of the supply network own farming activity.
00:11:58.159 --> 00:12:12.799
To be honest, most of those companies who had that in the past sold it off in the 90s and the noughties, and frankly, don't necessarily even have the organizational skill set to run that type of supply network any longer.
00:12:13.120 --> 00:12:22.720
Equally, there are an awful lot of those, what we would have termed commodity supply chains, that are based on millions, literally millions, of smallholder farmers.
00:12:23.519 --> 00:12:33.120
And so trying to own land where all those smallholderholder farmers might be tenants and farming for you just doesn't make any sense.
00:12:33.440 --> 00:13:00.399
But there are new ways of working with those even those millions of smallholder farmers through farmer infrastructure, building co-ops, rewarding farmers for the quality, consistency, and ongoing delivery, not just of the product, but perhaps even more, rewarding them for how they farm, not just the productive element of how they farm.
00:13:00.559 --> 00:13:06.159
And I think going forward that creates multiple opportunities for resilience.
00:13:06.480 --> 00:13:24.159
Resilience in the supply of the material, underpinned by resilience of the local landscape, which benefits continuous supply, but adds actually extra benefit to the farmer, but also to perhaps myself as the customer.
00:13:24.720 --> 00:13:27.759
At some point, I'd be buying carbon credits.
00:13:28.159 --> 00:13:41.840
Is it not more effective to pay the farmer of that key raw material to farm in a certain way to sequester that carbon that I will then use as well?
00:13:42.080 --> 00:13:45.919
I'm creating a more virtuous circle by doing that.
00:13:46.080 --> 00:13:53.600
And so for me, resilience goes beyond the simple, consistent supply of the product.
00:13:53.759 --> 00:14:08.960
It's how you then start to add additional value points that are beneficial to different actors along the chain, but create opportunity through that virtuous cycle that I was trying to describe.
00:14:09.200 --> 00:14:14.480
And David, there are two aspects to this virtual cycle that I'm hearing from you.
00:14:14.720 --> 00:14:18.240
One is the investment in the ecosystem.
00:14:18.559 --> 00:14:26.960
And I kind of think, for instance, this is, you know, almost like if you think of Ghanaian coco, this is the Ghanaian cocoa ecosystem, for example.
00:14:27.200 --> 00:14:37.679
And the second piece is the investment in the individual supplier in terms of making that supplier financially and economically survivable.
00:14:37.840 --> 00:14:42.399
And I think that for many primary producers, that's an increasingly important area.
00:14:42.639 --> 00:14:57.120
We touched a little on latex, but I remember that when you and I last spoke, there was a really amazing set of insights that you'd gathered and acted upon in the context of LaTeX for Wreck It, uh, where you sort of brought both of these elements into action.
00:14:57.279 --> 00:14:59.279
Could you describe that for our listeners?
00:14:59.360 --> 00:15:01.200
Like what was the problem statement?
00:15:01.360 --> 00:15:02.399
What was the finding?
00:15:02.559 --> 00:15:04.879
What was the what was the initiative?
00:16:03.710 --> 00:16:06.350
Well, I first of all, I don't think it's unique to Wreckit.
00:16:06.430 --> 00:16:08.830
I've seen it on multiple occasions.
00:16:09.070 --> 00:16:14.190
But you know, the starting point is do you have consistency of supply?
00:16:14.430 --> 00:16:27.790
You know, what is the pressure you face, particularly on agricultural type commodities, that is increasingly visible because land use change is continuing and growing at pace.
00:16:28.029 --> 00:16:41.550
The ability of that land to support productive outputs is getting tougher because of impacts on nature, possibly climate change, but maybe water stress, uh soil health, a whole range of things.
00:16:41.790 --> 00:16:47.790
Thirdly, as a result, people who own that land are considering what's the crop that they want to grow on it?
00:16:47.950 --> 00:16:50.670
What's the highest value crop that they want to grow on it?
00:16:50.830 --> 00:17:00.909
Well, if that's not the thing that you want to buy, then then you've got a threat to the origins that perhaps you've relied upon for a century or more in some cases.
00:17:01.070 --> 00:17:03.790
We're seeing that happen consistently.
00:17:04.029 --> 00:17:06.109
Latex was part of that discussion.
00:17:06.269 --> 00:17:13.149
By moving supply, by shifting, we reduced one of those risks of land use change.
00:17:13.549 --> 00:17:30.829
We also invested in the farming activity, helping farmers to strengthen the quality that they were delivering, and that meant consistency of latex coming through at the high quality that that was needed.
00:17:31.069 --> 00:18:13.949
But it also meant that the approach to farming also meant higher productivity and created the potential for adding both a nature resilience in terms of preserving, strengthening biodiversity at a time when frameworks such as TNFD are asking people to consider nature literally on the balance sheet and think of the dependency and the impacts that you have, and then think through well, how can you support that at a point of origin so that you have consistent and resilient business growth potential going forward?
00:18:14.189 --> 00:18:21.069
Because if you haven't got that, then there's a challenge to your business growth and performance.
00:18:21.389 --> 00:18:27.309
In doing so, you can also think about how you can create carbon opportunities.
00:18:27.629 --> 00:18:50.750
Because again, the way you can farm, perhaps using charcoal as a soil health improver, perhaps planting around the farm, perhaps thinking about different hedging opportunities and so on and so forth, can add carbon opportunity that the farmer then creates that you can take advantage of.
00:18:50.990 --> 00:19:10.349
And so instead of buying, in that case, a kilo of latex, you're buying a kilo of latex farmed in a certain way that gives you confidence and resilience of nature that tackles your biodiversity risk, potentially also buying carbon and reinvesting the value of that carbon to the farming community.
00:19:10.589 --> 00:19:16.909
What that does is something that I think we have to think very carefully about how we can take it to scale.
00:19:17.309 --> 00:19:22.429
Because it's fundamentally thinking about land in a different way.
00:19:22.990 --> 00:19:43.869
The productive value of land is not just the kilo of something that it grows, it's about what that land also acts and does sequesters carbon, strengthens nature, preserves biodiversity, adds additional nature-based solutions.
00:19:44.029 --> 00:20:01.230
For example, helping to support and manage the water catchment, reducing pollution if you're farming in a slightly different way, or actually reducing pollution because you farm in a certain way that uses things like reed beds to take out organic or other pollutants.
00:20:01.469 --> 00:20:07.230
It could also be about helping manage the catchment area more broadly, stopping downstream floods.
00:20:07.469 --> 00:20:19.069
And that's why thinking about landscapes and resilient landscapes that we are all part of as a business, because it's part of our supply network, as a business, because that's where our factory sits.
00:20:19.230 --> 00:20:25.069
We're all but as individuals as well, we're all part of those natural landscapes.
00:20:25.309 --> 00:21:02.829
And if we can see how we interact with them and think about how we can add value to them, then you create a very different and much more resilient landscape model, and frankly, a different economic model, where the value of land is much more than the one single longstanding historical financial capital outcome from it, because it's creating additional value, and that's without getting into issues such as the social impact, the human impact of land, the visual impact of land.
00:21:03.230 --> 00:21:05.069
All of those come as well.
00:21:05.309 --> 00:21:23.629
But frankly, there are emerging markets already for carbon and nature credits, and they're the things that we can work to first in terms of how we think about the landscapes that we are part of, and particularly the landscapes that our value chains are dependent upon.
00:21:24.189 --> 00:21:27.789
David, I want to dive into a couple of areas on this.
00:21:28.029 --> 00:21:31.949
One is we're talking about an exchange of value.
00:21:32.109 --> 00:21:43.789
There's not just the latex coming one way, but there's also resources going back to the producer to ensure that the land is preserved and managed in a way aligned with nature.
00:21:44.109 --> 00:21:48.269
Is the market-based mechanism here that we're looking at, is it an offset?
00:21:48.429 --> 00:21:49.389
Is it an inset?
00:21:49.549 --> 00:21:54.829
I know there's a lot of, there's a there's a religion now around these things, but what is the actual token?
00:21:54.990 --> 00:22:00.269
And then I'd love to uh follow that on with a couple of questions around how you make the case internally.
00:22:00.429 --> 00:22:04.029
But let's start with what kind of token are we talking about here?
00:22:04.349 --> 00:22:08.269
It is an inset if if you're already part of that value chain.
00:22:08.429 --> 00:22:17.629
But there are other potential values that are accrued by others that are dependent upon or impacted through that landscape.
00:22:17.869 --> 00:22:19.949
So let's forget about latex.
00:22:20.109 --> 00:22:23.069
Let's think about it from a northern hemisphere perspective.
00:22:23.309 --> 00:22:31.309
Downstream flood risks are an increasing part of what we see in Western Europe, in the UK, in the US.
00:22:31.549 --> 00:22:49.389
Heavy rains, which are becoming more and more commonplace because of climate change, and will are leading to uh saturated water tables at certain times of the year, downstream flooding, which is causing massive impact on cities, and therefore massive economic impact.
00:22:49.549 --> 00:22:54.669
It may not close a factory, but it might mean you can't get to the factory to work in it.
00:22:55.069 --> 00:22:58.029
Thinking about the landscape and the catchment.
00:22:58.589 --> 00:23:02.829
That location is part of leads you to think upstream.
00:23:03.549 --> 00:23:17.389
And that's where land management, farmland, can add value to the people who are living in that city, to the insurance companies who are paying out for that risk.
00:23:17.709 --> 00:23:22.909
That market is still emerging because it is a very diverse market.
00:23:23.389 --> 00:23:41.629
But it is certainly an area of opportunity where nature-based solutions upstream can reduce downstream flood risk, can add value for the landowner upstream, and particularly if it's moorland, it has very limited existing economic land value, perhaps.
00:23:41.869 --> 00:23:45.709
Sheep farming doesn't make people a lot of money these days, I have to say.
00:23:46.029 --> 00:23:55.389
So planting some trees, I don't say reforest the whole country, but planting some trees sequesters some carbon and helps to manage the downstream flood risk.
00:23:55.549 --> 00:24:02.269
There are growing examples of this throughout the world, but I've seen a number of them in Western Europe.
00:24:02.589 --> 00:24:05.629
The challenge is that the market is still diverse.
00:24:05.789 --> 00:24:09.309
The insurance companies could play a part in stimulating that.
00:24:09.549 --> 00:24:14.349
But think of the way we're trying to engineer flood management otherwise.
00:24:14.509 --> 00:24:16.750
We're building concrete walls.
00:24:16.990 --> 00:24:22.750
We're saying you can't afford to live there because your insurance risk is going to be too high for the house.
00:24:22.909 --> 00:24:40.429
So we're making technological changes downstream when perhaps we should be thinking about nature-based solutions upstream that have bigger, long-term, and equally impactful results.
00:24:40.669 --> 00:24:49.469
It just takes a little bit longer and a little bit thinking outside the box that we all live in to consider the landscape that we're a part of.
00:24:50.349 --> 00:25:04.669
David, when you need to make the case to your finance colleagues for, let's say, uh spending more with a certain part of the supply chain than might need to be done on a simply here and now basis.
00:25:05.069 --> 00:25:15.469
Is the case made on the angle of saying, look, from a resilience perspective, this investment is going to de-risk us in the future and de-risk disruption in the future?
00:25:15.709 --> 00:25:32.109
Or is it is it maybe just two separate budgets where you say there's a budget for offsets that we might need to spend because we can't meet our climate commitments, and we're able to tap into that budget and divert that towards existing suppliers, which is a win-win in other ways.
00:25:32.349 --> 00:25:34.109
How do you make this case?
00:25:34.669 --> 00:25:35.789
It can be both.
00:25:36.029 --> 00:25:47.309
Typically, I would say that the resilience of certain key strategic supplies is one of the most motivating start points.
00:25:47.949 --> 00:25:55.389
Most large organizations, when you look through their risk registers, will look at sourcing of key raw materials.
00:25:55.709 --> 00:26:06.269
The procurement teams spend most of their time thinking about how do they get that at best value over a reasonable period of time.
00:26:06.829 --> 00:26:23.149
Where we see the economic impacts of that becoming more and more challenging, then it is easier to make the case for investing in key supply networks to build resilience amongst them.
00:26:23.549 --> 00:26:31.629
If then you can say, but we're also already going to be investing or are investing in carbon, for example.
00:26:31.949 --> 00:26:35.629
Or in the future we might be buying biodiversity credits.
00:26:36.029 --> 00:26:45.709
More often than not, when I've raised it, there is a huge appetite for focusing the investment on key origins.
00:26:46.349 --> 00:26:52.509
And so you maximize the investment that you make by doubling down.
00:26:52.909 --> 00:27:26.029
One, because you're buying the material from there, two, because you're investing in that to give stronger supply networks, three, you're further investing in it if you're returning cash in other ways through carbon or biodiversity benefits that have a net benefit, of course, to me as a customer, because I have targets to hit, I have risks to mitigate that investors expect to see mitigating actions on.
00:27:26.669 --> 00:27:40.189
It makes more sense, and frankly, I've never had any pushback when we've said resilient supply and it's more sustainable and it benefits us because of these extra value points.
00:27:40.429 --> 00:27:47.789
In fact, when you add those extra value points in, it makes the ROI for doing the work even easier to support.
00:27:48.429 --> 00:27:55.149
Oftentimes, if you think about these in three separate silos, the individual ROI may not work.
00:27:55.309 --> 00:28:01.869
If you think in silo budgets, the individual ROI for each of them might not work today.
00:28:02.109 --> 00:28:18.029
But when you group it together, and particularly when you talk to people in the business, the XCO, who are supposed to and do have strategic overview, then you rise above those silo budgeting approaches that we all have.
00:28:18.189 --> 00:28:23.469
I'm deliberately not saying silo management because it's a really dirty word in organizations.
00:28:23.709 --> 00:28:27.629
But silo budgeting has exactly the same impact.
00:28:28.189 --> 00:28:33.149
You have to rise above silo budgeting and silo management to see the bigger picture.
00:28:33.309 --> 00:28:38.990
And then at a strategic level, the ROI absolutely makes sense and you get the sign-off.
00:28:39.309 --> 00:28:48.509
I think something that's really helped with this, David, is I've noticed senior procurement leaders have really developed in this direction over the last several years.
00:28:48.669 --> 00:29:04.349
Like if you look at the quality of engagement, insight, and storytelling that a chief procurement officer at a major consumer goods business has today, it's unrecognizable versus what you might have seen even six, seven years ago, I would say.
00:29:04.509 --> 00:29:07.069
And you know, there's a number of great examples.
00:29:07.469 --> 00:29:13.069
But I'd like to actually move towards the sustainability leader role.
00:29:13.309 --> 00:29:33.469
And you have been in this space for a while across different organizations and have had the benefit of seeing sustainability leadership roles evolve a huge deal since the first one you walked into at Cadbury's uh years ago over to the one that you've you've recently stepped down from at Wrecket.
00:29:33.869 --> 00:29:38.029
What would you say are the big shifts that you've seen in the nature of the role?
00:29:38.189 --> 00:29:43.549
What was expected of a sustainability leader uh when you first joined the profession?
00:29:43.709 --> 00:29:45.789
And what do you think is expected now?
00:29:46.189 --> 00:29:54.429
Well, I think I think your first point about the procurement teams deserves a comment as well, because I think you're absolutely spot on.
00:29:54.589 --> 00:30:10.509
The role of procurement has evolved because where they could mine efficiencies, where they could use pressure in the relationships, those days of running out of steam, that wave has been surfed.
00:30:10.829 --> 00:30:21.549
Now, to get more value, you really have to understand the nature of that supply network, the pressures that suppliers face at every aspect of that.
00:30:21.789 --> 00:30:26.269
And the best procurement people understand that and then work with it.
00:30:26.589 --> 00:30:39.869
Now you could say that's applying the frame of sustainability, the externalities that sustainability is grounded upon, I think, into a procurement type of activity.
00:30:40.029 --> 00:30:46.589
And for me, that's part of the step change that is going on for sustainability professionals.
00:30:46.829 --> 00:30:55.789
In the past, if I went back 20, 30 years ago, sustainability people knew about things that nobody else in the business knew about.
00:30:56.029 --> 00:31:06.909
And it was the new coming thing, and it was about perhaps human rights, perhaps it was about climate change, perhaps it was about nature dependency or resiliency and nature impacts.
00:31:07.149 --> 00:31:15.149
And they were trying to make a case inside a business for the business to tackle that and be more effective as a result.
00:31:15.469 --> 00:31:23.469
What they weren't necessarily doing is thinking about the business value that was going to be created and how to create business value.
00:31:23.789 --> 00:31:46.429
And for me, the step change is that sustainability is about really thinking and navigating all of the externalities that have always been with us in business, but only recently have become more and more visible and impactful on business performance.
00:31:46.669 --> 00:32:17.549
And so if you don't, as a sustainability person, understand how it affects business performance and therefore the levers you need to pull to create a different business value set from it, and how to have that conversation in a language of business value or brand value, then you're not going to succeed in managing effectively the embedding of sustainability in the business.
00:32:17.709 --> 00:32:20.990
Now, this is different from the compliance agenda.
00:32:21.149 --> 00:32:23.069
This is different from doing the reporting.
00:32:23.230 --> 00:32:24.909
That's clearly has to be done.
00:32:25.149 --> 00:32:33.869
But good businesses were already identifying the KPIs, identifying the material issues, reporting on their performance around them.
00:32:34.029 --> 00:32:41.629
There's just now a clearer, stronger, more effective platform of reporting that brings that together.
00:32:41.949 --> 00:32:51.069
But fundamentally, sustainability only succeeds if it embeds itself in a business, just like everything else that has happened in the past.
00:32:51.230 --> 00:32:53.789
I don't know whether you've heard of the Bradley Curve.
00:32:53.949 --> 00:33:00.909
The Bradley Curve was invented by DePont probably about 40 years ago now, about people's safety.
00:33:01.230 --> 00:33:04.750
And at the time, there were lots of workplace accidents.
00:33:04.990 --> 00:33:16.349
And the Bradley Curve talks about shifting from an unmanaged to a compliance level to an independent level where we all look after our own safety.
00:33:16.429 --> 00:33:27.549
In other words, I remember to put my hard hat on before I go into the room, to an interdependent level where I wouldn't go into the room without a hard hat on, but neither would I ever let you walk in either.
00:33:27.869 --> 00:33:31.309
Most businesses haven't got to that stage yet.
00:33:31.629 --> 00:33:38.750
Most of them are still at the compliance level, which is telling people, make certain you put your hard hat on.
00:33:40.029 --> 00:33:44.990
We need sustainability to embed itself in a similar process.
00:33:45.309 --> 00:33:51.629
So it's not the people in an organization with the job title sustainability who do it.
00:33:51.869 --> 00:34:22.030
It's the procurement people, it's the brand people, it's the product innovators, it's the finance team who think about these externalities and embed the management and the agility around these new externalities into business processes so that the business can be effective and agile against these new challenges and actually to embrace them and create opportunity by it.
00:34:22.269 --> 00:35:01.150
In order to do that, you don't just have to understand or have a PhD in climate change, you have to understand how that's going to affect your particular organization, and I don't just say business, but your organization and work out how you help that organization to manage and contribute to managing climate change so that as an organization it is a more resilient organization, so that as a business, it is a more effective business with longer-term growth potential and all that comes with that.
00:35:01.469 --> 00:35:12.989
So the challenge for sustainability people is almost to forget the PhD on climate change and think about what does your MBA tell you about how you need to talk about this and work this inside the business.
00:35:13.230 --> 00:35:24.670
Because if you don't do that, you can't hope to embed it within the business and to make the business more effective around all of these subjects that we talk about.
00:35:24.909 --> 00:35:28.269
I think changing language and changing approaches.
00:35:28.589 --> 00:35:31.630
I think, David, that's an excellent note for us to end on.
00:35:31.710 --> 00:35:40.509
And I think the idea of taking a Bradley curve approach to sustainability within your organization and your ecosystem is also a really fine one.
00:35:40.589 --> 00:35:44.029
I'm I'm going to steal that if it's not already out there.
00:35:44.429 --> 00:35:52.750
I was a consultant uh to the oil and gas industry once upon a time, uh, which is are the sins I'm working off now.
00:35:53.230 --> 00:36:03.949
And I think actually the oil and gas, you know, if you think about how the oil and gas industry embraced health and safety, because they had, you know, at some point a very poor record in that space.
00:36:04.110 --> 00:36:11.069
And then it's the only building where I've been told off for not holding the railing while walking down the stairs by a random person.
00:36:11.230 --> 00:36:21.949
And that is basically your badly curve in action where someone stops me uh in an office of maybe 1,500, 2,000 people or more and says, hey, you should be holding the railing.
00:36:22.190 --> 00:36:29.309
And I remember actually every meeting used to start with a safety observation as well in one of these clients.
00:36:29.710 --> 00:36:54.909
Um, and it's I think no surprise that at least you know, 2016-2015, some of the most ambitious sustainability strategies that I saw were coming out of organizations like Shell, because I think they were taking the mindset that they'd applied to health and safety and trying to come up with a parallel or an equivalent uh agenda, which then involved role modeling, incentives, and structures and so on as well.
00:36:55.069 --> 00:37:01.949
So I think there's a lot to be learned from I would say internal efforts that have worked in parallel spaces.
00:37:02.269 --> 00:37:02.909
I agree.
00:37:03.150 --> 00:37:08.269
That sort of parallel learning, parallel application, I think is really key.
00:37:08.509 --> 00:37:14.989
And just as you were talking, I was thinking then about, you know, I talked a moment ago about compliance and reporting.
00:37:15.230 --> 00:37:21.549
Yes, it's to give visibility for what's working or what's not working, what the challenges are.
00:37:21.789 --> 00:37:40.589
One could equally argue that by strengthening the way non-financial reporting works, putting it onto the same footing as financial reporting, arguably the key actor in the conversation is the CFO and the board.
00:37:40.909 --> 00:38:00.909
Because it's making those non-financial risks or opportunities, and resilience is an opportunity, much more visible, and the company's management and treatment of them much more visible to the key strategic leaders in the business.
00:38:01.230 --> 00:38:04.110
And so it's not about a chief sustainability officer.
00:38:04.349 --> 00:38:09.069
I think the days for chief sustainability officers are probably numbered.
00:38:09.309 --> 00:38:27.150
It's about how the CFO sees these impacts affecting the business and then can plan alongside all of the other financial pressures to address them, to mitigate them, but most importantly, to create opportunity for them.
00:38:27.389 --> 00:38:34.190
The same is true for the brand directors, the same is certainly true for supply chain and procurement leads.
00:38:34.429 --> 00:38:53.469
Ultimately, it is a leadership conversation about a new set of increasingly visible externalities that a business, if it's going to succeed, has to understand how to manage them and how to embrace them to create greater success for itself.
00:38:53.789 --> 00:38:54.429
Yes.
00:38:54.750 --> 00:38:56.190
Very well said, David.
00:38:56.429 --> 00:38:59.309
David, thank you so much for joining us on this episode.
00:38:59.549 --> 00:39:01.069
Really enjoyed having you here.
00:39:01.230 --> 00:39:07.230
I think we sort of started the conversation uh with this sort of big picture idea of the triple win.
00:39:07.389 --> 00:39:14.349
We then went deep into the weeds on resilience and what resilience means, why resilience adds value.
00:39:14.670 --> 00:39:30.750
We talked a little bit about how you make the case for resilience within an organization and how you can really unlock the potential for the business to invest in partnerships across the value chain that can be a win for nature, a win for the supply chain, and a win for the business.
00:39:30.909 --> 00:39:52.269
And then we sort of brought it all the way home to talking about the sustainability profession and what we think the sustainability profession has focused on now that it maybe was doing less of before, and how the migration from, let's say, being a PhD in climate change to being an MBA in business change has been one of the most important shifts for sustainability professionals to undergo.
00:39:52.589 --> 00:39:54.509
So such a rich conversation, David.
00:39:54.589 --> 00:39:56.429
Thank you very much on behalf of our listeners.
00:39:56.509 --> 00:39:58.670
And I'm already looking forward to our next chat.
00:39:58.909 --> 00:39:59.469
Me too.
00:39:59.630 --> 00:40:00.750
Nice to see you again, Seth.
00:40:00.829 --> 00:40:01.710
Speak soon.
00:40:02.750 --> 00:40:05.710
I hope you enjoyed this episode of the State of Sustainability.
00:40:05.789 --> 00:40:09.869
If you like our content, please hit follow so you never miss an episode.
