Editor’s Q&A

The political environment is in flux and the 2019 Edelman Trust Barometer has labelled the UK as the ‘Disunited Kingdom’. But intriguing trends are emerging. 

Belief in the ability of business to lead the way has risen. CEOs are seen as having the power to effect change and employees are looking to their employer for leadership. 

A new bond of trust is forming that, allied to purpose and reinforced by reputation, may just pave the way to business longevity. 

James Whittingham, Senior Sustainability Consultant, Luminous and editor of Sustainability Matters, answers questions on why trust is becoming an essential component of a business’ focus if its sustainability efforts are to be recognised.

Why have you chosen ‘trust’ as the theme for the first issue of Sustainability Matters? How is trust connected to sustainability?

Any relationship depends on trust if it is to be sustainable. On a grand scale, we trust our planet to meet our needs and we must honour that trust by doing what we can to look after the world in which we live. On another level, trust is the nodal point of reputation and purpose, and all three are fundamental in helping businesses become more sustainable. 

Sustainability has rocketed up the corporate agenda. Is it really something to focus on?

The awareness-raising power of megatrends, such as resource depletion, climate change, species extinction and the blight of single-use plastics on the marine environment, have all raised stakeholder consciousness and played their part in putting sustainability on the boardroom table. The linkage of purpose, responsible business and sustainability issues is something corporates have to build if they are to secure long-term investment and the long-term trust of their investors in this new era of stakeholder expectation.

How can you help clients on their sustainability journey? Where does it all begin?

Nothing beats the CEO or CFO, for example, providing the leadership and engaging the support of a designated colleague to realise their vision. If an organisation has a grasp on its sustainability-related issues and impacts, it is off to a great start. My role is to understand where our clients are on their sustainability journey, help them map their way forward and tailor individual solutions appropriately. It all starts by asking the killer questions!

What changes have you seen in sustainability reporting in recent years?

Legislative changes have driven greater focus on sustainability-related disclosures. Starting, for example, in 2013 with the requirement to include carbon footprint data within the directors’ report. Modern slavery statements and, most recently, gender pay gap disclosures have become mandatory requirements and have bridged the gap in terms of content between an annual report and sustainability report. Stakeholder engagement is very à la mode because of the additional requirements that The Companies (Miscellaneous Reporting) Regulations 2018 placed on preparers of annual reports in addition to the introduction of the EU Non-Financial Reporting Directive in the UK – we will start to see increased focus on this as investors start demanding more environmental, social and governance (ESG) data. These changes are helping the development of more integrated reporting which, in turn, often helps unite disparate units of a large, complex business so they can tell a joined-up story that inspires stakeholder belief and trust. 

Can you really help a business with high energy use or a reliance on plastics, for example, tell a better sustainability story?

Absolutely, but let me make something clear here. Sustainability is not simply about not using energy or plastics, for example, it’s about taking action to reduce your reliance on them and telling that story. Later in this issue, I talk to Alison Rothnie of Britvic plc, a company that distributes a lot of its products in plastic bottles but that has cut some 600 tonnes from its usage by ‘light weighting’ the packaging material in the manufacturing process. So there are almost always ways in which a business can become more sustainable. Taking the first steps, and seeking professional guidance regarding best practice, are what is important. 

We hear a lot about the United Nations Sustainable Development Goals. What are they, exactly, and are they relevant to Luminous clients?

The UN SDGs are 17 global ambitions spanning sustainability issues such as Good Health and Wellbeing (Goal 3), Sustainable Cities and Communities (Goal 11) and Climate Action (Goal 13). The goals are underpinned by 169 targets and the year 2030 has been set as their achievement date. We increasingly see our clients repurposing their sustainability strategy to align with those goals which most resonate with their activities. Coincidentally, this also helps align them with contemporary investor thinking in that as revealed in a recent survey, more than half of institutional investors incorporate ESG issues into their frameworks and are using the UN SDGs as a guideline themselves. 

What do businesses get wrong when it comes to their sustainability efforts? What can be done to help them?

If a business is addressing sustainability, I would not say it is doing anything ‘wrong’ as such. However, many companies don’t always have an overarching strategy and set of goals – i.e. a long term ambition that’s more than incremental progress. And presentation is an area where some companies let their efforts down. Too often, companies use industry-specific jargon, acronyms without proper explanation or are too minimal when citing savings or gains from a particular initiative. My role is to provide objective oversight and help organisations tell their story in the best possible way.

There seems to be a strong ‘feel good’ factor in being more sustainable. But does that help create value for investors and other stakeholders?

An executive team that properly manages sustainability risks and opportunities is a proxy for good governance and management overall. In September 2018, HSBC published ‘Sustainable Financing and ESG Investing’, a report in which it outlined that 30% of investable assets globally – over US$20 trillion – include sustainability criteria in their investment analysis. Stakeholder and shareholder pressure ranks highly in the investment decision-making process, indicative that there is far more than simply feeling good at play. And in his annual letter to CEOs at the start of 2018, Larry Fink, the Founder, Chairman and Chief Executive Officer of BlackRock, Inc., communicated his ‘New model for corporate governance’ and the need for organisations to find a purpose. Boardrooms ought to take note – sustainability is now a key contributor to demonstrating leadership and building trust in an unpredictable world.