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Mohan Munansighe - The path towards a Sustainable Society

26/6/2020

Mohan Munasinghe, who shared the Nobel Peace Prize in 2007, is one of the world's leading experts on climate change. In this exclusive interview, divided into two parts, the Sri Lankan physicist, economist and academic argues that climate change and sustainable development cannot be considered in isolation. He compares the path towards a sustainable society to climbing a mountain – achieved in stages, one step at a time.

Sustainable development is a goal, and also a path. How can we move towards sustainability?

Yes, the goal is sustainable development and the path is called balanced inclusive green growth (BIGG). Sustainable development requires that we harmonize the triangle of economy, society and environment. So BIGG means that we balance an inclusive society, green environment and growing economy.

There are several stages, for companies to walk this path. One is high-level leadership. You must have leadership commitment from the top. It is necessary that top management agrees that sustainability should permeate all levels of the corporate culture. So in stage one, we have to get the leadership to look from the peak -- what I call “climbing the mountain”. From the top of the mountain, they can see the whole picture of sustainable development in the long-term and think in visionary terms. That is the overall vision. Then there are some practical guidelines such as sustainable development goals, the GLI, the ISO, amongst others, which can be used to align business practices. These are still very generic, but it can help. And then there are specific tools, for example, preliminary sustainability assessments - to identify which are the main priorities and how such areas of sustainability can be improved.

In stage two, which we have already discussed with Amorim, we go for in-house sustainability. We prepare a road map. People who are working in the company also have to climb the mountain – one step at a time. So, they have to be given guidance. They have to understand why their work is contributing to the overall benefit for the company. Then it must appeal to their enlightened self-interest -- that is, if you make your contribution then you will be rewarded by the company and it will help the company and eventually this will help humanity. It’s essentially about empowering people to do their little bit. Although they may be small cogs in the wheel, they can contribute.

So, what are the techniques? We already discussed this. Full life cycle analysis, starting at the in-house level. You can certainly influence your own production process and operations. The employees. The suppliers and the supply chain. All of these can be influenced, because companies pay for things. So since you pay, you have a bigger say. Through the supply chain and full life cycle analysis, you can identify the hot spots: energy, water, carbon emissions, working conditions, gender balance, etc. You can analyse all those things and you can set your house in order, and ensure in-house sustainability, dealing with supply chains, suppliers, production and operations, and employees. So that is the stage two.

Stage three is a little bit more difficult. Now you’re going to the people who pay you for your products, i.e. your customers and even overall society. Now you’re analysing the demand chain, going in the other direction. How do you influence the consumers of your product, how they use product, disposal of it, and so on. For that you have to make your products more sustainable and educate your customers on how to use them in a sustainable way, in their lifestyle – to reduce any negative external impacts. Information is important. You have things such as green labelling, energy, water and carbon footprinting, recyclability, and increasing consumer awareness in general. But companies often wonder whether it is all fake. How much bang for the buck they are getting if they are spending a lot of time on consumer awareness. So that is Stage Three.

Stage Four, I have done with only the most advanced companies -- here the business goals and the sustainability goals kind of merge. That way whenever they make a business decision sustainability is already included, they have already set up KPIs so that stage is the final stage you can reach to achieve full business sustainability. In a post-pandemic world, firms that move towards this goal will become more resilient and survive.

You’re right, there aren’t many companies doing that. I think in the case of Amorim the interesting point is that because our business depends so much on sustainability, without it we don’t have raw materials, we don’t have business, period. I think it’s interesting that we can actually be in different stages simultaneously, in the sense that the more sustainably oriented the consumers are, the more they're going to prefer our products, the more they prefer our products, the more native species like this will be planted around the Western Mediterranean and the more sustainability we’ll have. Does that make sense?

Absolutely. When I spoke earlier about sustainable consumers and sustainable producers supporting each other, Amorim is a very good example. You are basically developing a self-sustaining cycle, starting with a sustainable forest society in your area. I think that’s exactly right. I think certainly for carbon, you are outstanding. Because basically you have a zero or negative carbon footprint, which is very important, and because your cork lasts a long time and the trees are sucking carbon out of the air. You are practising very much the circular economy concept. When I last spoke to you, you were very much interested in sustainable forest management for the environment and bio-diversity and all of that. Besides, from the social viewpoint, you are providing jobs, you care for people, provide good working conditions and so on, and it’s a very traditional industry, in which you are innovating from beginning to end – from planting trees to cork products. So I think you are a very good example of that kind of sustainability approach .

Agriculture accounts for about ¼ of the world's emissions and carbon sinks are key mitigation measures. How important do you think is the role played by Corticeira Amorim both in supporting forests and developing new solutions with cork? When we see that multilateral political efforts fail, companies will be the last driving force of change?

I would put it this way. Companies are more aware of what is at stake in the medium- to long-term future than governments, or perhaps they are more willing to take steps. I think many political leaders are smart enough to see what is emerging but they don’t have the courage to take the necessary steps. So this has been my strategy for the last 10 or 15 years, that I work less and less with government leaders, so called world leaders. I have been to many global summits and other meetings. It’s all a PR exercise and although they declared victory in the Paris agreement, all they did was to agree on some targets with no implementation mechanism, no compliance mechanism, only voluntary efforts. So how did they ever expect something like that to be implemented? So the point I am making is how do we cope as a business with the continuing failure of governments? Which is the point you made to deal with too. My answer is: let us take the worst case. Governments will not deal with this, because they are too preoccupied with immigration, or Brexit or Grexit or whatever is next in line. Or the US-Mexico wall or COVID-19, or something else. Therefore, if you are a responsible business, and a multinational such as Amorim, which has global responsibility, how can they work with a consumer society and their customer base to move things forward? The answer is not necessarily to focus only on climate change. That is the other message. So, two messages are: don’t rely on governments because they are increasingly less and less capable of solving this problem. Therefore, business should work with civil society, in particular their customer base and their employees, to push governments to do the right thing. That’s number one. The second point is to link up with other major issues, because the sustainable development goals stresses that interconnected issues cannot be solved one at a time. There are 17 sustainable development goals, and climate is only one of them.

“We can make development more sustainable if we integrate climate change mitigation and adaptation policies with the sustainable development strategy”. Can you develop this concept and explain how Corticeira Amorim, as a world leader in the transformation of cork, can make these practices even more effective?

Climate is important not because it is some abstract scientific phenomenon, but because it’s going to affect the next harvest and the growth of the vineyards, their profitability , the quality of the wines, how you are going to pay your workers, and so on. So, once you show the linkages between climate and other major areas of sustainable development, then you’ll get a lot more support for climate change. That is one of the things that the sustainability-oriented companies can do. The other thing they can do is practice what they preach. I am saying this particularly for companies that are doing “green washing”, and not Amorim -- because you are very sincere. You can have a lot of influence and we are not only talking about traditional marketing.

A lot of consumption is now taking place via digital markets, and the pandemic has accelerated this process. Young people I know do almost 90% of their shopping and marketing online. So we can reach a lot more of the younger population base, much more easily with the same kinds of advertising that was done in the past and persuade them to be more sustainably oriented. When they become voters, they will pressure the government to do the right thing. So we are coming back to the old story that we are trying to harmonize the sustainable development triangle, as I said. The company has to look after its economic and financial basis first. And that’s fair enough because the original purpose of the company was to make profits for its shareholders. That is the bottom line, but we can extend that concept a little bit to make it the triple bottom line – which is the BIGG path for a firm. First, you are also part of society, so you must be careful that you behave well within the community where you are located. If you are a multinational firm, your community becomes the whole world. This is basically your mix of customers, plus of course your employees and others. Second, you have to care for the environment. Harmonizing the economic, social and environmental aspects becomes easier, because now you have a larger vision. You will not only want to maximize profit, but also the durability and the longevity of the company, which is basically that you want to be there, not just for the first hundred and fifty years, but for another hundred and fifty years. That’s very good publicity for your anniversary -- to say that you have laid the foundation for the next hundred and fifty years. I think that should be your slogan.

That is the message of sustainability, really. You are thinking of the whole concept of shared value and so on. You share value with your stakeholder themselves, who want to make some profits. But you share value with the community you live in, by making that community a more livable and nicer place. You provide jobs, you can build a park, provide childcare. Finally, you share value with a broader group of people by improving the environment. You reduce your carbon emissions, etc. and somehow the concept of shared value will help the management and the board of the company to take a broader view of how you spend your profits. That comes back to what I said at the very beginning. Stage four is where the business grows and the company which may have started by just maximizing profits, becomes much more conscious of sustainability and better aligned with the triple bottom line.

And how can this be implemented?

The answer is about the connectivity that I showed you. Climate change is linked to every other aspect of sustainability. For example, I think that the best way to combat climate change is to address other problems at the same time. You can’t just solve one problem at a time.

We used to think that these things were so far in the future that ok “we’ll cross that bridge when we get there”. But we don't need to fantasize or imagine what climate change will look like, because we know already what it looks like. The images are everywhere, very explicit. How do you stay positive in this scenario?

Staying motivated is a question of empowerment, which is one of the principles that I enunciated 25 years ago - that is basically when climbing the mountain, people should not feel helpless. Because when they feel helpless, then they give up. First you have to gain their attention, as you said, and there are plenty of images of people affected by climate change now or in the future. There are pictures of people who are going to be affected right next door. You don’t have to show them poor people in the Sub Sahara or a polar bear on a melting iceberg. You can see what it will do to your own agriculture in ten years. But after getting their attention, you don’t stop there. You say: “Here’s what we can do. If we mobilize. if we do this together, we can prevent it.” That’s what I mean by climbing the mountain, one step at a time. You get their attention but then you give them some hope as to how they can organize themselves. So, you come back to our old message of a sustainable society where you have sustainable production and sustainable consumption. Then you build hope and motivate people. Because although our leaders may not be doing their thing, people start doing something and it makes them feel more positive and hopeful. You just build up from the bottom, at the level of individuals, firms, communities and cities,. That’s what I believe can be done, and mid-level leaders like company CEOs and city mayors can play a major role. This is very relevant for Amorim.

Mid-level leaders like the Amorim family are doing much more for sustainability than world leaders. Because whether you are a CEO of a company or the mayor of a city, you are in close touch with your own people. So, you can speak for them and they will respond to what you say. So this middle level of leadership is very critical. And that is where Amorim has a crucial role.
And you believe this is where it’s going to be won or lost?

Yes. I think that’s where it’s going to be won or lost, because if we wait for world leaders to do something we are lost. We are now on the edge of a cliff. If we wait for world leaders we will fall off. So the middle level has to step up. Step up and say “Look, enough. We are going to show you how it is done.” Not at a national level. I mean if you are in Portugal or if you are Amorim you can’t dictate to the government, but you can still say in our region: “we can do these things”. If every company and other big players start doing that. And next in big cities like Lisbon, which is the European green capital. If they all start doing their thing for sustainability, eventually it spreads throughout the whole country. So really I try to do things myself and push other people to do things as well. I think you are making real progress on this sustainability agenda. I have been reading your annual reports which you kindly sent me. I think that sustainability has been traditionally part of the Amorim brand. You are actually advertising that fact much more, and more power to you. I wish you all success.

The second half of this exclusive enterview is available here