Spotlight On Podcast
Spotlight On Podcast
Spotlight On with Kate Gibson, Global Leader in Strategy, Transformation & ESG
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In this episode of Spotlight On, Nicholas Barton, Founder of The Barton Partnership, sits down with Kate Gibson, who shares her journey from strategy consulting to becoming a pioneering sustainability leader, revealing how corporate approaches to ESG are evolving from siloed initiatives to integrated business strategy.
For business leaders navigating this landscape, Kate offers practical advice: understand your material risks, develop plans that acknowledge climate realities, and use current regulatory pauses to get ahead rather than relax efforts. Kate's insights are especially relevant for strategy professionals looking to drive meaningful transformation in their organisations.
Introduction to Kate Gibson
Speaker 1Welcome to Spotlight On, the must-listen podcast series where visionary leaders, global executives, trailblazing entrepreneurs and top-tier experts come together to share their inspiring stories and tackle the hottest issues facing businesses today, brought to you by the Barton Partnership, an award-winning global talent solution organization. We specialize in executive search, independent consulting and consulting solutions from strategy through to execution. Our mission to help businesses accelerate their growth by connecting them with world-class strategy and transformation talent. Tune in and join us as we shine a spotlight on the game changers and thought leaders who are shaping the future of business. Today, I'm talking to Kate Gibson. Kate is a global leader with over 20 years experience in the intersection of corporate strategy, business transformation and sustainability. The intersection of corporate strategy, business transformation and sustainability. She advises multinational organizations on embedding sustainability into core strategy and operations, accelerating action that delivers both social impact and long-term business value From 2019 to 2024,.
Speaker 1Kate was Global ESG Director at Diageo, where she designed and led Spirits of Progress, the company's industry-leading sustainability and responsibility program, embedding it across global markets and functions. Before Diageo, she held senior roles at Intercontinental Hotels Group, including Head of Corporate Strategy for EMEA and Vice President Global Corporate Responsibility, with a responsibility for environmental sustainability, human rights, community impact, stakeholder engagement and non-financial reporting. Kate began her career in strategy consulting, advising clients across consumer products, manufacturing financial services and pharmaceuticals in the UK, europe and the USA. She is a board member of Forum for the Future, an international sustainability non-profit.
Speaker 1Kate, it's great to have you here today. Thanks for joining me. I'm really looking forward to this conversation, especially on the back of my last podcast with James Hadley, where we looked at the role of corporate strategy. Obviously, given your profile and background, having been a head of strategy, you will add a lot of weight to this discussion. We're going to be talking with a keener focus on sustainability. Let's start, as I always do, with you Tell us about your career, history and really more importantly, perhaps tell me what you're doing now.
Speaker 2Sure Thanks, nick. No great to chat, yeah, I guess. In terms of my career history, I started my business career as a strategy consultant and I did a fairly typical rotation across a wide suite of industries from consumer products, pharma, financial services, manufacturing and then I decided about 20 years ago to move into industry and I spent 12 years at Intercontinental Hotels and Resorts, initially in strategy, so I was part of the global strategy team and then I was head of Europe, middle East and Africa strategy. And then I suppose this is where my passion and my longstanding passion for all things sustainability and social impact kind of kicked in. At that time it didn't really exist as a subject but it was just starting to be created at IHG. So I helped to set up the agenda you know the areas of focus and then went on to lead the team.
Speaker 2And then, back in 2019, I joined Diageo and I joined in a new role which was linking together for the first time in the company environmental sustainability, social impact, governance, human rights, non-financial reporting into kind of one big, huge, broad agenda.
Speaker 2And I led that agenda for just under six years and then at the end of last year I was doing a lot of reflecting and really thinking about this decade, in particular, this decade of action to 2030, which is where a lot of action on the ground actually has to happen, and I decided that my experience as being part of this early wave of sustainability leaders and companies and all the battle scars I've got from doing that could be best used helping a range of different companies. So I've set up an advisory firm and I'm working with a range of different companies. So I've set up an advisory firm and I'm working with a range of companies on getting sustainability and social impact into core strategy, getting it into core operations and really accelerating impact on the ground, and I'm having lots of fun. There's lots of similarities across companies. It's challenging, but there's so many similarities. And then I'm also serving on the board of Forum for the Future, which is an international sustainability organization.
Speaker 1I saw that that looked really interesting. So what's the story with that one?
Speaker 2Yeah, Forum for the Future is a great organization. I actually worked with them when I was at Diageo and was looking to be really bold in setting this 10-year ambition.
Speaker 2They've been around for more than 25 years. They take a systems lens on all of these challenges. Their focus is creating a more just and regenerative future, and they bring together lots of different organizations across sectors, from companies to NGOs, governments, and they lead coalitions and they really kind of take a collaborative point of view on this, you know, which is something that I guess the past 20 years has really convinced me is the only way to actually make meaningful change. So, no, it's a great organization. I'm loving being part of it.
Speaker 1Thanks for taking us back through your career journey. The role that you took on at IHG was perhaps your first role with a focus on sustainability and responsibility. Was that something you were really keen to do? I mean, is this something that just naturally evolved for you, or was an opportunity that came up, you gave it a go and you fell in love with it after that. What first drew you into that?
Speaker 2Yeah, it's a great question. And people who know me for a long time, when they know what I'm doing now, they sort of go, yeah, okay, that makes a lot of sense and that's really because sustainability and social impact have been real areas of focus for me since I was about 10 or 11. Wow, okay.
Speaker 2It's like a really long time. So, yeah, I used to spend my weekends when I was a teenager writing letters to CEOs of companies and sending their packaging back to them and saying you know, you really need to sort this out or else they won't buy from you To organize campaigns against deforestation, did a lot of volunteering for a whole bunch of different social impact organizations. So I suppose that, alongside interest in international issues and then a love of learning, those are probably the three things that define me. But when I started my business career and when I went into industry, sustainability didn't really exist as a focus area.
From Strategy Consulting to Sustainability
Speaker 2I think about 18 months after I joined IHG, there was quite a visionary CEO at the time who was just starting to set something up, and I put my hand up I was in strategy at the time and I said right, I really want to help with that, I want to focus on that and I want to make sure that what we decide to focus on as a company isn't divorced from the corporate strategy of the company. It needs to actually be linked in there and not a side issue. So I did that on top of my day job for a couple of years actually, and then moved across when a role came up and went on to lead the team. So it's yeah, it's been something that I've been focused on for a long time. It's been interesting to see this whole space evolve so much since then.
Speaker 1You took on the additional responsibility of looking at that during your role, before you transitioned. How did that shape the thought process of the organization? I guess when they saw what you were doing and how you'd evolved that into the corporate strategy role you'd evolve that into the corporate strategy role.
Speaker 2What was really, I suppose, helpful was this linkage. So it was saying, okay, what is the unique contribution that a company like IHG can make, given the business it's in, where it operates what it does, but also, critically, the business model that it runs, which is a franchise, which is an asset-lice franchise business model. And so there was a lot of focus not only on kind of why are we doing something, what do we need to focus on, but how are we actually going to convince third-party owners of hotels to invest time, money, energy, staff time into this? So I think it was really helpful doing both of those roles at the same time. I think it forced to be very focused In corporate strategy.
Speaker 2Language is really important. So actually just referring to things with the same terms, not having something that's sitting on the side, was really really important. I knew that at the time, but, especially looking back on it, I think it was really critical, and IHG is one of those companies that's been more strategic about this for longer. There's been a huge evolution since, but I think IHG was one of the early wave of companies doing this strategically.
Speaker 1When you think about your career again, you, as you say, worked in consulting IHG Diageo. What has been the most defining role or experience that you've had in shaping how you think about responsible?
Speaker 2business and investment today. Yeah, it's a great question, I mean. I think probably the most defining experience was the just under six years I spent at Diageo. So I really cut my teeth and really learned a huge amount at IHG not just about defining the strategy, but also mobilizing an organization to make it happen. And then the opportunity at Diageo came and it was just an opportunity to take that to the next level. So there's a very visionary CEO at the time who wanted to use ESG and to have the strategy and what they were doing set the standard, not just for companies in consumer products or even Alkabev, but for companies across sectors. And there was a desire to show that you could deliver strong performance and positive societal impact at the same time, which is a very big ask. And it was a newly created role. So it was bringing together all these topics for the first time and is a very big ask. And it was a newly created role. So it was bringing together all these topics for the first time and there was lots of great activity going on in Hedman for years.
Speaker 2That's the reason why I was, you know, I'd long admired Diageo, but it was quite fragmented, so it was done in different parts of the business, which meant that there was a sort of inefficiency potential. There was a potential to make the whole more than the sum of its parts. But I think critically as well, because it wasn't just any company. It was a company making alcohol. Thinking about environmental issues and social issues separately was kind of a missed opportunity, because you're in a sector where the social impact or the social footprint is very big because of the nature of the product you're making, and so you actually have to be very pioneering in, you know, making the case for moderation, addressing the harmful use of alcohol as well as addressing environmental issues, and you have to think about it all together. So I think that's what drew me to the role. And then I just had this opportunity which you don't often get, to set the first ever 10-year approach. It was done in the year pre-COVID and then it was launched. It's called Spirit of Progress. It was launched in November 2020, in the middle of COVID level of ambition and pushing it through, even as there's so much turbulence, you know, in the marketplace.
Speaker 2And then I spent about three years hardwiring it into the business and you know that's one of my really key learnings is you have to actually get it hardwired. What do I mean by that? We put it in leadership incentives. So the long-term incentive plan developed quarterly non-financial reporting back in 2020, using a similar logic to financial reporting, and then integrated into the finance systems, set up a whole bunch of cross-functional groups and then realized that we were asking a lot of leaders in terms of working in a very integrated way and we needed to do more in terms of training. So did a tailored course with the Oxford Said Business School, leading sustainable corporations, but tailored with Diageo, spirit of Progress, and trained the top 600 leaders in the company and really, like, mobilized the whole organization. That was really defining.
Speaker 2I mean, it really helped me understand, I think, three things.
Speaker 2One, you really have to make the case for why you're doing what you're doing and you have to define it and redefine it, and that's just the nature of big transformation.
Speaker 2You have to do that. You have to be clear on what you want to do. You have to prioritize and, again, you have to define and redefine that. And then you have to pay a huge amount of attention to the how. So how are you going to mobilize a whole organization and actually get this into the core fabric of how an organization functions and the key litmus test for that, I think, is it's not really BAU until it survives a leadership change. So you might be in a role like mine. You might establish a great relationship with the head of procurement or with the head of learning and development, or with the head of reward or a huge number of different functions and business units. But when they move on to a different role, does that bit that you've established, does that also get handed on to their successor? If it's just dependent on a relationship that you've built, it's not going to sustain.
Speaker 1Over the past few years. Obviously, there's definitely been a shift in terms of the topic of sustainability, the ESG agenda in the boardroom becoming a lower priority, what with AI or the other economic factors that we've been facing. Why do you think this change has happened and will it continue?
Defining Experience at Diageo
Speaker 2It's a great question and certainly my social media feed or my network is talking about this a lot. I've been working in this space for 20 years or so and I think in that time there's clearly been waves of increased interest and focus. Then there's been pushback and reflection, and we are most definitely in a period of reflection and pushback. Clearly, I do think it's important to put this in the context of this decade. So this decade from 2020 to 2030, because this is the make or break decade. You know and I'm not exaggerating here right, this is what the scientific consensus says that action now will define the operating context and conditions. You know, for hundreds and hundreds of years, you know, and there was a huge amount of focus, kind of in 2020 and pre-2020, in the lead up to COP26. And that came from investors, asset managers, putting a lot of pressure on companies, recognizing that you know they couldn't diversify their risk and the economy was too big to fail. So there's a lot of pressure on companies who then set really bold targets, particularly in the climate space, and those companies influence countries to set even bolder targets. This is all back to Glasgow. That, I think, did is it resulted in a lot of board conversations, because it was like what does this mean? What do we need to do? There's lots of regulation that was not very well understood. So there was a huge amount of board conversation, and then there was targets and the beginnings of action. But then we have this pushback right, we have the cost of living crisis, we have other priorities AI, you mentioned. You've got geopolitical tensions, you've got costs of living. You've got a whole soup of stuff going on, and now it's like where are we at? I think, first of all, this is a more mature issue. So I think there was a lot of board education and a board time focused on it, because it was very, very new. It still is new, but it is a little bit more embedded across the company.
Speaker 2And then I think the other thing is there clearly are other issues, but I think the challenge is is that these things are really interconnected right? So if you think about geopolitical tensions, you know some of those geopolitical tensions are linked up with the energy transition. You know you've got countries that are, you know, choosing different paths and some are going faster and slower. You've got a very energy intensive technology and AI, which needs a lot of water and it needs a lot of electricity. So that's another link.
Speaker 2And then you've got the reality of climate change, which is causing things like migration, causing instability. Reality of climate change which is causing things like migration, causing instability. So tempting to say, oh well, we'll just shut that off to the side, we don't need to worry about it. I think the reality is is that it's still in there. It's just in there, you know, amidst a huge amount of other stuff, and I think one of the things that leading companies are doing and need to do more of is kind of recognize that this is part of a new operating context. There's a level of volatility that we've not seen before and it's not going away. The temptation to say, right, you know that wave is done, forget it, we don't need to worry about it. That's a very, very dangerous assumption to make I mean it's almost.
Speaker 1It's being reframed under a different language right yeah, yeah, I think that's right. And in terms of, then, I guess, the influence that that has on the business and the ownership of that from a corporate strategy perspective, what pressures are causing ESG to lose traction again, as we've said? I mean, and how do you think they're addressing that?
Speaker 2Yeah, I think it's a really. It's a couple of shifts that have happened that mean that the role of the corporate strategy team is more important than ever. These things are all connected, which is really inconvenient. Right, you know you want to prioritize, you want to just focus on one thing, but these things are all interconnected. Two, they have to be solved collectively. They actually are as much about risk as they are about going after opportunity, and so I think that's one of the things that's going on and that's why I think that the role of the corporate strategy team becomes really important.
Speaker 2So I can remember coming into role and you'd have people say gosh, okay, this is great, You're here, You're going to solve all our problems, You're going to help us, you know, define what it means to deliver a positive water impact or be net zero, and then it'll all be great. We can just keep going and it's all going to be fine. And then my response was well, hang on a second. What is in your base plan? What does your base plan assume? Does your base plan assume that everything is going to be fine and everything's going to be very similar to how it has been over, say, the past five or 10 years and if it does, on what basis are you assuming that and what is your actual view of the future? I think that's one thing that corporate strategy teams do really well is think future back and go OK. What actually is our operating context going to be in 10 years, Particularly important in this decade, and what risks are out there that maybe investors aren't quantifying necessarily as well as they could do, although that's coming, and you know what do we need to do to protect ourselves against that risk and what is competitive advantage going to look like going forward?
Speaker 2So you know, to give you one example, you know we talk a lot about climate change, but you know climate change is showing up as water stress, you know, and that's what we're starting to see, right, and extreme weather events. Of course, that's growing in importance. Drought, yes, but also it's, you know, it's too much water, it's too little, it's too variable, and then you also have chronic water shortages and huge amounts of companies, from consumer products to beverages, to tech, to fashion you know everyone depends on water. So if you want to be advantaged going forward, you need to be very clear about what your water footprint is and how are you actually going to get access to this resource so that you can continue to operate and continue to grow.
Speaker 2Now that you can see that's an environmental issue, but it's also a social issue, you know, because if people don't have access to water, then society suffers. It's an economic issue because you can't grow, and it's also a geopolitical issue because a lot of migration and a lot of tension is actually when you trace it back can be linked to water. So it's just one example of you know you need to think future back and you need to think in this integrated way, and strategy teams are. They're not uniquely placed, but they're very critically placed to do that.
Speaker 1From our perspective, we've not seen any dramatic increase. But in terms of the ownership of this agenda, as you said, you've worked in two organizations now where there was a dedicated role that was focused on this topic but there was obviously a close alignment with strategy. And we see in many organizations where an individual like yourself that was in corporate strategy has moved across to take a more specific focus, like yourself that was in corporate strategy has moved across to take a more specific focus. From your perspective, have you seen any change in that demand within organizations to have a dedicated individual focused on this topic? Or, if anything, have you seen it come back into the ownership of corporate strategy and not have an individual take ownership for it?
Speaker 2Yeah, it's a great question and I think, lots of organizations. There's kind of an ebb and a flow right Again. If we think back to early half of this decade, you had big, bold targets. You then had quite a big increase in the size and scope of sustainability teams and then I think what you've seen, what you're seeing now, is more of a focus on embedding in the core operations and in the core organizations. I think about a team that I had, for example, I started off with a small team of subject matter experts when I first joined. It then grew into a bigger team that was focused on insights and what's coming at us transformation, business partners to help with delivery, non-financial reporting, and then the evolution of that went much more in terms of embedding across core functions and actually you know you're working with a whole host of different teams across the organization.
Speaker 2So I think like what you do and what you need to do to be successful has changed. It is very much about partnering across the organization. So you know you have a lot less end-to-end ownership of these topics and that's a sign of maturity. That's a good thing. Much more links with corporate strategy. If you take climate risk, for example, you know the disclosures that companies have to do, is not meant to be a piece of paper. It's meant to really understand what is your exposure and risk and it's meant to put that in the principal risks for a company. It's meant to put it in the investment profile, it's meant to put it in the base plan. You know, and I think that's happening but I think that can happen even more than I think the kind of the nature of what you're doing as a team is much more about partnering, much more about embedding, much more about how do we get this operational.
Speaker 1At the Barn Partnership, we're proud to be B Corp accredited. Are you a fan of the B Corp accreditation? Is that an accreditation that brings all of that together?
Speaker 2great question. I mean, I am a fan of the B Corp accreditation because it is. There are so many different things that you need to do as an organization and it's very difficult to kind of assess across all of it and do due diligence on a company. But what's nice about B Corp is it does, you know, recognize that it's about E, s and G. It does, I suppose, give a bit of a, you know, gives a badge of authenticity. Let's say so.
ESG in the Boardroom Today
Speaker 2No, I think I think it's helpful for sure, because I think one of the most difficult things in all of this space is you have to take action across a whole bunch of stuff. You have to do no harm in terms of, you know, making sure you're treating people well in the business across your supply chain. I'm not just talking about B Corps here, I'm talking about what business needs to do. And then you need to focus on your biggest risks and opportunities and take meaningful action there. And it's so difficult when you're trying to communicate that broader audience, be it consumers, be it the press, be it even like potential and current employees. It's so detailed. So I think B Corp is a nice way of like, it's a shorthand for, you know we've done the work. It can be a badge of trust.
Speaker 1Let's say let's talk about private equity. How do you see investors balancing the tension between short-term returns and long-term sustainability considerations?
Speaker 2Yeah, it's a great question and actually one of the things that I've been very positively surprised about in the turbulence we've been going through for the past six to 12 months is the fact that investors, including private equity, are still focused on long term and are still focusing on deepening understanding of risk, for example, climate risk yes, definitely, and I think, an emerging focus on nature risk. You know, you've seen some of the big banks, for example, stepping away from net zero alliances and coalitions. You're also seeing a growth in teams and specificity and sophistication on understanding climate risk, and I think that's because of the recognition that the impacts of climate change are already happening. And those impacts of climate change don't just impact the environment. As I mentioned before, they also impact society, they impact economies and they have a material impact on company valuations, cost of capital performance.
Speaker 2I think that that is actually encouraging because it means that it's real, if that makes sense, and I think the other thing that's going on and it's partly linked to overall resource scarcity, but also even things like tariffs, if you think about if you're running a business that's dependent on resources, if you can be more efficient in using those resources. So if you can reduce what you're using. You can be lean and mean. That's a good thing. That's very good commercially, also good for the environment. If you can get access to reused materials, that's also good. You know it's helpful for tariff avoidance as well. So there's a whole host of things that have business benefits and also have environmental benefits, and I think that's another thing that is starting to happen as this gets more mature. It's not like you always have to make a trade-off between doing something that's good for business and doing something that's good for the environment. There are examples where you can do both, and I think that's going to be a more and more important part of competitive advantage going forward.
Speaker 1And what do you see as the biggest misconceptions that companies still have about the topic of ESG and ESG right now?
Speaker 2As an ex-strategy consultant. I thought about a list of three, but I've got six, so bear with me.
Speaker 1No, please.
Speaker 2I think the first is it's a little bit linked to what I just said that all action in this space is cost, because there are many things that companies can do in terms of resource use efficiency, in terms of thinking a little bit more long-term that will also deliver near-term performance as well as protecting you over the long-term.
Private Equity and Long-Term Sustainability
Speaker 2And there is a misconception out there. I think there's also a misconception that this topic is only about the energy transition. I mean, yes, the energy transition is really, really important. It is happening. There's buffeting, there's turbulence going on, but it is progressing and companies do need to think about how are they going to play in the low-carbon economy, what is going to be their role? And I think the other conception is that it's only about some industries. You know you could take a view that you're in oil and gas, if you're in infrastructure, if you're in electricity generation. You know you need to really think about this, as you do.
Speaker 2But the reality is is that, with all this volatility in the operating context, with everything that's going on, it doesn't just impact that. You know the food system is undergoing a huge transformation. It needs to. Soil health needs to be restored. There's a massive focus on agroforestry and regenerative agriculture, for example. So consumer products and food companies need to be paying attention, not just energy producers, for example. So consumer products and food companies need to be paying attention, not just energy producers, for example. Climate and health is another area. There's a massive change going on in terms of how healthcare needs to be delivered, the kind of health challenges that are going to be facing people going forward, anything to do with infrastructure, so it's not just relevant to some industries. It's important to be clear on what are the most relevant issues.
Speaker 2I think the other misconception is that consumers don't care. There is a well-established say-do gap, so consumers will say they'll pay more and seek out products that are more sustainable. At the end of the day, they won't pay more for them, which is true. That doesn't mean they don't care. Consumers are increasingly aware of the issues. They are doing their due diligence and they will punish you if you are seen to be doing harm and if you're not working to become more sustainable. So consumers do care. It's just not showing up in the way that perhaps we thought it might a few years ago.
Speaker 2I think that the other thing is there is a misconception that this is about reporting, or just about reporting, and the regulation that's come in has been helpful but also quite onerous, and you know it's created this big wave of activity and action and hiring. And I think some people now, with some of the changes that have happened like with the EU, for example are saying oh great, we can just down tools and we don't need to worry about this anymore. And that's not true. If you try and see, the kind of ultimate aim of this reporting regulation is about getting companies to understand their biggest risks and opportunities and to do something about them. So reporting is a means to an end.
Speaker 2And then I think the final thing is that it's very easy, I think, to read the press, particularly the English-speaking Western press, and think that this backlash is happening everywhere. And I think the reality is that the backlash against the energy transition, against other aspects of social impact, is not showing up in the same way everywhere, and there are many parts of the world where this is continuing. And so I think it's also important not to get in an echo chamber, because there are lots of countries around the world that are reorientating their energy systems very quickly. So I think that's another misconception that we need to ensure we avoid.
Speaker 1Even with budgets shrinking at the moment. If you were advising a CEO or private equity partner today, what would you say are the top priorities they've got to be focusing on?
Speaker 2Yeah, it's a great question. So I mean, I think the first thing I would say is really understand your key risks and understand what your most material topics are, and you actually have to go through and do that work in order to help you prioritize so clearly. It's like have a base plan that actually recognizes that climate change is a reality and it will have huge social and economic ramifications, and internalize that. That's the first thing Understand the business you're in, where you operate and therefore where your biggest risks and opportunities are, and focus on those. And I think, because they're so interconnected, that needs to be the job of the CEO, so it doesn't mean they have to do everything, but I think it's a whole of company approach way to do it.
Speaker 2And I think what's going on with this world is a little bit similar to, you know, digital transformation, for example, where it started off as a separate topic. It was a huge focus for boardrooms, there was a huge amount of capability building and knowledge building, and then it's become more embedded in part of just how companies operate. That's what's going on and what needs to go on now with this topic as well. And then I think the other thing I would say you know, back to this, back to what's going on with this kind of backlash and particularly some of the delays in reporting.
Speaker 2It is very tempting, I think, for people to say, right, we're just going to down tools, we're just going to take a little bit of a breather.
Six Common ESG Misconceptions
Speaker 2And I think that the way to make sure that you get to grips with this issue and you are resilient for the future is to use the next couple of years to really really get prioritized, really focus and get this into the organization, because if you're going to have a whole bunch of pain in a couple of years time, um, it means that it's a classic common received wisdom, let's say, of like an ounce of prevention is worth a pound of cure. Um, I think a lot of these topics lend themselves to that, which is a bit of, you know, focusing now and taking steps now, um will actually make sure that you are resilient, for whatever scenario happens in the future is really important and you know, in the experience I've had in working, you know, both as a consultant with different companies and then in different companies, is that, where this is seen as a whole, a business issue, I think, is where it settles in the right level and the right way and where it can actually be a source of competitive advantage.
Speaker 1As you say. It's that ownership piece as well, isn't it how it's been driven in? Where do you think ESG will be five years from now? Will you see it as a rebound, a reinvention or something else entirely?
Speaker 2Yeah, I think there's a reinvention going on, and I will come to a list of three, because I think there have been three phases on this. One First phase was very much the corporate social responsibility phase, you know, where you had companies doing things in areas that weren't necessarily directly related to their core business. It was often philanthropic, you know. There was a lot of PR. It was as much about engagement as it was about action on the ground.
Speaker 2I then think you've had this ESG wave that's just, you know, washed over over companies over the past, say, five years, where there has been this raising of ambition, you know, deliberately setting very high ambitions and focusing on a very broad set of things and setting very ambitious targets and then trying to take action against them. And these things are really hard, they take time. And then we've had this, you know, backlash and this turbulence in terms of is this greenwashing? Are you all talk, no action, what's actually going on? Et cetera.
Speaker 2And then I think, from from the turbulence that's happening now, you're seeing sustainability 3.0 emerging, and what I think that is is it's really this understanding of how does it link to strategy, how does it make your company more resilient and fit for the future. And then how? How is it actually embedded into the core of and this is really, you know, this decade of action, especially these years now up to 2030, which are about delivery and not just talking? How do you actually get things done? And then delivering multiple benefits with the same actions at the same time, you know, which I think is the way that you try and square all of these things that are coming at companies and deliver some short term benefits while setting yourself up well, but this is just emerging. While ESG is a term, I think you're going to hear less and less. You already are In some ways. That's a bit of a shame, because ESG was helpful in the sense that it framed the fact that it was about the environment and about social issues.
Speaker 1It captured it, didn't it?
Speaker 2Captured it, but it was investor driven, quite poorly understood in companies and it's also its weakness now is that there's this broad brush ESG backlash, and so you can kind of push back against a very broad range of things with one term. So I think what we're going to see is it being split apart in terms of how it's framed, but aspects of it I don't think that are going to completely fall away, because if you're a company and you think about what's your license to operate and how do you preserve it, and what is your license to grow and how do you ensure it, you actually have to think about these things. You may not refer to it as ESG and I think you'll start to see people referring to it as less and less, but you are still going to see action being taken.
Speaker 1Well, I hope so, and look. Final question then, and as a father that's got a son at his final year of uni has an interest in sustainability. What would you say to young professionals entering business and finance today? What skills or mindsets will be most valuable in navigating the evolving sustainability landscape?
Speaker 2Yeah, it's a great question and people always ask me like, how did you get into this being in part of that early wave?
Speaker 2Yeah, it isn't defined Definitely not I mean, I think the first thing you need is you need commercial acumen and you actually need the ability to get stuff done. And that is true especially now in this sustainability 3.0 that we're coming into, because working through others and delivering big transformation through others is the job. It's so broad and the action that needs to be taken is so big that one centralized function can't do it on its own. It's impossible. So I think that's the first thing. I think you need to be, as a result, very good at influencing.
Sustainability 3.0: The Future of ESG
Speaker 2And if I think about the past 15 years, it's like making the case for the why, defining the what, constantly thinking about the how, but also being flexible and nimble and like you have to go through all three of those things all the time. It's the nature of it. And then I think you know this focus on delivery and the last 5%. So if you want something to last, it has to be hardwired into the organization and that's where the kind of the big, bold idea turns into the you know, very detailed plan and kind of very diligent, determined just get it done.
Speaker 1Yeah.
Speaker 2And it's only business as usual, as I mentioned, if it survives a leadership change. If not, it's a kind of favor that someone's doing for you. And then I think you also need huge amounts of personal resilience. You know people used to say to me all the time oh, you've got the best job in the company. You know you're making a positive difference. That must be so great, which is true, and it's also a really hard job.
Speaker 2Often you're framing something that's very inconvenient. You're often asking the organization to work in a way that kind of goes against the grain of organizational silos and the way it normally operates. You mix signals from the external environment, so you're kind of being buffeted all the time. So you need a lot of personal resilience. And then I think if you're leading a team, you need to be able to make sure that your team is resilient, because a lot of people drawn to this space tend to be quite mission driven and purpose driven Very hard when you're having to compromise, when you're having to say right, I know we want to do this, but we're going to ask for this, like I know we want a 10. We're going to ask for a seven or a six, we're going to get approval for that and then we're going to build to an eight and that for some people is hugely demotivating. Are you giving up? No, I'm not giving up, because if I asked for 10, I'm going to be told no and I'll have to wait a year. So it's that resilience and that sort of grit and determination I think is really, really important.
Speaker 2And then I think the other thing with sustainability 3.0 is because it needs to and is going to, cut across much more of the functions of companies. I think it's around finding a company that you like and getting in there and then moving towards sustainability, if you will. And I suppose the final piece of advice I often give people is to be patient. The movement in these teams tends to be slower than in other functions, so people aren't. When they get in a sustainability team they don't think, ooh, two more years and then I'm going to get my promotion. They tend to be there for longer. It's helpful for getting stuff done, but it's maybe a little bit different than if you're trying to move into that team. But I think if you get into a company that takes it seriously and strategy professionals can make a huge impact in sustainability 3.0 in the years. Now that really matters the most.
Speaker 1So I would just say go for it. Wow, what better way to end this conversation, this discussion? Kate, it's been great talking to you. Your insight has been fantastic. I'm sure it's going to be extremely well received by our network. Appreciate your time. What a great career history. You and I have known each other a long time, so I've followed it with interest. It's been great to get your thoughts on such an important topic. Thank you.