Isobel Wild [00:00:07]:
Hello, everyone. This is the state of sustainability podcast brought to you by altruistic. Today we're going to cover the sustainability market highlights that have been hitting headlines this last week, namely the corporate backsliding on climate pledges and the greenwashing clampdown. We're also going to dive into a specific topic on effective communications around your sustainability data sharing learnings about how best to navigate this for internal and external purposes. Saif, hello.
Saif Hameed [00:00:39]:
Hey, Izzy. Great to be back.
Isobel Wild [00:00:41]:
Good to have you. For all the listeners, I've just been told off by Saif for having a lot of background noise, which was my fan. So this podcast is going to be a very hot one for me. But Saif, it looks like you're in milder climates.
Saif Hameed [00:00:56]:
I don't know. The heating in my apartment is always on overdrive, so I've just used her by now.
Isobel Wild [00:01:03]:
Well, we're in it together then. Saif, I wanted to pick your brains on mushrooms, aka the forbidden fungi, which I saw a news article. Call it for context, everybody. This week, the National Trust has actually come out to say that they'll no longer be including mushrooms on their menu. This is to boycott mushrooms which are grown in peat. I didn't actually know this, but the majority of mushrooms in the market are actually grown in peat. And peat is an incredibly important ecosystem as it stores and sequesters huge amounts of carbon. I think there's always that stat knocking about, which is like two times the amount of the forests in the world, I'm not completely sure about.
Isobel Wild [00:01:47]:
But regardless, it's very important. And how people harvest peas is that they drain it, and all that carbon that it stores is then released into the atmosphere. I'm not sure about this, just about them emitting mushrooms from the menu. Because it's like, where do you draw the line? Do you then emit all meat and dairy or is it just peat based ingredients? What do you think, sir?
Saif Hameed [00:02:18]:
It's like that old quote, right? First they came for the beef and I didn't object because I didn't eat beef. Then they came for the Chicken and I. I didn't object because I didn't eat Chicken. And then they came for the mushrooms. I think we in the sustainability space have a deep attachment to mushrooms and I actually think it's going to come back to haunt US when mushrooms conquer the earth. For anyone who's read extensively about mushrooms and mycelium, you start to realize that it's basically a brain. Just spread it out across the earth. And then you watch something like that.
Saif Hameed [00:02:55]:
Show the last of US and your fears about mushrooms just go into Overdrive. So I'm happy we're taking the battle to the mushroom, to the fungi. Just kidding. I actually love mushrooms. But I think one of the interesting things is how our economy is able to take something like a mushroom that grows in naturally, sort of wild, very sporadically. If you think about where mushrooms just come up, they come up right after the rain, and then suddenly the forest is filled with mushrooms and we're able to industrialize that process and have mushrooms on demand, growing just in a predictable fashion and at a predictable quality. And that's actually quite interesting. If you look at how you grow mushrooms, you typically have these large warehouse type structures and then you have layers.
Saif Hameed [00:03:47]:
And it's not a surprise to me that this has come up. I think it was something that would come up eventually. The other aspect is many large mushroom farms are also placed near herds of cattle, for instance, and then you kind of have the waste. And at some point that will also become a little untenable as meat starts to decline from the diet or dairy starts to get replaced. I think what we're coming up against is that the way in which we produce things and the quantities at which we produce them are the problem here. And as you start to try and transition diets, we need to start thinking about, let's say, environmentally intensive products as more of a treat and less of a staple. And we've sort of seen the same with beef. We're maybe starting to see the same with dairy.
Saif Hameed [00:04:32]:
I had a conversation with oatly yesterday and we were talking about how it's not about removing all dairy from the diet. The reductions that we need in dairy and meat consumption is not like 100%, but it's about just shifting the way in which you consume it so that it's less of a very stable bedrock of your diet. And maybe you actually have alternative milks in your coffee, and then you have something with dairy in it as a bit of a treat, like cheese in my case. And I think with mushrooms it can be a bit similar. Like how do you start thinking about something shifting from being an industrialized output, using vast quantities of peat, towards something being more of a. More of something special? I think with mushrooms, part of the trick is that we've seen mushrooms as the normal replacement, in many cases for meat, because the texture is similar. And I think that's going to be a bit of a struggle. I think we need to start thinking much more carefully about what are we trying to replace meat with.
Isobel Wild [00:05:27]:
Yeah. And I think that's it. That's the shocking thing, is that how do I as a consumer, know that this mushroom has been grown in peat soils when I'm going to the, going to the shelf, like, you know, it's tricky enough to kind of differentiate between different types of meats, let alone like, actually knowing where your mushroom is growing. So I actually think the emphasis should be on the growing techniques versus the behavioral activities of the consumer. In the case of mushrooms, I actually, I completely agree with you in case of like, meat, but it seems that actually, yeah, the growing techniques should be different.
Saif Hameed [00:06:03]:
I think other than the growing techniques, it's also about the transportation and kind of the, let's say, post production part of the value chain. Because one of the best ways to have the impact of the product is to have the waste. Because the waste post production captures everything that happened pre production. So if, for example, in the restaurant or kind of on site, if you can actually reduce the mushroom waste by 20%, 25%, you're actually reducing all of the environmental impact of everything that came before. The other thing with mushrooms is that they bruise easily. And I don't have the stats offhand around how many mushrooms get discarded because they don't look right, for instance. But those are things that you can kind of address post production as well.
Isobel Wild [00:06:48]:
Exactly. Well, before we have a fungi foray, which I've actually, I've done a fungi foraging event and they called it the fungi foray. And I forever loved that term. Let's get on to the market highlights. We're going to start off by looking at the corporate backsliding on climate pledges. So following Shell's decision last week to water down its climate commitments, there's been a flurry of media activity slamming companies who are also doing this. So the Financial Times actually pointed out that 239 companies failed to provide the science based targets initiative with necessary targets within the 24 month period that was agreed upon when they set the commitments. This is about a quarter of actually all the companies that did submit commitments.
Isobel Wild [00:07:46]:
So it's a huge amount. And big names like Unilever, Walmart, Diageo, Microsoft have been one of those 239 that have been told that they actually have to retract their SBTI commitment. Although I would caveat that Unilever has set their own 2039 net zero targets. But this hasn't been validated by SBTI with the companies who actually have set targets. There's also a trend emerging that much, many more of these targets are short term versus long term. So we're talking about, like, 2030 timelines versus 2050 timelines, this isn't that surprising, given the 2050 is well beyond any company's typical three to five year planning cycle. But what I want to get about, what I want to talk about is that I think the majority of companies are setting targets without actually really understanding how to reach them. But I don't know whether this is actually a bad thing, because whilst everyone's trying to grapple with their environmental data, like their scope, three data, engaging their suppliers, all of that malarkey, it still creates a lot of ambition and gets the ball rolling.
Isobel Wild [00:08:56]:
So I think that whilst it's right that we, as the consumer, like everybody, knows that actually they haven't set the targets to get that, I think the ambition that's there is a really positive thing that we should also, like, highlight.
Saif Hameed [00:09:13]:
Yeah, I mean, I'm going to do something horrible now, Izzy, which is, I'm going to quote Sun Tzu on a podcast, and, you know, like, my favorite Sun Tzu quote, and I only have one, is that every battle is won or lost before it's begun. And the thing with these targets is that the targets were never viable. The original targets that many of these companies were setting, the original roadmaps, never made sense, actually. And many of us in the sustainability space, we just sort of drunk the Kool Aid of 2020 and maybe early 2021, where we were just so excited that this was happening and it seemed to be a real thing. And we'd had all these false starts before, and we felt like this was the real moment. And I remember, I think it was like 2018. I think that Shell announced the executive compensation being tied to emissions reduction. I think it was around the same time that Unilever said they'd be putting a label on every carbon label on every package.
Saif Hameed [00:10:17]:
And there was just this kind of euphoric moment where everyone was setting some massive and frankly, quite unrealistic sort of aspiration out there. Like the Shell original targets were basically a commitment to being just different business and just effectively building down the business and building up a different business. I was at some point in the surreal experience of helping a coal mining company set its SBTI targets. And there's just something about that that you have to realize is not viable. And the reason I said the battle sort of won a loss before it's begun is because the business is what it is. And very few businesses can undergo a complete radical transformation from left to right. And I only know of maybe a handful of businesses that have done it. Dong is a great example where it used to be the danish oil and gas company, and it transitioned to being a big wind energy leader, which we now know as Oersted.
Saif Hameed [00:11:24]:
And that required a sort of seminal moment in the company's experience, where they just decided that what we're in is the past and what we need to be in is the future. And it was much more about economics and business strategy than just about sustainability. But for the rest of it, this was business transformation without deep seated conviction across the business. And while we can say, look, there's something wrong with that and it should be different, and these businesses and the people in them should have higher aspirations, ultimately, we're all the shareholders of these businesses. Our pension funds and insurance funds and our bank accounts are basically all financing these companies. And if we wanted more change faster, we have ways of creating that leverage. We can all show up to vote more often, just as a small example. So I personally am not surprised by this.
Saif Hameed [00:12:22]:
And frankly, six, seven months ago or more, I think we were actually posting on LinkedIn, and I was saying everyone's going to, a bunch of companies are going to start dropping off their targets mid decade, which is exactly what we're seeing now, a little earlier than mid decade. So I'm actually not super miffed about this. I do think that it'll go back, actually. So I think the pendulum is going to swing back. I think it's going to be. Personally, if I had to make another sort of prediction off the cuff, I would say, I think it's going to be another five, six years before the pendulum swings back in a big way, and the urgency is going to be even higher. In the same way that when it swung in 2018, 1920, it swung in a big way. I think we're going to see it swing back in a big way at the end of the decade.
Isobel Wild [00:13:06]:
Okay. We shouldn't be surprised about it. But if you were a professional who was like, maybe you just came into your role as a head of sustainability and a previous CSO had set a target that you. A target that you realize is completely overly ambitious, what would you do? Do you think it's actually better to just hold your hands up and say, right, this isn't working? Or do you actually continue with the target and see and be more ambitious or opportunistic that things might change? We might have a big shift?
Saif Hameed [00:13:43]:
I think with any target, frankly, once you realize that the target is completely unrealistic, I think that it's not just an obligation, but it is in your best interest to recalibrate the target as soon as possible. So if you're coming in as a sustainability professional and a target has already been set, you should sound the alarm within week one, two or three or four of you being in the business. At the risk of looking stupid, at the risk of looking under ambitious, you should do it then. The reason for that is that there's only two possible outcomes after that point. One is that you fail the target and start to look manifestly like you're going to fail the target and then you look stupid because you didn't raise the alarm earlier on. The other is that you pass the buck on to someone else. But that relies you to assume coming into the business that this is a short term gig. You and I don't think that's often the case.
Saif Hameed [00:14:36]:
So I would always sound the alarm within the first few weeks. I would say that that's not, shouldn't be the case if you think you might fall 10% shy of your target or your goal, but if you think you're going to be 30% shy or like there's a meaningful shift, then I would definitely sound the alarm quickly and.
Isobel Wild [00:14:55]:
You'Ll read on how many companies are falling shy. Like if I was going to take an assumption, I would say that most companies probably are going to fall shy of their targets because as you said, data has come a long way in terms of finding out data accuracy, finding out actually the full scope of the emissions that you have.
Saif Hameed [00:15:17]:
Yeah, just to jump in on that, Izzy, I actually think that the scope one and two targets for many companies will be met. And that's because scope, that's for a couple of reasons. One is that scope one and two is easier to understand conceptually what you need to do. So for most people, scope two, they're just thinking about shifting to renewable energy and solar for a lot of their scope. One, they're thinking about electrification of equipment, transport, etcetera. And those are easier to understand conceptually. So that's one reason. The second is that they're easier to measure accurately, like actually the emissions factor, for instance, for a lot of this stuff will change much less frequently, much less dramatically than for other contributors to your emissions.
Saif Hameed [00:16:06]:
The third is that it's easier to also change because they're within your operational control. And the fourth is that it's cheaper. Actually, like most of this stuff in the scope one and two camp is either at cost parity now, which means that it costs you the same to be using renewable power, let's say in London versus grid power or it's going to be at cost parity in the next couple of years. So certainly in Europe, I'm seeing a lot of scope one and two being relatively straightforward. For a lot of companies, there are some exceptions. Steel can making, bottle making, a lot of these things are exceptions. But for a lot of businesses, scope one and two is going to be actually straightforward. Not that it's going to be super easy, but it's going to be straightforward and more predictable.
Saif Hameed [00:16:52]:
Scope three is classically the hard one. And I think for anyone who set non emissions environmental targets like water, nature, biodiversity, plastic recyclability, that stuff, I think is going to be difficult because it again gets you out of the comfort zone of operational control.
Isobel Wild [00:17:09]:
Yeah, I think exactly that. So shell, whilst they were saying that they are diluting the strength of their targets, was saying, well, actually, look at the progress we have made on scope one and two. I'd love to just take us on to our.
Saif Hameed [00:17:21]:
Yeah, but wait, wait, wait, wait. Just to. Just to jump in on that. Just to jump in on that. Sorry. The thing with the oil and gas industry is that progress on a lot of the scope one and two stuff is just very, very directly correlated to cost. And for anyone who's familiar with the oil and gas industry, for instance, a lot of the operational emissions come from things like flaring and fugitive emissions. For those who don't know what these things are, when you have excess gas and you actually can't pipe it over somewhere for whatever reason, let's say a piece of equipment has failed and your process is no longer running efficiently, but you can't shut off the gas, the well.
Saif Hameed [00:17:59]:
So you still have gas coming through, you basically burn it, which means that you just set fire to this gas, you have these big plumes coming out. Fugitives are similar where you basically have leaks in the valves or leaks in different places and you just have stuff leaking out. And both of those are basically just the core product being wasted. When a lot of these companies say that they're making big strides in this, it's either that they're just reducing wastage of their core product, which is great, I'm happy they're doing it, but it's also cash banked, basically. And when they're talking about a lot of the scope two shift, they're also in the middle of this transition to renewable power, because renewable power is becoming a great business model. I mean, it's had a bit of a negative turn, relatively speaking, in the last 1218 months, but otherwise it's a great new infrastructure business that many energy companies are setting up, and then they can be also the first customer for a lot of that. So in their case, scope one and two is kind of given their role in this transition, I don't think it's right for them to literally just focus on scope one and two.
Isobel Wild [00:19:07]:
Personally, I'm glad you're not giving them any slack. And I actually remember us discussing a little bit of this at cop because that was when we had a flurry of announcements from a lot of the oil and gas companies about their scope one or two reductions. So well for highlighting this, but I do now want to take us on to our next market highlight, which actually refers quite nicely back to this because it's around the greenwashing campdown. So the competitions and marketing authority is coming down hard on a lot of FMCG companies. And I think to our point previously, this is mainly the companies that were shouting the loudest about their green credentials, their SBTI commitments, and those that are now not hitting them are probably taking the biggest hit. So a couple of recent company finds is Unilever was investigated late December last year in 2023 for vague and broad claims and imagery on the pack and in advertisements that have no data to verify those claims. Oatly was also sued back in 2021, but last week they actually had to settle for, and actually, can I add, they were sued by their investors, which is crazy, for misleading environmental sustainability assertions as well as some growth assertions in China, and they had to settle last month for a whopping $9.25 million. Another one at Starbucks was under pressure for its claim on ethical sourcing for its tea and coffee.
Isobel Wild [00:20:37]:
And the list goes on. But maybe just before we jump into how to navigate this conundrum of when to shout and when to whisper, I'll just run through the green claims code quickly. So the green claims code is designed to stop greenwashing and penalizes companies promoting unclear and ambiguous claims in the EU. So for instance, when you see on a pack like this is better for the planet, like what does that even mean? We don't know. So specifically it states that claims have to be specific. So the van reduces transport emissions by 80% compared to our previous van journey van on a 20 miles journey. Link to calculations and more info here, although that probably isn't quite as like marketing sexy cool. I think that's where it's going to have to go.
Isobel Wild [00:21:28]:
And this rule affects all businesses that want to make claims in the EU. So even if you are a global company, but you have a market within the EU, you have to buy by these claims. It does exclude SME's below 2 million of revenue. And these fines are increasingly being dished out. Saf, what are your thoughts?
Saif Hameed [00:21:51]:
Yeah, there's a lot to unpick here, Izzy, and so just interrupt me if I wax too lyrical on this stuff, but, you know, I would almost take three different examples here and I think that there's going to be an impact in different ways. So let's take Oatly, Unilever and Starbucks. In the case of Oatly, I actually think that when the dust settles, Oatly is going to be really glad that this happened. And the reason for that is twofold. One is that oatly, as a brand, has so strongly tied its brand presence and who they are to its sustainability impact and credentials that actually any chink in the armor is going to have real business impact either in the next year or the next three years, or the next ten years or 15 years. For them, the brand consistency around sustainability is super, super important. And so in a way, it's nice that they're getting a friendly here, they're getting sued by their own shareholders. And it's almost preemptively right.
Saif Hameed [00:22:56]:
Like the shareholders are effectively saying that we held you to a higher standard and you're actually not meeting that standard. It's quite interesting, but it's almost like, it's like you'd rather have your manager call you out than someone out there elsewhere in the business. And if you're the manager, you'd rather have your own board call you out than your shareholders. And then if you're on the board, you sort of rather have your shareholders call you out than the actual regulator. And so in a way, I actually think that's a great thing. The other thing is that how cool is it that the shareholders of oatly are as mission driven as the business? That is exceptional. I honestly, I would love for our shareholders at altruistic to call us out on our impact. I think that's a great brand story, to be honest.
Saif Hameed [00:23:48]:
I would run with it and I would advertise it and I would own it. And I'm sure it doesn't feel that way in oatly right now, and I'm sure it feels stressful and difficult. But when the dust settles, I think that oatly will start to see this as the. The boon or the gift that it is in some ways. And I realize that might sound strange, but that's a little how I would see it. The 9 million is a lot, but it's not crippling for a business of oatly size. They're not huge, they're not major, but they're big enough that they can move past this and maybe it gets settled or something similar, they can move past this, but the lasting impact on them correcting trajectory and preserving brand equity long term. Plus, again, the marketing value of having their shareholders even more aligned with the mission than their management.
Saif Hameed [00:24:36]:
That's fantastic. I think if I look at Unilever, I think that large companies like Unilever have a really interesting problem where they have a sustainability team and set up and they have a marketing team and setup, and there are some overlaps, but it's not always clear. And so I think that in many cases the sustainability team feels like they get a lot of pressure from marketing or they get a lot of pressure to deliver the right messages and support the right messages. And I think that these sort of shocks help create better alignment and Unilever as a business and large companies like them in the long term are very good at adjusting to regulatory risk. They are in the business of managing this day in and day out. And I think with sustainability is just newer. There hasn't been that regulatory risk in, in a big way. But I think what you'll get coming out of this is that there'll be better alignment within the business around how do they substantiate.
Saif Hameed [00:25:30]:
One is kind of what is the claim that you're putting out there? The second is what information can you give to a consumer of the product to make the consumer want to buy the product? And that should not be technical information. That should be narrative story, something that appeals, something that ropes in the customer into the journey emotionally, that you're trying to create the identity journey. And then below that, there needs to be defensibility of what you're putting out there where you can actually back it up in an auditable way effectively and say, here's exactly where the claim comes from, here's what backs it up. And that requires a certain level of alignment between marketing and comms, legal, sustainability, data and analytics, regulatory affairs. There's a whole chain that needs to work very well in sync. I actually think that in a couple of years, Unilever will be on top of this and I think these shocks again will help them create that alignment, which will ultimately be a good thing. Moving on to Starbucks, I think Starbucks has a genuinely difficult challenge, which is that Starbucks is so big in their industry that it's not like they're a niche buyer of coffee and tea, they are the world's largest buyer. For them to manage transition in their supply chain and sourcing, they need to transition the whole market, because they can either try and transition token suppliers, token parts of the value chain, and then they're playing around the edge of the problem.
Saif Hameed [00:26:57]:
But at the scale at which they are, they need to actually shift the whole thing. When you speak with Mars, for example, Mars says that if you look at the cocoa and chocolate value chain, Mars needs to not only account for, let's say, the two or 3% that they're buying from a supplier, they need to account for the 100% that the supplier is selling. What I mean by that is that they can't just transition the two or 3% and say, okay, this bit is regenerative, this bit is sustainable. And I don't care about the other stuff that my supplier is selling to someone else. I just care about the two or 3% that I'm buying. And the reason is that Mars needs to make sure that they have a pool of supply that they can dip into and they're not constraining the available supply that they can buy from, because then they're creating a choke point in their own supply chain and procurement, and they're effectively beholden or dependent to that two or 3%. They might have to pay higher rates. If there's a supply chain disruption, then they're in trouble.
Saif Hameed [00:27:52]:
So they need to account for the whole thing. And with Starbucks, it's even worse. It's like not just your supplier, you need to think about the whole end to end value chain, and you need to think about the countries producing this stuff. And actually you need to sort of think about labor rates and wages in those countries, and what policies are in those countries, and what incentives are given in those countries to keep people in the farming industry. And I realize that I'm maybe sounding like a sort of, maybe too sympathetic to big corporate interests, but honestly, with companies where they are the entire value chain, there is a big difficulty. And it's just very hard navigating that shift.
Isobel Wild [00:28:32]:
Yeah, and actually I was speaking to Pedro from OFI, and actually, I don't want to steal his thunder because he is coming the podcast in a few weeks time. But he was saying, and OFI for everybody, they're a huge ingredient supplier and they supply Coco, for instance, to oatly. But he was saying that it's, as the supplier, it's really tough when a big brand comes in and only buys up x amount of your supply, because then they have got the other 80% or other 60% whatever to then sell to another customer, but because they've maybe invested into regenerative agricultural green leaf coffee. But all of these environmental incentives that they have tried to approach the brand with to get to 20% of the supply chain. But the issue is that, okay, Starbucks might be paying a premium for that 20%, but then they've got another 80% to shift to another customer who perhaps wouldn't actually pay for that premium. So the whole circle is actually really complicated, not just for the brand, but for the supplier as well.
Saif Hameed [00:29:36]:
Yeah, I mean, I guess there's a few interesting things here, right? Like, one is that in this case, actually Starbucks becomes quite different. Because if Starbucks is paying 20% extra, then for a lot of the stuff that Starbucks is buying, they're sort of moving the market and they're big enough where it's almost the reverse problem that everyone else now has to raise the prices in my small farming business, not to compare my farming business to Starbucks, but, you know, we were a mover and shaker in the village that we employed from the village of a couple of hundred people. And in that village, we wanted to pay men and women the same and create wage parity. And the fact that we were doing that lifted the average wage in the community, because all the men actually then wanted to be paid more than the women. So the fact that we'd raised the women's wage just made the men go to their other employers and try to. To lift it even more. And it ended up happening because we were large enough that we were moving the ecosystem. People could just come and work for us.
Saif Hameed [00:30:37]:
And therefore, that alternative shifted the market. I think that's a little how it could be with Starbucks, but with all the other buyers, it's that problem. And actually, if you're a producer or a supplier, it's not super helpful always to cater to the one outlier who is super mission driven and happy to pay a premium. I think the exception is where you use that as a showcase piece or use it as a case study or credential. Every now and then we talk about Meadow Foods, which is one of our customers in the dairy space. And what Meadow finds as a dairy supplier is that some of their customers are super mission driven. So, like when they work with a Unilever or a Mondelez, they have a great collaboration on sustainability and they're able to really lean forward. They find that a lot of their other customers aren't the same.
Saif Hameed [00:31:25]:
But the fact that they do this with Unilever and Mondelez gives them a good case study and credential to go to other customers with and say, look, you could also do this this way, and we can help you because we have the know how, we have the capabilities, and we're doing this elsewhere. And I think that can actually be a very rewarding position, which is why, if you look at OFI, I think in many ways OFI punches above its weight because they're a reasonably large company, but they're not the size of some of their larger peers, like a Cargill or Louis Dreyfus. I think they might be peers, customers as well, but because OFI has really owned a lot of the sustainability topic in their space, they're able to actually appear as a thought partner to many of their customers rather than just as a supplier. And so even if it's just a small slice that are walking the talk with them, I think that they have the longer term capability to move the market and be in sync with the market as it moves, if that makes sense.
Isobel Wild [00:32:20]:
Yeah, I love that. And also, I think with all of these examples that you've just drawn on, you've done a great job at making what could have potentially been quite a negative thing into very positive.
Saif Hameed [00:32:31]:
So always be selling. Always be selling, Izzy.
Isobel Wild [00:32:35]:
Always be selling.
Saif Hameed [00:32:36]:
Right.
Isobel Wild [00:32:37]:
Let's have a quick break before we go into the topic deep dive. Okay, welcome back. So we are going to do a topic deep dive on effective communications around sustainability data. I see this playing out in two ways. The first way is internally. So how do you actually engage colleagues supply chain to enable data collection and to improve your sustainability data, and then externally. So what we've been speaking about on this podcast with the market highlights how do you actually demonstrate your progress and sustainability in a way which doesn't put you at a lot of risk? I think the main pain points, if I just draw on two and then maybe steph, you can chime in, is that firstly, there's a bit of limited buy in with gathering sustainability data. I think we've seen actually buy an increasingly over the last few months, but also last year.
Isobel Wild [00:33:41]:
But it's clear that to get sustainability data, like accurately and at the frequency that you want, you need to have your internal stakeholders on board. And traditionally, it's best if the person or the business owner that's closest to the problem actually requests that data. But as a sustainability professional, I mean, we've been speaking to lots of people who say one of the main challenges or my main job roles and responsibilities is actually being able to talk across every different business function. So talk to operations, talk to finance, talk to legal, all in a way that resonates and actually translates into their kind of realm. So I think this is like a really big challenge. And then the second challenge is all these green claims. So, like, how do you know when to whisper? How do you know when to shout? Like, what? What about your sustainability narrative is one that you should be pushing out externally, which are the ones which you should perhaps be more cautious about and wait on and see until maybe you have the, like, confidence in your data accuracy that actually you can verify and evidence these claims.
Saif Hameed [00:34:54]:
Yeah. Fun topics. Let's start with the first one, which is how do you create some alignment internally? And I'm going to give a sort of a left field example that's not from sustainability, just to make the point. So for a brief moment in time, a small period of about 810 years, I was a consultant at McKinsey and I focused on sustainability and energy. And I had a side hustle for a little while in advanced analytics, which is basically where you're trying to come up with use cases for data science in a business, and you want to say, this is what we're going to do with data science. And let's kind of, let's, let's come up with the model and then let's scale it up and put it into, into operation at the business. So think about, for instance, optimizing a call center or optimizing pricing, these sorts of things. And there was actually a really interesting playbook for how you do this, which is you first want to identify the business problem, which is, why do we care? What do we want to do? Why are we doing this? Why is this important? Let's really crystallize, what are the pieces that's important? This has nothing to do with the data.
Saif Hameed [00:35:59]:
This is just about business value, business problem. The next thing that you do is you say, okay, look, what are the pieces of this that we could actually solve with a better model or better analytics? And then you kind of go the step behind that, which is you say, okay, what is the data that we need to feed into this model with the better analytics to deliver the business value that we're talking about? Then you say, we're going to put this whole chain in motion, and actually we're not going to get accuracy out of that. And we understand that if we get 60% accuracy, we're super happy. And then if we take it up from there, fantastic. But we're not looking for high accuracy to start with. We're just looking for something that works, and ideally something that one in two times gives us the right answer or better answer and then can get better. I'm simplifying, and our data science team will probably crucify me after this. But to be honest, we put this into practice ourselves as well in our own use cases.
Saif Hameed [00:36:55]:
In the sustainability data world, I think it should be the same, which is rather than just leaping into, oh, we need a carbon baseline, it has to be as accurate as possible, it has to be as holistic as possible, and it has to never change. I think it's much better to say, look, put aside for a moment what we need for regulatory reasons. What is the business problem that we can solve with better environmental data? What environmental data is most important for that, actually? So let's say the business problem is we're a logistics company, and we want to provide our customers with really accurate, really granular information around what routes they've used and what modes they've used, and what fuels they've used, and how they can shift to more sustainable alternatives. Because by doing that, we can build a better equation with them and have a better commercial relationship. Then you say, okay, for that, what do I need to be able, what analysis do I need to be able to run? Do I need to have all the individual routes? And I need to be able to say which route was more emissions friendly? And then what data do I need to make that work? So I need to have what trips were run, what parcel weights were used across those trips, what was the timestamp? Here are all the things that would be great. Out of all these things, which ones do I have? Which ones do I not have? Okay, great. Now let me actually run something through this, get an output, and then maybe it's half accurate, but I can then figure out which bits do I refine and make better. In some ways, I will appear to be overcomplicating this because there will be some of our listeners that think, well, I could just create a spreadsheet and use some assumptions and create a carbon baseline.
Saif Hameed [00:38:27]:
But I think that what you get out of that is something that is pretty useless for anything in the actual business. Whereas if you start with the business problem, you then work backwards, you then create an infrastructure that you can actually refine and improve to deliver better business value. And I would almost take that lens even at an activity level, when you think about your carbon emissions, for instance, and I think the same will apply for water and nature and biodiversity progressively. So that's a little how I would create alignment, which is you create alignment around the purpose. You then create alignment around the steps. You also create alignment on where this is not going to be working. It's not going to be super accurate. And you create alignment on how we're going to improve this and when and where.
Saif Hameed [00:39:10]:
And you keep everyone bought in on the journey and the updates and the status, which means that actually everyone, then when you get to 60% accuracy in the first run, everyone's like, wow, that's amazing. We were expecting this to spit out total rubbish, but it's actually accurate more than one in two times. Whereas otherwise you would have said, well, it's only 60% accurate. My financial data is 99% accurate. This looks horrible and useless, but actually you get celebration at inaccuracy, relatively, and you get celebration at every incremental piece of accuracy thereafter. So that's a little how I think about the internal side. Let me pause there, Izzy, before we move on to the externals.
Isobel Wild [00:39:48]:
Well, I was literally about to ask, would you also go down that route for external purposes or is it different?
Saif Hameed [00:39:56]:
Well, yes and no. Actually, to be honest, I actually think that there is a very interesting counter play here, which is for companies to be more honest about the stuff that they're getting wrong. And let me give you an example that actually sticks with me from a couple of years ago, which is asyn Tate, which is the sunglasses brand, this trendy european brand that I'm a customer of. What I love is at some .1 of the co founders of Ace and Tate put up a post on LinkedIn, or an actual article, and he reposted it on LinkedIn. And he just talked about, he basically said, look, we've effed up, and here are all the ways in which we've effed up.
Isobel Wild [00:40:37]:
I was about to interject and say, seth, please don't swear on the podcast. So I'm glad you stepped up.
Saif Hameed [00:40:42]:
I didn't. I held back, Izzy. I held back. And he kind of just listed all the stuff that they got wrong, and that has stuck with me two years later. I think that's the best kind of marketing, where you think about the business as humble, introspective, you think about them as having a high moral standard, and it sticks with you. Right. It stays with you. And I felt better about being a customer of theirs after that.
Saif Hameed [00:41:08]:
And so I think there is, I don't think that will work for everyone, but I think that is a strategy. I'm not saying that's my answer to your question, Izzy, but that is one strategy.
Isobel Wild [00:41:17]:
Well, I think Greg Jackson also drew on this as actually a way of employee value. And actually, because if you are honest and you're transparent about what's going well, but actually equally, the big areas that's not going well, that can actually create a lot of trust and also commitment and loyalty from not just customers, but loyalty. And I think, Saif, you actually spoke about building these issues and eff ups into folklore and stories, and I think you do that very well at altruistic as well. So everyone remembers that and they become almost part of the culture.
Saif Hameed [00:41:54]:
Yeah, I think, I don't talk too much about altruistic, but I'd love to on this occasion. But let me quote, make another quote, which is from v for vendetta this time, which is ideas are bulletproof. And I think that actually, if you look at what Greg Jackson does very well, Greg is never, Greg is usually not quoting specific numbers to do with his business. He's usually not saying, we did x, and this is why we're amazing. And here's the number to back it up. I doubt if Greg knows what his carbon footprint is, frankly. And I say that despite us working with octopus on their carbon footprint. But I think what Greg does very well is Greg talks about the mission.
Saif Hameed [00:42:34]:
Greg says the mission is clean green energy. The mission is that we need to electrify the world, and we need to electrify the world with green power, and that mission becomes the green agenda for them. That mission is the sustainability credential. And it's very hard to sue someone for being mission driven in that way. It's easy to sue someone for getting the numbers wrong. It's very hard to sue them for the idea. And at altruistic, one of the things that I've thought about, and I think about this internally, but I'm also thinking about this externally, is how do you rely on the power of rituals and sort of important pivot point moments to create a sense of culture and values? And so we had a big, big moment recently, as you're aware, of, where we had a data challenge, a data issue, and what could have been something that was an isolated instance that we said, look, this is related to one customer, and it's worked out fine, actually. And all the chips have settled in the right way and let's sort of move past it and forget about it.
Saif Hameed [00:43:42]:
That's actually an opportunity to create an experience that everyone remembers and that means something to people. And for us, it was to say, look, actually, the quality of data that we're generating is not only important for us, but it's important for the industries that we work with. And actually, if we're not holding the wall on that, then no one is holding the wall that's on us. And I think that those sorts of messages, I think, are something that actually businesses can definitely shout about. One of my favorite messages from Starbucks, which I think we quoted in a previous podcast, is that the CEO says we have to solve for coffee. And if no one else solves for coffee, if we don't solve for coffee, no one else will. And that's something that you don't want to call anyone out on. You like, the fact that a business owns its part of the problem and it's not about the numbers or the data.
Saif Hameed [00:44:39]:
And I think some businesses do that very well.
Isobel Wild [00:44:41]:
So narratives, not numbers, I think is the resounding kind of point from that this is so important. Well, it's hinged on, and we slightly touched on this previously, but on a good relationship with the marketing team and interfacing with the marketing team in a way which these messages and this mission is conveyed in all of your externally facing content, brand personality. Have you seen good examples of where this has worked really well and any kind of core techniques that can be drawn from it?
Saif Hameed [00:45:17]:
Yeah, actually I was at this, as you know, Izzy, I was at this sustainability supper club yesterday and we were actually saying, what are the brands hosted by Altruistic? Hosted by Altruistic. And we were just asking at my corner of the table, what are the brands that you think about as doing this really well? And I think it's the usual suspects. In our space, you think about companies like Patagonia, you think about lush cosmetics, you think about oatly, actually. And in the social space, you think about maybe Tony's chocolate only as well. And I think what these brands do particularly well is that they identify, they create an identity around sustainability. And it's not about the numbers, it's about a very simple mission and they're very consistent. If you think about lush, it's the fact that it's not just about the numbers and the data, but if you think about packaging and the emphasis on packaging free products and the way that that's sort of right there in the store and it's all there and the soap bars are there for you to just pick up. Like they create an identity around the mission.
Saif Hameed [00:46:28]:
And I think that's quite valuable. If you think about Tony's chocolate only, for instance, it's the wages in the value chain and the fact that even the chocolate bar shapes represent the asymmetry and power across the value chain, income across the value chain. If you look at oatly, its kind of about how its basically a battle against dairy. I know thats not how theyll put it. Or maybe it is how theyll put it, but its like, what is that billboard with one half, which is this is us, and the other half this we bought for the dairy industry. Its very simple mission clarity associated with the brand, associated with the identity of the brand. Patagonia, I think, is in some ways different because Patagonia is. It's sustainability, not around a specific issue.
Saif Hameed [00:47:11]:
It's like holistic and it's everything to do with the business. And that's harder. And it's harder because they're also bigger than the ones that we've mentioned, I think. But what I love about how Patagonia enforces that is they're always very transparent about what they do right and what they do wrong. And they sort of famously don't say anything in closed circles that they sort of wouldn't say in public as well. And these are the things that you remember. And it's not about a particular ad campaign, it's about the brand identity.
Isobel Wild [00:47:39]:
So those are all really great examples, but they're all examples that were created with a mission or created in line with like a kind of punchy purpose. What about the companies who are having to come to this later in their life?
Saif Hameed [00:48:00]:
You know, I'm going to give a really controversial example, which is Shell.
Isobel Wild [00:48:05]:
Yeah, our old friend.
Saif Hameed [00:48:07]:
Our old friend. And the reason I say this is because Shell's legacy is that they are an oil and gas company. And let's be honest, they have a really horrible legacy. They have done some really terrible stuff. Not going to sugarcoat it, not going to lie. When I was at high school, I was reading about the Niger Delta and executions that were allegedly like state. Kind of like the state being backed and pushed by shell. Whether or not this is true, I just mean that like the brand out there, the story out there in sustainability circles is not a good one.
Saif Hameed [00:48:42]:
Right. They're part of a small group of sort of public enemy number one category, companies for the sustainability crew, myself included. But at the same time, if you look at the transition that Shell has been undergoing since around the, let's say, 2013 1415 era onwards, it is a big transition that they're trying to achieve. And there are a lot of reasons why they shouldn't do it. And if you kind of, you know, again, I don't think it's super important personally that they've stepped back from their targets because I think the targets were over ambitious to begin with. But what I find interesting is that they're committed to some form of real lasting change and they've been committed to that for, for a while. And if you're ever inside Shell, inside the building, you see the messaging everywhere. You see the focus everywhere.
Saif Hameed [00:49:32]:
You see the teams working on this everywhere. You see the deep analysis like they were putting out their sky scenario, which was the transition pathway in a super meticulous, detailed way in 2016, 2017, I think, is when it came out and almost no other company in any industry was doing that. They were sitting there in the oil and gas industry and doing that. And they were investing real dollars in trying to shift their own business towards renewable energy relative to their cohort, relative to their peers. They were so far an outlier that at some point over the last few years there was a conversation happening, which is, is shell destroying enough shareholder value in dollar terms that actually they're an interesting acquisition target for one of their less sustainable peers to buy them and actually just roll back all the sustainability stuff and increase the share price and the shareholder value. And its almost like a kamikaze moment, actually, where you go so far that youre actually just how capitalism works. Youre basically that sort of running across the lines with a bomb strapped to your chest, which is a horrible example that no pakistani man in their mid thirties should ever quote. But I think that's a really interesting moment.
Saif Hameed [00:50:53]:
And I think you see some of these transitions in the energy industry because any energy company that wants to survive into 2050 has one of two strategies. Basically. One strategy is I want to be the last person drilling the last drop of oil out of the ground. And the other strategy is I want to be a renewable energy business. There are only really those two plays and then theres maybe some stuff in the middle where youre not sure, but those are the two plays. And anyone whos in the latter camp trying to become a renewable energy business is somewhere on this journey of how do I completely pivot and change the messaging and change what I talk about, change how my business thinks and change the types of people who are rewarded in my company. And thats hard, honestly, thats just a really hard transition.
Isobel Wild [00:51:41]:
Yeah. I think to this point of, from what I'm kind of gauging is that actually it doesn't really matter about how you interface with marketing. It's how you embed it throughout the company, so throughout all the business functions, so everybody's aligned, so even, you know, operations, who are finding the right offices or procurement, who are finding the right products. It shouldn't be something that you are faking and trying to. Well, not faking, but you are embellishing and trying to tie a ribbon around. It should just be, like, inherently telling the story that, you know, not something new.
Saif Hameed [00:52:14]:
Yeah, I mean, let's give another great example, right? If you look at the national grid in the UK, for example, which is the transmission operators, they operate all the cables and lines that get power from the. From the station where it's produced, to the city where it is then consumed, for instance, like at national grid and companies like them, there are decades of mission embedded in the company, where the mission is, we have to keep the lights on. We are the ones keeping the lights on. If the lights go off in England or in the UK, it's on us. And that's our mission. Our mission is reliability. That's the one word that is the watch word. If you think Game of Thrones, these are the watchers on the wall.
Saif Hameed [00:52:56]:
And the mission is keep the lights on, be reliable. Actually, when you look at the renewable energy transition, whether you're talking about power generation through solar and wind, or whether you're talking about transport and electric vehicles, you're inherently creating volatility. You're moving from a world where you have a lot of gas stations and power stations that are always on running very predictably based on stuff being burned and then always being consumed very reliably to a world where you have all these sort of peaks and troughs. Because power is being generated when it's sunny or windy, it then has to be stored. It's being used by a car that is also actually a battery, and there's peaks when all the vehicles are using it and troughs where the vehicles aren't. There's a lot of volatility. And that transition for transmission systems is challenging because it means suddenly reliability is still important. But actually, there's a whole other thing, which is you have to be able to actually embrace volatility and in some ways, encourage it and sponsor it and back it.
Saif Hameed [00:53:55]:
And those two things can seem to many individuals in the business, many of the engineers on the front lines, so to speak, can seem contradictory, and the business has to reconcile with it. So the internal culture alignment is very difficult in many businesses that have done their job well, their core job well over decades, because they've evolved synapses in a certain way. Yeah.
Isobel Wild [00:54:18]:
And I guess that's true of all companies who are trying to push the sustainability agenda, especially, I don't know, looking at agri value chains, trying to innovate farming practices, it is high risk. And trying to get the internal buy in behind that. When you've got a pilot project and you're like, right, well, I actually need to put quite a bit of money behind this. Not 100% sure it's going to work, but we need to try it anyway to actually see if we can innovate past this jump over the hurdle. But I think that internal driving the internal business case is a topic for another day because we are running well over time. Saif, any final thoughts before we wrap the show up?
Saif Hameed [00:54:56]:
No. I'm intrigued to see how the dust settles on, let's say, the target backslide or whatever we're calling it. Maybe I'm too optimistic. It may not have sounded that actually when I said that the pendulum is going to take five or six years to swing back, but, like, I actually think that businesses are going to emerge from this much more focused, much more driven to do what they've committed to do after the retrenchment, and that we're going to shift a very operational mode of getting things done because you actually know that what you're doing now is a little more realistic than what you were afraid. It would be.
Isobel Wild [00:55:31]:
A great, positive note to end on. Thank you so much, Steph. And thank you, everyone, for listening.
Saif Hameed [00:55:36]:
Thanks, Izzy. Thanks, everyone. Goodbye.