Diane Brady sits down with Paul Polman to discuss global ESG challenges, from lobbying pressures to Paris Agreement resistance from Trump
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00:00One of the unique experiences you've had is being a business leader, one of the few business
00:04leaders working directly with heads of state, policy makers.
00:08I just want to start, before you give us your reading of this week, did that shape your
00:15perspective in a different way?
00:17I mean, obviously you've cared about these issues at Unilever.
00:20How did this experience through the UN Global Compact and being part of the sustainability
00:25goals?
00:26Well, so I had the fortune to chair the International Chamber of Commerce.
00:30I've been a long time chair of the World Business Council for Sustainable Development, the B
00:37team.
00:38I chaired for a long time, which Richard started, Richard Branson, and the UN Global Compact
00:43I chaired too long.
00:44I was reminded that I had some Russian similarities with someone who doesn't want to move out
00:50of his job either.
00:51You didn't want to leave, or they didn't want you to leave?
00:54No, I wanted to leave, but I was there quite a long time.
00:58But anyway, there's a term limit now, and we have found a very good replacement with
01:04Jasper Rodin from IKEA, who is a wonderful leader.
01:08But anyway, I always felt that two things, that we needed to get all these organizations
01:16on the same hem sheet to really move the world forward in these broader systems changes,
01:21and I put myself in those positions.
01:23It was a little bit of that, people said, why do you do all those things, but it was
01:26basically the same thing, is to get that agenda aligned.
01:31And then the second thing was I was very fortunate to be asked by Secretary General Ban Ki-moon
01:36at that time to be part of a panel, he had quite a lot of courage, although he was very
01:42modest as a South Korean, but quite a lot of courage to say we need the business community
01:47to be part of the development of the Sustainable Development Goals, which were the sequel to
01:52the Millennial Development Goals.
01:53So we were all in Rio plus 20 in 2012, and that was held in Brazil, so I was heavily
02:02involved already at that time from the World Business Council, which actually was created
02:05at the first Rio, interestingly enough, by a guy called Smith Heine from Holcim at that
02:11time, very foresighted.
02:12There were only about six or seven business people at the original Rio, and look at it
02:18now in Unga Week, and the things we've come a long way, thank God.
02:23But anyway, Ban Ki-moon said we want you to be part of this high-level panel of what they
02:28call 27 eminent people, most of them were heads of state or former heads of state.
02:34So chaired by David Cameron from the UK, a developed country, Yudo Yono, SBY, who was
02:41then President of Indonesia, a mid-developed country, and then Ellen Surley from Liberia,
02:47a stressed country, it would be an understatement.
02:51I go into this room in New York for our first meeting, and they all look at me, and you
02:57feel obviously intimidated, but it was like, here comes the problem walking into the room.
03:04I was like, okay, what did I sign up for?
03:06But two and a half years of working intensively, drinking from a firehose, it was one of my
03:11best experiences to become a different person, hopefully a better person, from what we learned,
03:17because we listened to farmers, to people with disabilities, to people from all parts
03:20of the world, to the youth, and everybody wanted to have this world function for everybody
03:27and had different ideas on how to do this.
03:29And then to be able, finally, in an environment like that, to synthesize it down, which sounds
03:35complex, to the 17 goals, 169 targets, which is basically, you could see it as a scorecard
03:41of where we are, but also where the biggest opportunities are.
03:44So I immediately launched, after that, the Business and Sustainable Development Commission,
03:48which I asked Mark Mullenbraun to chair, he was an undersecretary at the UN, and we synthesized
03:54it down for business to make it simpler, and that was the first report where we really
03:58talked about, you know, in the neck, between now and, at that time, it was 20.
04:05Would they look at you now and say, here comes the solution to the room?
04:08Well, we would certainly want to, I think people would say, you know, we are at the
04:13point where the cost of not acting is higher than the cost of acting, that this is a big
04:17economic opportunity, that we'd definitely like to keep the narrative as hopeful that
04:22it is possible.
04:23We don't have to solve all the problems tomorrow, you know, you don't eat an elephant in one
04:27bite, but you can solve 80% of it, and we're trying to say to people, have the courage
04:31to do that.
04:33It's a crisis of leadership that we're trying to address here more than anything else, and
04:36I think that's in our own.
04:38But coming, finalizing your question, because we were working with all these heads of state
04:42and in the intersection, that's where I like it the most, because we need the systems changed,
04:47and we need to do that together.
04:49Optimizing in a system that's not designed anymore to work in where we are doesn't do
04:54anything.
04:55You can only make yourself run so fast in a little spinning wheel.
04:59We really need to work on the more profound changes of changing the system.
05:03I don't need to tell you that with Patagonia here or with Mars here, with the economics
05:07of mutuality with Stephen and all the others.
05:09And that really requires governments, it requires civil society, it requires business,
05:14and I'm just very comfortable to be on that intersection.
05:18Well, and tell us, you know, obviously this is a room of people who care deeply about
05:22these issues or they would not be here.
05:24This is Climate Week, people have chosen, they do care.
05:27What are you hearing?
05:28I mean, you get into some of the rooms, we don't get to go.
05:32Even how does it feel different from last year, any sense of the zeitgeist shifting
05:35in some way?
05:36Yeah, it's shifting all the time because the world is shifting so fast and sometimes it's
05:40confusing to figure out what is happening.
05:42And every time we think it can get worse, we figure out something to surprise us.
05:47So you know, on the one hand, that puts us down to the here and now and makes us very
05:52reactive to symptoms.
05:54And on the other hand, because so many things are happening and I don't need to rehash them
05:58here, I think people are realizing that so many things are broken and actually they're
06:02all related, that it is better, in my opinion, to then really have the serious discussions
06:07on what do we need to change.
06:09You know, when we had the financial crisis or when we had the COVID, it was putting a
06:13bandage on something and it was a single-minded thing, but it's more complex than that.
06:18Now people are starting to realize that.
06:20In fact, COVID was a wake-up call.
06:21We saw what inequality did, we saw what racial tension did, we saw what destruction of biodiversity
06:28did, and others saw a disease with terrible consequences and all that stuff.
06:32So it gave us a better understanding that we're part of a system that we need to protect
06:38and that we certainly can put ourselves at the top of the pyramid and think we're superior
06:43to that system.
06:44In fact, we're an integrated part of that system.
06:47So it has given us a wake-up call.
06:49Coming to this week, it's too early to claim something, but don't underestimate what the
06:54Secretary General achieved with the Pact for the Future.
06:59For the first time, and to my comments, we grabbed the bull by the horn and the UN needs
07:04to be reformed.
07:05We need to come to grips with AI, and I think you can't make the gamekeeper and the hunter
07:11the same person.
07:12It's a little bit happening in that industry, so the UN has a role to play.
07:17The use, how to build the international institutions again, it is worth reading the document because
07:27it's not only about aspiration, but it's something actually that's within reach, but would be
07:32a fundamental change in how we operate on a world order, including the Security Council
07:38and other things.
07:39Now, they signed it, there was a little bit of pressure until the last minute.
07:42It was like signing in 2015 in September the SDGs.
07:47I obviously was there having worked on it, and that was an emotional moment.
07:51The Paris Agreement was an emotional moment, and we see what happens to the world and how
07:55an agenda gets hijacked and you fall behind.
07:58But the fact that we have these agreements, the fact that we have a UN despite its challenges
08:05is a very important thing, at least for where the world is right now.
08:09And then what you see here is a COP, sorry, a COP, I'm saying an UNCA week where climate
08:15change still is very high on the agenda, but where people have also understood that that
08:19needs to be a nature-based agenda together.
08:21Very few companies that understand nature-based solutions and how to integrate that.
08:25But it's 30% of the problem, probably even more so.
08:28Food companies are close to becoming bigger carbon emitters than many of the fossil companies,
08:33if you really want to have an honest discussion.
08:37You also see that it is a big part of the solution.
08:40So that agenda is becoming more integrated.
08:42Brazil understands that.
08:43We just had discussions with the people that are going to run that agenda.
08:48We're heavily involved in that.
08:49And then the US, we just have to see.
08:51That's a big, obviously unknown this week as well, but depending on what the outcome
08:56is.
08:57Political outcome?
08:58So when I did the Sustainable Development Goals, the US was represented by John Podesta.
09:04Because it was a little bit formal, we always had to sit on alphabetic names.
09:07So Podesta and Polman were sitting next to each other all the time.
09:10So John, I just came from John, he's now a big buddy and a good friend and I have a tremendous
09:15respect for him.
09:18You saw the effects of the IRA, the Inflation Reduction Act, the CHIP Act, the Infrastructure
09:22Act.
09:23I mean, I'm not here for any political reasons, I'm not voting in your country, but there's
09:27a fundamental shift that has happened in this country that is actually for the positive.
09:32The economics work, the technology helps there, signals from the marketplace.
09:37But also within a very difficult environment, you've also given the right incentives as
09:43much as you could.
09:45And that is going to accelerate depending on who gets elected or is going to be slowed
09:49down.
09:50And that's a huge difference.
09:51Do you think it'll be a big difference?
09:52Because a lot of people I talk to believe that because a lot of the benefits are in
09:55red states, for example, that this will continue apace.
09:59Well, Texas is now the biggest, not only on wind, but also on solar.
10:04It just passed.
10:05And it was interesting in Davos when the IRA came out, I talked to quite a lot of senators
10:11from the red states that were heavily lobbying the European industries come to my state.
10:15But then it would go on television for their home country at night and start talking WOKI
10:19and ESG and all the other things.
10:21So yeah, that's politics nowadays.
10:23But I do believe that the IRA is difficult to unwind.
10:29And indeed, the fact that the vote goes into red states is a pleasant, not coincidence,
10:34but it's a pleasant effect.
10:37But like I went to the White House to convince Trump to stay in the Paris agreements and
10:43terribly failed.
10:44If the US doesn't show leadership, the world is paying a significantly higher price, including
10:51the US.
10:52And so the difference between presidents here, and you make up your choice, this is not why
10:56my comment is made, is the equivalent of the emissions of Europe in a year.
11:01So I just want to be very clear, there are huge differences.
11:04So we got, this is like speed dating, I got the one minute.
11:07So in one minute, whether it's a haiku or a poem or advice, but I think you talk about
11:12a crisis of leadership, and I think it's very important to give your sense of advice to
11:17leaders in this room.
11:19Obviously, to talk about ES and G feels a bit perilous right now.
11:24It does and it doesn't.
11:25I think it's in this country more probably so than in Europe, although some of that is
11:29always blowing over, and it always comes to the UK first where I happen to live.
11:33But here it's a little bit.
11:34In a 13th century farmhouse with all your kids, good for you.
11:36In a 15th century.
11:3715th.
11:38It's not that old.
11:39I would never buy it that old.
11:42Although there are some Roman ruins on the property, but you're not allowed to talk about
11:47that because then the government comes in and we don't want that.
11:50The right of way.
11:51Exactly.
11:52We don't know what's there.
11:53But they had a hard time putting the heat pumps in, that's all I can tell you.
11:57Enough said.
11:58Enough said.
11:59So you're marching orders to this group.
12:01So let's just look at the reality for a second.
12:04There were 161 proposals in the U.S. this year alone.
12:07Only six got passed.
12:09Many more that got passed last year, 24 in total, got unwound.
12:13The state of Texas is being sued now because their pension plans have a 600 million higher
12:18cost now because of this than what they otherwise would have had.
12:21This country's moving forward very fast in many of the conversions in the industry.
12:26In fact, if you look at the numbers itself, more CEOs are now compensated on DE and I
12:31this year than they were the year before.
12:33The ESG funds are performing better and actually are increasing.
12:36You take Climate Action 100 where a lot of companies went out, that organization is growing
12:42and has more members than it has ever had.
12:44True, some U.S. members went out, but a lot of Europeans got in.
12:47So the press doesn't like to write about that because it doesn't sell.
12:51We do.
12:52You do.
12:53No, no, you do.
12:54But you're not press.
12:55You're far more intelligent than that I would call your press.
12:58So that's why I'm sitting here.
13:00But people get the wrong impression.
13:05And obviously heavily fueled by the fossil fuel industry and by money and politics where
13:12some people just become, you know, you just hire them to say whatever you want.
13:16So where's the damage?
13:17Because there is damage.
13:18I don't want to be naive about this.
13:20The damage is that the direction is set for the reasons we talked about, but we need acceleration
13:27of that direction.
13:28We're in second gear in the car, we need to go to fourth gear.
13:31We're not in reverse.
13:32So it's easier to do, to accelerate.
13:35But you see the ambitions of CEOs collapsing.
13:40We see a few making bold statements of ambition, which are needed.
13:46I need to tell my friends I'm going to run the marathon, first I have to tell them that
13:51before I actually go and run it.
13:53That is important.
13:54And the other thing where we're paying a price is in collective action.
13:57There is this notion of which the senators played very well on competitiveness and antitrust
14:03and all that stuff that they scared people with.
14:05And then you get the lawyers that are risk averse and you get into this cycle.
14:09So you definitely see in the U.S. less partnerships at a time that we need more cooperative leadership
14:14and when we need more ambition.
14:17And then you see a little bit coming in in legislation.
14:19I think the Biden administration and John would have been more courageous if they wouldn't
14:24have had to walk such a fine line of give and take.
14:27Because at the same time as we got the IRA, you also continue to invest in LNG facilities
14:33and drilling and on federal land and some other things that are frankly not needed.
14:39So that's the unfortunate part that we shouldn't deny, but it is there.
14:44So if you are a CEO, what do you do in this environment?
14:46First of all, be aware of the fast moving reality.
14:50The European Corporate Sustainable Reporting Directive is affecting all U.S. companies
14:54that are sitting here.
14:56And that's increasingly the standards that are moving forward.
14:59And I think these are major game changers that should be taken into account.
15:02It's the first time that actually you have to report on materiality or what they call
15:07double materiality or impacts as well.
15:10So that is changing significantly.
15:12And if you want to make your company just governance, you miss a great trick because
15:16this is an accelerator of innovation.
15:18Stop being courageous.
15:20So you need to be courageous.
15:21And then the second thing that is happening, which I think the CEOs need to be aware of
15:28is how do you better communicate that you build value?
15:31So communication, communication, communication is very important to your own people.
15:36So this is probably the biggest opportunity that is there.
15:40That is why countries, by the way, seven countries are totally converted on energy.
15:44People might not know that.
15:4547 countries in the world are ahead of the Paris Agreement.
15:49And there is no correlation that they do worse.
15:50In fact, these countries collectively do better than any sample of 47 countries.
15:54So there is enough evidence there.
15:57And companies, I mean, you know, Deloitte does a lot of studies and often they are common
16:00sense that the companies that are leaders in this field are higher valued.
16:06Also the funds that are ESG funds.
16:08Many in this room.
16:09Yeah, many are here.
16:10So but we are not willing to put that story out.
16:14And that's a little bit unfortunate.
16:15So make the value creation story very clear.
16:18And I think you can change the direction of the debate, which is important.
16:24And then my final point is move from what you might call, I call it towards positive
16:29advocacy.
16:31But it's really right now it's lobbying.
16:33Your trade associations, especially in this country, sing a different song than what the
16:37company CEOs are saying.
16:40Six percent of your CEOs go to Washington, but it's fighting for your own interest.
16:44The money that flows into politics doesn't go in the right direction.
16:47With Ben and Jerry's, I used to always Ben and Jerry to agitate the system, but we stamped
16:52all this money.
16:53Take your money out of politics.
16:54Take your money out of politics because it's a devastating thing.
16:57And the companies that are the ones that are going to be respected in the future, they
17:02move to what I call positive advocacy.
17:04Work with civil society, with your colleagues, with governments to put the right frameworks
17:08in place to be sure that we have a world that we can function in.
17:11Nobody is served by anything else.
17:13The only world we have.
17:14And thank you very much.
17:15I think you're a role model.
17:17And thank you for the service you've had as well with UN Global Compact and others.