Andrea Barrack, Senior Vice President, Sustainability and Impact, Royal Bank of Canada Amelia DeLuca, Chief Sustainability Officer, Delta Air Lines Gayle Schueller, Senior Vice President and Chief Sustainability Officer, 3M Moderator: Molly Wood, Founder and CEO, Molly Wood Media; Co-chair Fortune Impact Initiative
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TechTranscript
00:00Thanks for joining us. Welcome to my lovely panel. I am going to dive right in
00:05with the key question, the title of our session right now, and I'll just
00:11sort of go down the row here. Are you market movers on track, Andrea?
00:16Ish.
00:18Your honesty, as always, is appreciated in this room.
00:22I'm glad I didn't have to go first.
00:24Now you know what to say.
00:26Oh, that's it? That's all?
00:29Well, she did say it wasn't a closed session when we're on the stage.
00:34My legal team's not here to tell me if I can disclose this or not.
00:37I think, listen, you have to be an optimist to be in this space.
00:40I'm sure all of you are here today because you're optimists,
00:42so I'm always going to be optimistic unless I'm talking to my board,
00:45and then I'm going to have a little bit more of a realist viewpoint.
00:47But in general, I will say, yes, it's very hard.
00:49Are we going to hit our targets exactly spot on?
00:51Probably not, but we're going to make a heck of a lot of progress,
00:53and that, to me, is wonderful.
00:57It depends on who we are because I would say 3M,
01:01we've been ambitious with our goals.
01:03We really hold ourselves to a high standard
01:05in terms of developing the math, path, and plan.
01:07So 3M is on target, in fact,
01:10a little bit ahead of what we've set as our public goals.
01:13We, as a planet and a society, I think we have some things to work on,
01:18and we can only do it by being together,
01:20so it's great that everyone's here together to work on that.
01:23That's a good challenge.
01:25Obviously, so also great partnership.
01:28Yes, exactly.
01:30Exactly.
01:31Well, and the reason that we put together this panel,
01:33and it is interesting because the reason we put this panel together
01:36was to say we would love for these companies,
01:39these market movers to come here and say,
01:41you know, this is the progress that we're making.
01:43Here are the benchmarks that we're setting.
01:44Here are the standards we're creating for the industry.
01:47And also, I can safely say in this room,
01:50a lot of people dropped off of this panel as we were programming it,
01:54and so I think this question of where you are in your goals
01:58is stressful for a company.
02:01So Andrea, not to make you the avatar for the entire financial sector.
02:05You wanted a longer answer than I did.
02:07But no, no.
02:08You know, we're just going to keep going here.
02:10Ish is a really good answer.
02:12I also recently learned the phrase no is a complete sentence,
02:15so I think that's, you know, also an acceptable answer to many questions.
02:21The financial sector has come under a lot of pressure.
02:23I was just reading a Financial Times story today
02:25about how none of the major banks and financial institutions
02:28are attending COP29 in Baku.
02:33How are you thinking about balancing sustainability goals
02:36with the reality of achieving them
02:38and sort of the evolving role of banks in these goals?
02:42Yeah, and I love that you led with the evolving role of banks
02:45because I think that's really something that, you know,
02:47it was like, I don't know, sort of 2016, 2017,
02:51we were all just like, let's do the moonshot,
02:53and we're going to be net zero by 2050,
02:55and we're just going to rely on human ingenuity to get there
02:59because we don't really know the path yet,
03:01but we believe in people and we believe in innovation,
03:03and that's going to get us there.
03:06Fast forward to now, we're in this exceptionally volatile
03:09and dynamic external environment.
03:11And, you know, RBC has, you know, our core markets are the US,
03:15Canada, and the EU,
03:17and they have vastly different landscapes
03:20when it comes to ESG, DEI, standard setting.
03:25And so trying to sort of thread that needle
03:28has been extraordinarily difficult,
03:30and I think the one way that we've sort of approached that
03:32is to say we have to be so tightly aligned
03:36to the business goals and to the values of our organization.
03:38That is the way through.
03:40That's how we're going to get there.
03:42And then sort of dealing, I think, then back to the reality
03:45is sort of to say what are the societal issues
03:49that impact the success of our business today,
03:52but also in the future,
03:54and that we also feel like we could have a positive influence on?
03:57So those of you who follow CSRD,
03:59it's kind of that idea of double materiality
04:01and starting to bring that in.
04:03And then what are our ambitions?
04:05And then what are our contributions that we can make to get there?
04:08And we use the term contributions really deliberately
04:11because actually banks didn't cause the societal issues
04:14we're challenged with,
04:16with climate change or with inequities.
04:19And so we have a contribution to make,
04:21but it's not the whole thing.
04:23So how do we kind of look at that
04:25and then try to balance it needing to be ambitious, set the bar,
04:28but we have a legislative environment,
04:30a litigation environment
04:32that really punishes any sniff of greenwashing.
04:35And so we need to be careful there.
04:37And so it's trying to sort of say be realistic,
04:39but something that allows you to stretch at the same time
04:42because we want to spur action at the end of the day.
04:45A reminder that we are going to come to you with questions.
04:48I have a couple more for the panel,
04:50but start thinking of your questions.
04:52And you've been through a couple of sessions now.
04:54Raise your hand and a mic runner will come to you.
04:56But before that, Amelia,
04:58I want to ask you about the airline industry.
05:01Delta is, of course, more sensitive than most
05:03to this question of greenwashing
05:05for reasons you probably can't talk about on stage today.
05:08But it does raise this sort of the idea of evolution, right?
05:12Like the idea of the evolution of the backs on the ground
05:17when goals were set and how you work toward meeting them.
05:22Yeah, I think, and I think just to step back for a second,
05:25you know, aviation is a hard to decarbonize sector.
05:27And so while we're doing everything that we can today,
05:29if you flew in on Delta,
05:30some things that I'll point out that you maybe have seen
05:33are the sustainable packaging many of our products are in.
05:36Things that you did not see
05:37is how we're taking weight off the airplane
05:39through both our catering products
05:40as well as through the structural items,
05:42how potentially we landed you with a slightly different vector
05:44to reduce fuel usage,
05:45how we maybe changed the speed that we flew you at for 30 seconds,
05:49all of which saves millions of gallons of fuel every year.
05:52But we burn 4 billion gallons of fuel every year.
05:56And you can't take off with anything
05:58besides liquid-based carbon fuel today, essentially.
06:02You know, it can't be a battery electric.
06:03And so we've got a long ways to go.
06:04Sustainable aviation fuel is our North Star.
06:06It has been our North Star
06:07and will continue to be our North Star as an industry.
06:09I think where the evolution comes in
06:11is an understanding about the need to accelerate
06:13what we can do today
06:14and talk a lot more to our consumers
06:16to educate them, to let them know
06:17that we're not just waiting for this moonshot,
06:19but we are getting all the fuel out of our system
06:21that we can today in really ingenious ways
06:24while we scale sustainable aviation fuel.
06:25And sustainable aviation fuel
06:26has been a really interesting product to watch evolve.
06:29It competes with the same feedstocks
06:30that on-road vehicles use,
06:32whether that's in our liquid fuels today
06:34or in the future synthetic fuels.
06:36Either of those are competing feedstock resources.
06:38We're a completely new value chain.
06:40So if you think about what these fuels of the future
06:41are gonna look like,
06:42I never thought as an aviation leader,
06:44and this is the only career I've ever had,
06:46that I would be spending my days on a farm, for example,
06:49and that I would be lobbying in the Midwest
06:51more than I'm actually home in my home base in Atlanta.
06:53And so to me, I think the evolution
06:55is building these partnerships
06:57that you may not need today,
06:59but then in five to 10 years from now
07:00when that breakthrough starts to come
07:02or that technological advancement is finally here,
07:04that we have those relationships
07:06and those partnerships and that trust.
07:07And so to me, the evolution is that,
07:09and it's data-backed.
07:10And I think it's the fact that data is changing
07:12to say that a lot of money needs to go into this.
07:14Let's make sure that the money goes into the right places.
07:16And so part of that is through both our policy
07:18as well as how we spend our money,
07:20just being agile and also transparent
07:22about what we're doing with that money.
07:24And when we find a better solution
07:25than we've seen in the past,
07:26we will be transparent and tell you about that switch.
07:29And then Gail, 3M is such an interesting case
07:31because it is so broad.
07:34There are so many things in scope,
07:36which is one of the conversations that we have had.
07:38How do you even determine which parts of the business
07:41to tackle and talk about what a challenge that is?
07:43Yeah, we have on the order of 55,000 products,
07:49spanning Post-it notes and command strips
07:51and scouring sponges that you might be familiar with,
07:54but also adhesives that go into aircraft
07:56and solutions that go into your electronics devices
08:00and helping batteries be safer,
08:03helping fuel economy and vehicles be more efficient
08:07and helping workers work safely every day.
08:09I mean, we used to be known for Post-it notes,
08:12then it was N95 respirators.
08:14So it's really been an evolution.
08:16We have, like I mentioned, we're very science-based
08:20and we have this math, path and plan approach.
08:22We have systematically analyzed
08:24every one of our facilities around the world
08:26and we're just now at a point
08:28where we're looking at every product portfolio,
08:30which is a big effort.
08:32And we needed that, at least at the facility level,
08:37to look at that math, path and plan.
08:39And by going systematically through the approach,
08:42whether it's the manufacturing processes,
08:45the portfolios themselves,
08:47or how we source and how we deliver the products,
08:51that's allowed us to reduce our scope one and two emissions
08:54by more than 80% since 2002.
08:57And that includes more than 43% since 2019.
09:01And so we just, it's taken us maybe longer
09:05than we might've liked,
09:06but we just had SBTI validation
09:08for our near-term target relatively recently
09:11and we're committed to continuing down that path.
09:14It is a lot of hard work though,
09:16because it means that every different business
09:19needs to be engaged in the own way
09:21where they're most relevant.
09:22Right.
09:23Are there questions from the audience just yet?
09:26I see a hand, oh, right in front of me.
09:28Look, look at you.
09:30Yeah, this is Khwaja Sheikh.
09:32Fascinating panel.
09:34It is very important to integrate sustainability
09:38with the business strategy
09:39and there comes the balancing both short-term and long-term.
09:43And if you apply the VC mindset on the venture capitalists,
09:48they are very much high risk takers
09:51where they invest a lot for the long-term
09:54where they are literally creating new business models.
09:57So from the financial services industry standpoint
10:00or from the travel and transportation industry standpoint,
10:03what are your views on how do we make sure
10:06we apply the VC mindset
10:08to fundamentally create a new business models
10:11instead of just looking at the short-term
10:14only from the regulatory reporting needs
10:17trying to do minimum versus looking for the long-term?
10:21Any ideas you would like to offer?
10:23Interesting.
10:24Yeah.
10:25And do you want to apply a VC mindset?
10:27Well, yeah.
10:28So banks in North America are highly regulated entities,
10:33but I think you're absolutely right.
10:34If you look at what is the number one driver
10:36that banks have to try to make a positive impact in the world,
10:39it's the allocation of capital.
10:41And so we do think about how are we driving more green
10:45and even more sort of greenish brown
10:48to try to help the transition to accelerate.
10:51And people said sustainable finance schools
10:54and we've got a new one that we're putting out there.
10:57But the fact of the matter is
10:58is there's not that many things
11:00that meet our risk return profile
11:02that we can invest in that are green at this point in time.
11:05So it really does beg the question
11:07and I think it's not just RBC,
11:08I think it's all financial institutions to say
11:12would we consider modifying our business model a little bit,
11:16looking at that risk return profile?
11:18What would that mean to be able to incent
11:20more additive kind of activity
11:23that we could then sort of really say
11:25that we're being a market mover,
11:27I think in those kinds of things.
11:28So I don't think we're there yet,
11:29but I think financial institutions
11:31have a huge role to play in getting there.
11:33And I think maybe I'll just take it very short,
11:35which is I think business today,
11:37it's very easy for me to argue why what we're doing is good
11:39and we save jet fuel,
11:40that's our largest cost driver, that's easy.
11:42I don't think that it's the role of the airline
11:44to be financing these kind of risky bets
11:46when it comes to sustainable aviation fuel producers.
11:48As mentioned, that just doesn't fit in our business model
11:50nor our margins.
11:51But I just want to give an example.
11:52We have a sustainable aviation fuel hub in Minnesota
11:55and it is public-private partnership,
11:57it is the state, it's all the major corporates,
11:59you've got major oil and gas, you've got ag,
12:02you've got the energy company
12:03all trying to figure this out
12:04because that's the answer, right?
12:05You're right, everyone needs to up their risk a little bit,
12:08but not one single industry or party can take that risk.
12:11I will, please, go ahead.
12:14I love your question in part
12:17because it gets to a core value that we have as a company.
12:20We're really focused on innovation
12:22and we've put forward a requirement since 2019,
12:25so it's five years old now,
12:26that every new product we develop
12:28must have a sustainability value commitment.
12:30Now, some of these, and I will tell you,
12:33especially the first year,
12:34some of them I was much more excited about than others.
12:38But each year, so the first year we allowed,
12:42okay, if you're not packaged in recyclable packaging,
12:46that can be your commitment.
12:47But the next new product has to be built on that
12:50and has to be above and beyond.
12:52And that's really led to a lot of things.
12:54And in terms of venture engagement,
12:56yeah, I could go on for a long time, but I won't.
12:59But it's led to a lot of really interesting breakthroughs.
13:02But in terms of venture engagement,
13:03it has us leaning in stronger than ever to climate tech.
13:06And so new ways, how can we bring things forward,
13:09you know, whether it's carbon capture
13:11or whether it's a hydrogen economy,
13:13all of these things,
13:14because collectively we're all trying to find solutions.
13:17And increasingly,
13:19I think there's a really important roles for materials
13:21and as a material science company,
13:23that's an important opportunity for us as a business.
13:26That's great.
13:27I was only going to add to that,
13:28that corporate venture capital has actually emerged
13:30as a really interesting source
13:31of some of that catalytic capital.
13:32And so you have this market mover advantage
13:34in terms of procurement, sometimes CVC,
13:37certainly financing mechanisms.
13:39I know there's a question over here.
13:43I'm Eileen Buckley.
13:45I represent Stryker, a med tech company.
13:47Gail, I believe you were referencing
13:49the progress on carbon goals.
13:51And I imagine 3M has many businesses
13:54as do probably many of our companies.
13:56So do each of your businesses have goals
13:59around carbon reduction,
14:01or can you speak a little bit to how you tackle that
14:04as a major enterprise?
14:06Yeah.
14:07So we have goals at the prioritized portfolios.
14:13So we go through
14:14and we know where our heavy carbon footprint is.
14:16And so we challenge those businesses in particular.
14:20We don't have an internal carbon tax right now,
14:22but we make sure those businesses are very aware
14:25of what an external carbon tax might be
14:27and try to help them with that incentive and progress.
14:30And we give them special love and attention
14:32if there are higher carbon footprint areas.
14:36Great.
14:37Thanks.
14:38What have you seen?
14:39I think we're probably out of time
14:40to take more audience questions
14:41because we will all get too excited.
14:43But one of the things we talked a lot about
14:46in our prep call for this panel
14:47and in the round table that preceded
14:49the main stage sessions
14:50is this idea of, again, the evolving landscape, right?
14:54That there are things maybe we didn't see coming
14:56such as a pandemic.
14:58If you maybe set 2025 or 2030 goals in 2018.
15:03New technologies, innovations, things like that.
15:06What have some of those innovations, evolutions been?
15:09What are some of the conditions
15:10that have changed the most on the ground
15:12in the time that you maybe set your goals
15:14or that are making you think we're on track-ish?
15:17Yeah, I think two things and I'll try to be brief.
15:19One is just that we're seeing far more intersections
15:24between E, S and G.
15:26And so this idea that we would treat them in pillars
15:30is no longer really sufficient if we want to get there.
15:33But the second thing is that there's been
15:35a huge proliferation of regulation
15:38and disclosure standards.
15:40And while some of that can be good,
15:43in fact, the first panel on D, E, I and A
15:46that was earlier talked about,
15:47never mind the letters, can we just do the work?
15:50And one of the things that I wonder
15:51is that companies are so busy
15:53hiring up to have people do disclosures
15:56and make sure that we're in line with regulations
15:58that we actually are pulling away people
16:01from doing the work to actually decarbonize
16:03or to increase our diversity
16:05or to have a positive impact.
16:07And so I think in this environment,
16:09particularly where it's global
16:11and regulations in Europe are far more stringent
16:14than they are in the U.S., I would say.
16:16And so we're seeing already companies thinking
16:18about listing rather than in Europe,
16:21listing in the United States.
16:22That doesn't help global emissions, right?
16:25And so if we can't be consistent
16:26in that kind of innovation and that regulation,
16:28we're not gonna get anywhere either.
16:30Yeah.
16:31I think for us, there's two things.
16:32So I think the first in the short term
16:34is that it's good for business
16:35and we've proven that out over the last couple of years
16:37which means we actually have more money
16:39flowing into our team to spend
16:41towards fuel saving initiatives
16:42than we ever thought was possible
16:43because we proved it's good for business.
16:45We will find innovative technologies.
16:47We will use the goodness that is sustainability
16:49to just get everyone rallied around us.
16:50Whether you are meeting us
16:51from a cost savings perspective
16:52or from a purpose driven perspective,
16:54everyone can get on board with what we're doing.
16:56I think the second is at least for us,
16:58our industry is bipartisan
16:59but the concept of sustainability is often not.
17:01Sustainable aviation fuel is actually incredibly bipartisan
17:04because a lot of the fuel will come out of the Midwest.
17:06And so I think for us,
17:07the real evolving evolution is realizing
17:09we have this once in a lifetime kind of opportunity
17:11to truly shore up support on both sides
17:13so that no matter what happens in November,
17:15it will not significantly impact.
17:17And to really tell the story again
17:18about how this industry,
17:19which has always done so much good for so many people,
17:21is now gonna have new connections
17:23into agriculture in rural America,
17:24which again just provides decades worth
17:26of kind of new partnerships,
17:27new opportunities,
17:28and new ways to uplift communities
17:30that we didn't have before.
17:31Wonderful.
17:32Wow, great answers.
17:33I thought I had three.
17:34One was about regulations getting tougher
17:36and more reporting.
17:37One was about how the politicization,
17:41I don't know,
17:42becoming more political in this space
17:44when it really shouldn't be.
17:46But the third I would say
17:47is technologies are really advancing.
17:49So you see there's a technology S-curve concept.
17:53As you come up the S-curve,
17:54things start moving really fast.
17:56And so we're seeing that with renewable energy,
17:59that that's becoming more and more affordable.
18:01We're seeing that with electrification,
18:03maybe not of airplanes,
18:04but of other types of ground transport.
18:08We're seeing those things move.
18:09We're seeing more and more different ways
18:11of things advancing.
18:13And I think it's a matter of getting on with it
18:15and some of those first movers
18:17that you were talking about.
18:18Yeah.
18:19We're going to geek out a bunch
18:20about climate tech at dinner.
18:21Excellent.
18:22But that's where I have to leave this panel.
18:23Andrea, Gail, and Amelia,
18:24thank you so much for the time.
18:25I appreciate it.