Addressing the Existential Threat of Climate Change

Uni Leaver CEO Paul Pullman. He's got a new book out net Positive, how courageous companies thrive by giving more than they take. He joins us on the phone in the UK. Paul, So nice to have you here on Bloomberg. How are you? Thanks for having me. It's a great opportunity. Well, it's great to have you here. You know, first I want to ask you, I mean, you were CEO coming

out of the financial crisis. You know, what do you remember that time and where you're kind of glad not to have to deal with this crisis as CEO of a major global company. Well, there's so many change is happening right now. We see the speak of change and of the technological volution and the scale of the Industrial revolution. And I don't think it's easy to be a CEO

any time in history. But the financial time crisis what was particularly tough because we really saw a big contraction in emerging markets and big interventions from governments that were needed. But it was clear to me already then that the economic system needed to evolve to something that was more

inclusive and frankly, more sustainable. That's what we set out in Unilever to do already back in two thousand eight, and over the ten years of my tenure, that has helped us show that business can be done differently, but that it ultimately is also good for the shareholds. Have you been concerned that the current crisis that we're facing as as a as a globe, as a global community, the coronavirus pandemic is going to further set back those those goals of being a more equal society, being more

just society. Well, if I may be honest, even if the financial crisis we missed an opportunity and people felt that banks were too big to fail and people were too small to matter, and the governments did not really use that opportunity to channel the funds into creating a greener, more sustainable, more equitable society. COVID again is a stark reminder and that we can't have healthy people on an

unhealthy planet. And I think it has brought to light complexities of our system, the biodiversity destruction, climate change, inequality, the racial dimensions as you've seen, especially in the US, and that has uh put many of these things higher

on the agenda of the business community. And the reason for the net positive is I think most people understand what is happening now around climate change or inequality and trying to move in the right direction, but collectively we're clearly not moving at the speed and scale and recognizing the difficulties that we see in many countries and developed around governance or or global multilateralism if you want to.

The book would argue that it is in businesses interests to step up and fill that point and healthy risk that political process. How do we get here, Paul and I asked, because look at the macro problems we have right now. You know, inequities, incredible wealth gaps, We're talking about the energy crisis, We're talking about climate and the impact that we've had, and maybe it's just getting too late, uh, the inability and maybe food feed everyone. Did companies become

too greedy? Well, it is clear that the current economic system that we've had with infinite growth on the finite planet is really not sustainable and anything you can do uh continuously is by definition not not possible. So we need to change our economic system and be sure that we are pivoted in a way that we take care of planet Earth and also a fellow citizens. And the most existential threat we now have, without any doubt is

climate change. But we and the other side of the coin that we've seen is that when we kept these issues nowaday after day, nearly on television or any other media, it's again the poor that suffered the most. COVID has put us back on the sustainable development goals probably fifteen twenty years. So there is no doubt that we need to work harder. The option of not doing anything and and going to a crisis like COVID again at the accelebrated phase and more often is simply not an option.

I've never really felt that to be reasonable, and unfortunately, we still have a lot of the opportunities to address it and to to figure out something better that would serve us in future generations. Paul, I'm curious about your path to becoming CEO, because I did read that you were considering becoming a priest, you were in line of to go join the priesthood or a doctor as well. I'm curious how that impacts you're thinking, impacted you're thinking

as a CEO. Well, I was born in nineteen fifty six, and I always thought there was a long time after World War Two, but it actually was fairly short. And I grew up in a family where my parents were deprived education because of the war. So all they wanted is peace in Europe. The communities to work ensure that there's six children called education, and frankly had a better

life than than they did. So I think at the end of the day, I was fortunate, um that I had these parents and who put the interest of others ahead of their own, and and they firmly believed that they would be better off by doing that as well. So that's how I grew up and and it brought me values of dignity, respect, equity, compassion that I've tried to live my life was I've always realized that having

been born in the Mettlands. I've just been lucky. The government paid for my education, I had a toilet at home, I had some food, so I wasn't stunned that. Unfortunately that's only the case for five of the world population that that privileged position, and yet they didn't do anything for it. So I want the lottery ticket off verse,

if you call it that. And I've always felt it's our obligation to put ourselves to the service of others, to ensure that that in consumption for everybody, So priesthoods or being a doctor or now being in business actually ultimately is the same purpose. How can you have the

best impact who helped ensure the changes that are needed? Paul, I want to be honest with you, and Tim and I have been talking and people, you know, we get a lot of feedback this whole idea that companies that have got us into a predicament in some ways, have contributed to climate change, have helped create wealth gaps, have done a lot of things that have put us in not a great way today. How how can we really rely on them to be ethical, responsible and get us

out of it. Yeah, I don't disagree with that statement, and we have that same skepticism. Obviously, a lot of these issues that we know deal with have craft up on us, and our incredible wealth creation and lifting so many people out of poverty over the last four or five decades has been incredible and we should be rejoicing in that. Unfortunately, though, we've done that in a linear production pattern that is giving us enormous pressures on the

planetary boundaries. This year, World over shoot Day was July twenty nine, which is the day that we use up more resources then the world can be planets. In fact, after that day, we're stealing from future generations. Now, increasingly businesses are starting to understand that that is an unsustainable way of running businesses. The financial market seas that has

an increasing risk. The employees that worked for the companies want to live in a better weld, The citizens are speaking up, So I think there's a ground swell of action happens to be. Fortunately still that in today's well the business community has held at a higher level of trust than governments. And whilst we in our book deliberately don't want to get into finger pointing, we say the first thing that businesses have to do is to own

the problem. If you break it, you own it is what we call it, just like happens in the store when you break a couple uh that you wanted, that you didn't buy or whatever. So businesses need to go look at their total impact and take responsibility for that, and that takes leadership, That takes courage, and then they look at the negative consequences of some of their business models and try to work very hard, first alone, then in their value chain, then at industry level, or finally

at societal level to drive the needed chances. And that is starting to happen. You look at climate. I think it's now undeniable that we have an issue of climate chance. But it's also clear that the costs that society are incurring five point nine trillion all of us, according to

the I m F significantly hired. And actually what it would cost us two attack it partners would be the photom to realize that, Paul, are the incentives aligned though, Because here we are, we're in the fourth quarter of the year, We're about to start getting earnings from companies, and the numbers that move the company's stock are revenue and UH bottom line forecasts and how the companies did in the previous quarter. There's nothing in there about environmental impact,

and that's what investors are focused on. Well, yes, I know what we now see in the shareholder proxy season that you just close that most of the questions are around E s G. You ask. You see shareholders asking uh x on to change board members. You see shape from being attacked. You see ninety tillion dollars of money on the management now in the financial markets asking for disclosure on carbon you see Larry Pink writing is letters

friend guard. I think we're past that point. We also see that if companies make announcements, significant announcements to do something about it, that that actually their share price gets positively affected. We've looked by industry sector, just comparing within a sector companies and companies that more aggressively attack these externalities actually seem to get a higher market value now

as well. So we would argue just the opposite that if you want a longer term shareholder return, short term you can always speculate, but if you want a longer term shareholder return, it is now better to do that in a way that also deals with the environmental and social issues. That will say some unfortunately, more and more CEOs are understanding that. It is just that I think we don't have to spend too much time anymore on the why, which is really your question, but more on

the how. And this is where they struggle. Well, when it comes to how. You write in the book about a net positive world right, and you talk about redefining the corporation, that the corporate world is zeroing in on better metrics with a sup of new initiatives and acronyms are popping up. And you know, in this section you talk about, you know, what would it mean if companies had to pay for the natural capital and resources that they used for free? None of the biggest industries would

be profitable. And then you also ask what what would a company look like if citizens, not shareholders were the focus. Do we need new metrics, whether it's from the SEC or European regulators or Asian regulators in terms of what really is a successful company? And I do wonder how the capital markets, the financial markets that Tim and I report on minute by minute every day, makes it complicated

and maybe impossible for new metrics to be created. Well, there is a lot of effort going on around the globe actually to create these methods, measures because people increasingly see that these environmental issues like climate chains, or these social issues like resilience in your value chain or employee engatesment eutchet uh are actually of material importance, and increasingly

the financial community is asking for it. Unfortunately, until now we have not had governments that were in some countries conclusive to put in that direction, and as a result we have a little bit of an alphabet soup. Assion mentioned was about six hundred different efforts to put standards out there. Fortunately someone has thought about it, and on climate were increasingly rolling out the standards of financial Disclosure for Climate related risks, which are called TCFD. We now

have over two thousand, three hundred companies supporting that. We have about forty five companies countries implementing that, and that is from basically zero a year ago. We have the SEC getting increasingly interested in looking at some of these measures for matt reality reasons. Europe has the European Taxonomy, and last but not least, the i f r S is working quite aggressively on creating the sustainable standard boards. So there are things happening on that front, and rather

sooner than later. Hey, forgive me thirty seconds quickly. Is there a company other than you know Leaver that you think is getting it right with this and just quickly if you could, Oh, No, there are many companies that get it right. We see now companies like Google wanting to put their system to the use of consumers and helping consumers make better choices in purchasing or investing in companies. We see companies like Belta Order Airlines now making commitments

to be net zero by twenty fifty. We see companies now trying to go to the net positive direction. Walmart restoring forests, protecting oceans, Salesforce replanting forest, Microsoft trying to capture govern or Juice since their inception Noah, the trainers left the station. We just need to get more companies and then as these companies work together with governments to

change some of the frameworks that are out there. Well, Paul, nice to get some time with You really appreciate pop Home and former you know Leaver ceo his book Net Positive, how courageous companies thrive by giving more than they take. A lot of problems to solve, a lot of problems to solve um WA's optimistic phil Yeah, I'm gonna be optimistic to have a great evening. Everyone