From 'care of creation' to boardroom value creation
From 'care of creation' to boardroom value creation
I just returned home from my second trip to Greece this summer. On both occasions, I heard a lot about crisis. Most crises are on the news repeatedly in a short span of time. Many become a topic that comes up in discussion with friends and colleagues. And typically, you see action from companies, governments, communities and individuals all doing their part to bring the crisis to an end.
Crisis usually comes with teamwork at its best, swift action and constant progress towards resolution. The crisis from each of my trips could not have felt more different.
The one from my most recent travels is the one that all in the world have heard about — the horrific wildfires in Athens that claimed so many innocent lives. As we drove from the Peloponnesian peninsula to the Athens airport Saturday, we smelled the stench and saw the damage with our own eyes. It was all that could be found on TV or talked about with friends, relatives, shop-owners and colleagues who were checking in from back in the U.S.
You felt the heartache, sorrow and frustration, and at the same time saw the action whether it was the firefighters putting out blazes, private boat owners and the Hellenic Coast Guard rescuing people from the sea, or activist citizens getting in the face of politicians demanding answers, better planning and swifter action. I left part of my heart in Greece as we departed for home.
I bring this up to purposefully compare what was a very visible crisis — the Athens fires — with another that was the focus of my first trip back in June, the climate change crisis. There is consensus on climate change that it is unfolding all around us yet seems distant at the same time. Perhaps it’s because changes are occurring on a global level and most of us don’t connect the amassing dots.
It also may be because the impacts of this crisis more significantly will affect the next generations and not ours. Some island nations see the writing on the wall and are already taking action. Countries around the world are making progress in the climate change battle, but there continues to be a lack of sufficient action and absence of a sense of urgency.
The conviction I heard from the world's leaders on climate change felt incredibly real and was generated by science and faith, a combination which throughout history has often been at odds. There was unquestionable alignment among economists, scientists, NGO executives, government leaders and environmental activists. Corporate executives were noticeably absent, with the exception of a couple of us.
This gathering of the minds spent four days together in Greece at the invitation of the Ecumenical Patriarch of the Orthodox Church, His All-Holiness Bartholomew, to discuss the urgency around taking action on climate change to alter the crash course we’re on. While at home with people of faith, eco-minded leaders, thought-leaders and thought-provokers, and in my parents’ homeland, I felt that I was on an island as a Fortune 100 executive and former chief sustainability officer.
Accusations of corporate greed abounded, as did blame for inaction. Rhetoric from environmentalists sounded familiar as I've in the past sat across from them and often next to one another. Cheering and long applause erupted when corporations were referenced as the bad guys. I appreciated these were leaders who have been shouting from the mountain tops for more than 30 years. They weren’t beaten down, but rather filled with hope.
There was an overwhelming belief that love, humanity and the care of creation will overcome inaction. I wondered how I would translate what was talked about as "love" to a corporate board room and reflected on how I’ve done that in the past.
Towards the end of the symposium, one example highlighted by Christiana Figueres, global climate change leader and former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC), of how industry is doing the right thing on climate change was aviation.
From my experience in driving action within one of the largest global airlines with a massive carbon footprint and across a global industry, four thoughts come to mind on the path forward to bridge the divide, create alignment and inspire appropriate corporate action.
1. Economics of sustainability matters
There is an intrinsic value in most of us that effort towards the greatest good is worthwhile and respected. Most businesses and leaders get that, and the ones that I’ve had the benefit of working with have tried hard to incorporate heart and community into our work. However, there’s a reality for companies whereby their vitality is anchored to the company’s economic well-being. Companies that are thriving economically are also the ones that can think about the long term. It’s a cycle and foundational factor in business that is critical to environmental sustainability.
For many years, I worked with environmental NGOs and activists to convince them that they needed to help us figure out environmental sustainability not as a matter of obligation nor on blind faith, but rather as a means to improve financial outcomes and the long-term viability of our business. We found success in several areas and launched a sustainable supply chain initiative, sustainable food program, carbon offset projects, technologies to reduce fuel consumption and CO2 emissions and renewable energy commercialization — all done with a focus on good economics that are additive to the financial health of the company.
On renewable energy, we became the first airline to test flying commercial jets with a variety of fuels made from renewable sources that significantly reduced lifecycle CO2 emissions and eliminated particulates. We flew the first commercial flight with eager, excited and paying passengers with jet fuel derived from algae. We signed the first deal in the industry to buy commercial quantities of renewable jet fuel to power our aircraft out of Los Angeles, and today the airline is using that fuel every day.
I’ll never forget my dinner meeting with my CEO at the time who said, “I don’t like the economics. Get a better deal and I’ll be your biggest supporter.” We both upheld our side of the deal. In our case, we found a way to mitigate the risk economically with a partner who was willing to listen and eager to put the time and energy into figuring it out.
Getting the economics right got us the executive and board support we needed and helped us contribute to the creation of a new industry as well as accelerate innovation.
2. Consumer value is key to generating corporate value
All companies are in the business of developing products or delivering services that consumers (individuals, businesses, or governments) buy. For environmental sustainability actions to take hold within companies, the efforts must generate some level of consumer value that in turn creates corporate value. This quickly becomes complex for global companies in that consumers throughout the world are not created equal. What a northern European consumer may value in a brand may be very different from what a U.S. consumer values.
We launched a carbon offset program that enabled consumers to choose whether they wanted to offset their emissions from their air travel. We made it as easy as we could — directly in the purchase path and highly visible. We found that very few of our consumers were choosing to do it.
Unfortunately, this sent signals to departments in the company that our consumers didn’t care enough about the environment. As our eCommerce channel data focused on U.S. consumers, what we thought we understood as a global perspective we learned to be misleading.
Meaningfully, we saw an increasing number of our corporate customers, particularly those headquartered in the EU, who wanted us to demonstrate environmental improvement year over year in order for them to continue their cargo and passenger travel business with us. We also saw more of our large U.S.-based corporate customers develop interest in reducing their carbon footprints.
In a business where corporate customers drive sizable revenue, our sales teams became acutely interested in our environmental work and grew to be champions within the company of the importance of sustainability progress. We connected consumer value to corporate value creation.
3. Leadership must enable and support a longer-term view
Most of us understand and appreciate that companies are in the business of driving and delivering financial results and are under immense pressure to do so every day, every quarter and every year. When public companies fall short in improving their financial performance, markets are quick to respond. Although the long-term view is always desired, many companies can't help but focus on the short-term to ensure that they are meeting and exceeding expectations.
Over the course of my 10 years at the airline, I worked with four CEOs who were tested with daily, quarterly and annual pressures — but who never lost sight of the long-term. On the topic of sustainability action, there was never hesitation on what needed to be done today to shape the future. They each provided the support in the near-term to inch along and progress our sustainability efforts towards the long-term goals. They created the space to do so, and more importantly, actively supported these efforts.
The best example that comes to mind is the work we did on renewable energy to power our aircraft. Our carbon footprint was largely attributed to the emissions from operating our flights. Finding a cleaner fuel with which to run our core business was and remains the most impactful place to have a positive impact on the environment.
Our work in renewable jet fuel started in 2008 and it wasn't until 2016 that we were able to begin commercial operations of daily flights with renewable jet fuel. Our work centered around finding fuel alternatives to hedge volatile crude markets, cleaner fuels to reduce our environmental impact, reduction in climate change related regulatory costs, and cheaper fuels to improve our bottom line. Motivation existed on multiple levels.
I credit supportive CEOs and managers who gave us the runway to pursue long-term changes while balancing and supporting short-term needs.
4. Governments play an important role in creating a supportive environment
Politics aside, there is an interrelationship between regulation as a catalyst for change as well as incentives to spur innovation and corporate action. There’s a delicate balance in this equation where government action should be supportive and not punitive to enable both the right business and environmental outcomes.
I saw this firsthand with the onset of the European Union Emissions Trading Scheme and a patchwork of policy that was developing around the world to regulate aviation emissions. What stared us head-on was very costly and detrimentally burdensome which would have had the wrong effect. Instead, we worked across the industry to create a single, global approach to managing aviation emissions. It became a plan that created the right balance to motivate airlines and manufacturers to act, while enabling investment for sustainability, long-term value creation and accountability for environmental improvements.
Our industry convinced each of our governments to support this global approach and in turn partnered with the United Nations as the singular, global body to manage this and hold aviation and individual nations accountable. As a result, manufacturers are working more aggressively toward the development of even more fuel-efficient aviation technology, energy companies are achieving commercial scale renewable fuel production, and airlines are investing in carbon offset programs around the world. Initial independent government action was corrected for a more impactful and outcomes-oriented approach to managing aviation emissions.
Anything short of a collaborative, synergistic approach will fall short and the impending climate change crisis may forever change the course of our human history.
Beyond 'love for humanity'
I am grateful for the invitation that I received from His All-Holiness, Ecumenical Patriarch Bartholomew, to attend his international symposium on climate change, Toward a Greener Attica: Preserving the Planet and Protecting its People. While I met some phenomenal people and learned even more about climate change, what I took away was that "love for humanity" may motivate each and every one of us, but it's not enough to influence corporate action.
Many companies around the world are taking action on sustainability and positively impacting climate change. We know that more can and should be done. I found through my own work that to gain traction, the combination of favorable economics, consumer value, long-term focus, and supportive government policies can be extremely powerful in creating corporate action.