February 8, 2025

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Interview with: Peter Bakker, CEO, World Business Council for Sustainable Development (WBCSD)


September 6, 2022

For the past decade, Peter Bakker has led the World Business Council for Sustainable Development (WBCSD) based in Geneva, Switzerland; the leading global, CEO-led community of over 200 of the world’s leading sustainable businesses. WBCSD is a membership organization that considers business to be a critically important driver in leading the change needed to ensure that more than nine billion people live well, within the boundaries of the planet by 2050 – a net-zero, environmentally positive and fair future. But business alone cannot ensure the scale of change required. The list of WBCSD members includes many of the world’s most famous brands and household names, including some that have previously been accused of harming the environment. Bakker spoke to World Finance about creating change from within.

Is it for businesses to take the lead on climate change and self-regulate, or is it for governments to draw a hard line and force change through policies? How realistic is either proposition and how does WBCSD see the way forward?
A combination of policy and regulation as well as leadership from business to sustain the drive for change is needed. Our member companies come from all business sectors and all major economies, representing a combined revenue of more than $8.5trn and 19 million employees. Their actions can be truly transformative and we need to start in the value chains where it is most needed and has the highest impact.

Let’s take energy for example. Energy powers the economy and enables people to live the lives they dream of. A sustainable energy system must provide reliable and affordable net-zero carbon energy for all. The speed of decarbonizing the energy system will critically influence our ability to limit the increase in global temperature to 1.5 degrees Celsius.

Decarbonization and transition will only happen if forward-thinking companies within the energy space work together to design a net-zero carbon, environmentally positive and equitable energy transition as well as scale new- business model for low carbon energy solutions. We need to bring new innovative thinking along with the scale and reach needed to drive and implement change.

You talk about ‘reinventing capitalism’ to reward real value creation, not value extraction – what does that actually look like?
The starting point is to rethink capitalism, and not ideologically. In today’s world there are three serious sustainability crises: climate instability, environmental degradation, and growing inequality. In our current model of capitalism, we only measure financial performance; we do not integrate environmental or social performance. This means that if we do something bad, there is no penalty for anyone to pay. We need to start integrating the environmental and social impacts that governments and businesses have.

Then we arrive at a value creation model – if you reduce people’s environmental impact and improve their lives, you create social value and by measuring that as well as ESG disclosures, the markets in capital begin to value that performance. Twelve months ago, we published Vision 2050 – Time for change. The basis of that vision is the reinvention of capitalism. It has already been signed by 44 companies that helped us create it. The WBCSD revised its strategy to align with this vision and took it to the ballot in October 2021.

Due to the growing trend of ‘greenwashing,’ there are people who may feel that they have lost confidence in the self-selected green propositions of businesses. Why is it important that businesses in sectors known for high-impact carbon emissions (oil and gas, banking, ‘big food’ etc) are on board and taking action?
We are fortunate that our membership is just that – a membership and completely voluntary – but there are several criteria that members must follow when deciding to become a member. Our philosophy is that it is better for large companies to have an impact to be in the tent than outside the tent. There are many organizations and individuals who do not believe in that and who is to judge, but our role is to bring companies into the tent and work with them on how to decarbonise, be environmentally positive, and be fairer.

In our current model of capitalism, we only measure financial performance; we do not integrate environmental or social performance

We still see business as having a lack of confidence in the eyes of many – oil and gas companies are in that camp, for example. Only by taking real action and being transparent about what your target is and when you are making progress can you rebuild trust; it’s a journey. You need to set a target that is in line with science, and then through ESG disclosure and reporting, you need to be very transparent with progress.

There is a lot of pressure on companies today due to competition, activism, and consumers demanding different solutions. McDonalds joined us eight or nine months ago, which was after Vision 2050, and after our new membership criteria. They came in with their eyes open and we would not have allowed them to join if they had not understood the membership criteria. Companies come to us as they get real support on how to decarbonise.

Have you managed to get 200 CEOs of some of the world’s biggest businesses in the same room at the same time?
We have a council meeting once a year and invite CEOs as council members. We never had them all at the same time, but there were always more than 100 in a day or two. We host roundtables that bring people together with a common theme and shared knowledge. But more important than that is the development of the teams of CEOs and CFOs. It’s not a talk shop, it’s a gathering to learn how to make actionable decisions, identify projects to pursue, then report progress for CEOs and mobilize teams to deliver. yet.

One of the major challenges you face is increasing inequality. How can business leaders approach this meaningfully and avoid failure in sustainability efforts? Why are the two interlinked?
As business leaders we need to ask ourselves – are we truly committed to a more sustainable world? And if the answer is yes, we must admit that it is not a pick and mix approach to sustainability. Reducing our emissions is not enough; committing to a circular economy is not enough. We must take urgent action to create a more just world where everyone has access to opportunity, justice, and income regardless of their race, gender, or background. Only by achieving this will the world have the possibility to change. Inequality has become a systemic risk – a risk that threatens not only individual companies or communities, but the entire economy and society.

Wide disparities in income, wealth, and overall well-being, underpinned by deep, structural differences in people’s opportunities to achieve those outcomes, have fueled widespread discontent and disillusionment. This, in turn, contributes to a cascade of consequences that have serious implications for our societies and for businesses around the world: the destruction of social cohesion, the reduction of trust in the main institutions , fueling civil and political conflict, and undermining our collective capacity to deal with complex challenges. . Arresting climate change, for example, is not possible without addressing inequality. Meanwhile, several major trends and developments have worsened the situation. Climate change, technological disruption, and the COVID-19 pandemic, for example, are all hitting the most vulnerable the hardest.

Are you affiliated with direct action groups such as Greenpeace and Extinction Rebellion? How would you describe the relationship between the two types of organizations?
Activism, if used honestly, can play a beneficial role in moving people’s minds. We have projects associated with other players such as Greenpeace but structurally our organizations have different roles to play. In terms of our membership, I always describe WBCSD as the ‘challenging friend’ of business – always trying to help them do better, faster. We are there to help them, share best practices and redefine value terms. We now have a network of over 50 Chief Financial Officers who will also work together. As a bridge between the corporate world and the capital markets, CFOs are uniquely positioned to set the agenda and course of market changes as they begin to take shape.

In the end, the agenda and ultimate goal of our organization compared to activists is no different, but our messages are. All over the world, corporate sustainability performance is top of mind for investors and consumers. The world’s financial reporting standard-setters are quickly paving the way towards aligning sustainability disclosure frameworks, with new regulatory requirements for ESG and climate disclosure on the horizon. The business is entering the next phase of ESG performance, transparency and accountability.

To realize a world where more than nine billion people can live well, within the boundaries of the planet, in the next decade we need to unlock change in a way – and at a rate – which until now we have no more. It is not enough to know what needs to be done. We must accept that radical changes in all areas of society are necessary, including business. Leading companies must prepare now.

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