In 2020, COVID-19 profoundly disrupted the global economy. No industry was immune, and companies around the world had to adapt and adjust their goals, strategies, and initiatives.
We still don’t know the pandemic’s full and lasting impact on the private sector, and we may not for some time. But in 2021, we anticipate that many multinational companies will forge ahead, making bold sustainability commitments and acting to drive progress. Quick, committed, and coordinated action will be essential to drive full recovery from COVID and to achieve the ambitious sustainability goals that companies have set—many of which align with the United Nation’s 17 Sustainable Development Goals (SDGs).
What should we expect in 2021? Here’s our list of some of the top corporate sustainability trends we see coming this year.
Corporate Sustainability Trends for 2021
Focus on Pre-Competitive Partnerships for Corporate Sustainability
COVID-19 accelerated a shift that was already underway toward more collaboration between companies, including competitors. Overcoming the unexpected challenges caused by the pandemic called for new, innovative partnership models. Today’s sustainability challenges span supply chains and industries—and demand immediate action, at scale. We anticipate more collaboration between companies in 2021 as more businesses look to fight for systemic change together.
For instance, Cargill and Unilever partnered to deliver hand washing soaps and hand towels to 30,000 cocoa farmers in their cooperatives. And in September 2020, a group of more than 10 of the world’s largest food retailers—including IKEA Food, Carrefour, Kroger, Tesco, and Walmart—who partner through the 10x20x30 initiative announced that over 200 of their suppliers had joined their commitment to reduce food loss and waste. Together, these companies have engaged nearly 200 major suppliers, operating in more than 80 countries, to eliminate food loss and waste from their supply chains. (One-third of all food produced in the world is lost or wasted each year; this trend and its consequences have only been heightened by COVID-19, which has disrupted critical distribution channels linking farm to table.)
We also see greater collaboration to accelerate progress toward sustainability goals. We’re working with a consortium of private sector companies from The SAI Platform, which includes leading multinational agribusinesses like PepsiCo and Ingredion, to create pre-competitive and cross-sector partnerships to advance sustainable agriculture supply chains in Pakistan. This partnership will identify intersecting supply chain challenges and coordinate action.
In July 2020, nine companies—including Danone, Microsoft, Nike, Starbucks, and Unilever—launched Transform to Net Zero, a new cross-sector partnership to accelerate the transition to a net zero global economy. The partnership will focus on policy, innovation, and finance as well as the creation of clear roadmaps to help all businesses achieve net zero emissions by 2050.
Pre-competitive collaboration provides greater impact, reach, and power for the companies involved, thanks to their collective resources and impact.
Sustainability Initiatives to Address Intersecting Impact Goals
Traditionally, companies develop sustainability projects to achieve a key metric like improving water quality, lowering carbon emissions, or increasing diversity in the labor force. But sustainability goals often intersect, and a well-conceived initiative can have an outsized impact on multiple goals. For example, when companies commit to purchase a greater share of their commodities from woman-owned farms or businesses, it not only improves the local economy, but it encourages entrepreneurship and unlocks new economic opportunities, which in turn eases challenges linked to poverty, food insecurity, and gender inequality.
Recently, Unilever launched its “Future Foods” initiative to increase sales from plant-based meat and dairy alternatives in the next five to seven years. Unilever’s objective is to promote healthier diets while also reducing the environmental impact of the company’s global supply chain. The effort is designed to holistically assess food system transformation, developing a strategy that limits food waste, addresses food insecurity, mitigates climate impacts, and promotes healthier diets and consumption.
In 2021, we expect corporate sustainability teams to take a more systems-focused approach, crafting initiatives that address multiple, interlinked impact areas through a bundled approach like Unilever has done with “Future Foods.”
We expect to see the most movement between the linking of climate action (SDG 13), decent work (SDG 8), and responsible consumption and production (SDG 12).
A Regional Approach to Verify Supply Chain Sustainability Claims
Many companies certify and verify that individual suppliers and farmers meet sustainability requirements. But conducting company-by-company, farm-by-farm certifications is often expensive, time consuming, and inefficient. It also places an undue burden for sustainability improvements on small farmers and producers who often lack the capital or influence to address more systemic challenges in the supply chain ecosystem. Increasingly, companies that source a variety of goods, from palm oil, to minerals, to seafood and agricultural commodities have recognized that they—and their industries—need a more efficient and effective model.
An alternative: A regional or landscape-level certification approach that moves from certifying individual farmers and producers to measuring sustainability trends across a production area. The Partnership Assurance Model (PAM) is closely related to Verified Sourcing Areas and sustainable commodity landscapes. The PAM model allows cross-sector partners to co-invest and collaborate to address systemic factors that prevent sustainability or fair labor practices in aquaculture farms. Partners invest in the supply ecosystem then work to measure and certify the cumulative impact on sustainability efforts.
We anticipate that many companies will explore and develop new, innovative certification models like PAM to apply in other sectors, geographies, and commodities.
Alignment Between the Boardroom and the Field on Sustainability Initiatives
Units housed in corporate headquarters are responsible for setting ambitious sustainability targets that are then adopted by staff in the field. While we don’t expect this to change, these targets must be translated into actionable solutions and targeted projects at the regional and local levels.
Forward-thinking sustainability teams are exploring ways to design targets, goals, and programs from the ground up, tapping into the knowledge and understanding of local farmers, producers, and processors to create better programs and stronger buy-in along the value chain. This grassroots approach can help sustainability teams better combat context-specific sustainability challenges and create local projects that are actionable and responsive to needs of local stakeholders—while still aligning with the global goals set by HQ.
Leveraging Open Innovation to Crowdsource New Solutions
Open innovation allows companies to crowdsource solutions—often through a competition or prize—by calling on global innovators to put forward ideas to address a specific challenge. The winners, with the best and brightest ideas and business models, receive funding or other support to pilot and scale their solution. This approach also helps companies connect to regional and local NGOs and small- to medium-size enterprises with solutions adapted to the local context.
Companies have used open innovation for decades to drive advancements in business operations. But now we are seeing more sustainability teams turning to open innovation to unearth new and better ideas to advance sustainable supply chains. PepsiCo is focusing on exploring new technology to affect its food and beverage portfolio, including efficiencies in crop science, ingredients, processing, packaging, equipment, distribution/fleet, to improve the entire supply chain from raw materials to consumer consumption. Nike, meanwhile, funded six innovators with ideas to accelerate the transition to a circular economy. Other examples come from GE, Unilever, and Walmart.
We expect that more sustainability teams will leverage open innovation as a tool for soliciting new, locally informed solutions to support progress on sustainability goals.
A Greater Role for the Private Sector to Advocate for Public Policy Reform
As companies work toward their sustainability goals, many have recognized the critical role that public policy plays. No single organization has the power to shift a market, funding landscape, or economic factors, especially when it comes to complex sustainability issues that span geographies and markets. This is where the public sector becomes a critical partner in driving change—something that the private sector has been calling for.
For example, last year, the Business Roundtable called on governments to pass public policy using a market-based approach, including a carbon tax to reduce carbon emissions. And in May 2020, the American Workforce Policy Advisory Board—whose members include a range of corporate executives—advocated public policy and investments to support upskilling for the country’s workforce and other infrastructure needed to lay the foundation for the future of work.
We expect to see more companies act to shape public policy, either individually or through trade organizations like the Business Roundtable. We expect to see increased focus on climate action, renewable energy, accelerating to the circular economy, expanding health access, and extending internet access.
Emphasis on Improving Diversity
Companies are realizing that meaningful focus on diversity and equity are needed across every area of the business, from human resources to operations to the supply chain.
In June 2020, Ramon Laguarta, PepsiCo CEO, announced “a more than $400 million set of initiatives over five years to lift up Black communities and increase Black representation at PepsiCo.” According to Laguarta’s announcement, published in Fortune, the company has committed to doubling spending with Black-owned suppliers, expanding supplier networks, and building supplier capability.
Unilever has also made bold commitments to diversity. In February 2021, the company announced that by 2030 everyone who directly provides goods and services to Unilever will earn at least a living wage or income. And by 2024, Unilever committed to spending €2 billion annually with suppliers owned and managed by people from under-represented groups.
We’d argue that the sustainability unit—with its cross-company reach, supply chain insights, and understanding of the interplay between social impact and core business targets—is uniquely positioned to help companies achieve their commitments to address systemic inequality across supply chains, operations, human resources, and talent management. As more companies commit to ambitious diversity goals, we anticipate that sustainability teams will increasingly be tapped to help ensure these targets drive change across their company’s core business units.
Working Together to Advance Sustainability in 2021
Companies recognize the need for ambitious targets in many areas, including climate action, health and wellness, gender equality, water and sanitation, responsible consumption and production, poverty, and affordable and clean energy. As such, companies have set bold milestones to achieve sustainability goals by 2025 and 2030. This places enormous pressure on companies to make progress. But it can—and must—be done, even as the world grapples with COVID-19.
The trends we have highlighted indicate that sustainability teams and their business partners understand their missions, and they’re getting to work. They know the challenges before them, and they are finding new paths forward to make progress toward sustainability.
Are you looking to make progress toward your corporate sustainability goals? Contact James Bernard to discuss how we can help you align your goals with strategic action.