A Post-Davos To Do List
Weary Travelers CEOs,
Welcome back. I know that the Davos experience — mostly fun, very engaging, always interesting, sometimes even glamorous — can be exhausting. Racing across town for around-the-clock meetings with world leaders and other important people at the World Economic Forum is a cool but daunting exercise.
Some of your meetings were probably business as usual with customers, shareholders, and bankers. But more of your time at Davos was likely spent with different folks: activists, government officials, community leaders, NGOs, regulators, emerging global leaders, academics, journalists and even a few celebrities. They came from all over the world just to see you! You must be doing something right.
And you were pitched a breathtaking range of ideas from all corners . . . only much of it was contradictory. NGOs urged you to pursue big philanthropic projects. WEF officials pushed you to join corporate working groups on priority global challenges. Some activists threatened to campaign against your company or even take you to court. Certain institutional investors seemed a bit confused, asking on the one hand for bold and very expensive long-term environmental commitments, but on the other hand cautioning against doing anything at the expense of near-term earnings. A few politicos warned you against going "woke." And some troublemakers blasted you on social media, just for good measure.
It’s a lot to take in. I’m sure you’re relieved to be back home. Get some rest. You’ve earned it. But then you have to get in gear.
To make it a little easier on you, I’ve prepared this post-Davos To Do List.
Mind your ESG.
Yes, ESG gets lots of scrutiny and criticism these days. I’m sure you agree that this is a welcome development — there’s room for improvement, right? But the core idea remains highly relevant and intact. You should not expect intense ESG scrutiny to go away. And of course you want your company to be a leader in these areas. So now is a great time to conduct a quick audit with the team. How is your company doing? Are there areas where you’re lagging? If so, make plans to address them. And while you’re at it, make sure your disclosure is complete, without too much braggadocio. But don’t stop there. ESG checklist compliance is necessary but insufficient.
Get ready for much more disclosure.
The prospect of increasing disclosure requirements may give you headaches. But they’re coming. The US, EU, and UK all have plans to require much more disclosure in the realm of ghg emissions, climate goals, and all other ESG matters. Yes, there is still some uncertainty about who will require exactly what and when. But make sure your CFO and team are preparing now. The new rules will be here sooner than you think. You need to get this right. My tip: try to avoid hype and fluff. Just explain fully what you are doing and why you believe it makes business sense. Acknowledge where uncertainties remain and which challenges may be tough to overcome. We need more no-nonsense discussion of these matters – including the difficult stuff – so that ESG and voluntary climate initiatives are understood by all in a realistic way.
Develop your long-term net-zero goals.
Bad climate outcomes are only going to compound and get worse. Yes, we need much better public policy to address these risks. But progress will likely remain slow. Therefore, you should expect pressure on public companies – especially the biggest and most visible ones – to only intensify. You need a net-zero game plan.
If you've already established net-zero goals, do a quick audit of how you are doing. Even if your ultimate goal is a long way out (say 2040 or 2050), expect more questions about how exactly you plan to get there and what you are doing to move the needle forward today. If you’re concerned about costs, risks, and policy gaps, say so. Again, candid disclosure is your friend.
If you don't yet have a net-zero goal, it’s okay. You’re still redeemable. But instead of quickly and arbitrarily setting one, begin a realistic assessment of your capabilities based on current technologies and marketplace realities.
Extra credit: State your views clearly on the climate regulations and public policy we need. Make sure your government relations efforts are aligned with these goals. When the trade groups you belong to diverge from these measures, publicly state your disagreement (or better, quit such groups). Expect much more focus from activists on these matters.
Most importantly, think very hard about how your company can make an outsized, positive contribution to society that also makes strong business sense.
Of course there are no general strategies here that will work for all. But there is one general principle: businesses will be rewarded for undertaking ESG initiatives that do important things for the world and draw on core corporate capabilities. Don’t worry too much about ESG scorecards. Instead, think about this the same way you regularly think when running your business: what are the best ways to use your most significant assets and capabilities to address important opportunities and/or risks.
I’m probably biased a bit here as I ran a big NGO for a decade-plus, but teaming up with sophisticated non-profits organizations can help. They know things that you don't (and vice versa).
But mostly it's up to you as the boss. Where do you want your company to lead? What do you want your legacy as CEO to be? How can your company best address big issues today? Where do you want to be boldest? And make it personal – what can you do that will make your children and grandchildren proud of you?
Maybe I'm expressing this too vaguely or theoretically for you. If so, look around for some concrete examples to guide your thinking. (And review your notes from Davos – I bet interesting ideas arose while you were there).
Here are a few examples of companies getting this right:
Walmart’s Project Gigaton. Walmart is famous for its skillful supply chain management. Now it seeks to leverage this great corporate asset to make a huge environmental contribution – by removing a gigaton of ghg emissions from its supply chain. If your company is a supplier to Walmart, you’re probably being leaned on by the company right now to make fast decarbonization progress. What does Walmart get out of this? Tighter supply chain management, closer working relations with suppliers and environmental NGOs, energized employees, significant progress in reducing scope 3 emissions and so on. This ain't "woke." It’s just a smart way of doing business.
Syngenta's "Good Growth" plan. Syngenta is wisely aiming to transform one of its biggest risks — the potential for tougher regulations against pesticides — into an opportunity. It's working to develop new and safer ways of protecting farmers’ crops. No easy task, definitely important, aligned to WEF agenda, and makes business sense. Win-win-win-win.
Intuit helping mid-size companies decarbonize. Seeking to go beyond decarbonizing its own (not huge) ghg footprint, the company extends what it does best, aiming to help its mid- size and small customers also decarbonize through company-provided software. Another multiple win – strong climate outcomes, more sales, and better relations with customers. It’s a project that all Intuit constituents can be proud of.
I could go on and on with more examples, but it would miss the main point. The idea is for business leaders to do what you always do when you’re at your best. Figure out where and how your company can do very important things and execute that strategy very well. And when it comes to disclosure, just state what you are doing as clearly as possible. After all, you’re business people — not politicians or NGO leaders or activists. Explain why your initiatives make business sense and why they are in the interest of all stakeholders. Avoid hype and fluff.
CEOs, I know it’s lonely at the top. You don’t have to go it alone. Sit down with your team and think through what will or won’t make sense for your enterprise. As you reach out for help, include the younger and newer people in your organization – they’ll likely have fresh ideas that the old guard miss. Your suppliers and customers may have good suggestions too. And if you need more support, call me. Helping on this stuff is the Instigator’s day job.