For BP & Nestlé, Net Zero is Still the End Game
Can an oil major and a food and beverage giant really achieve net zero emissions? Two senior corporate leaders weigh in on carbon neutral goals amidst political polarization and pandemic strife.
Photo by Marcin Jozwiak on Unsplash.
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Nestlé and BP recently shared ambitions to achieve net zero emissions by 2050––prompting applause, along with some raised eyebrows and more than a few questions. In early April, as part of our virtual Future 500 Summit at EarthX, we hosted a webinar with two corporate leaders driving these goals at their firms.
Here are six takeaways from my conversation with Bob Stout, Vice President & Head of U.S. Policy at BP and Nicole Collier, Director of Policy & Public Affairs at Nestlé.
Despite Polarization, Climate Change Remains a Priority
As global companies, Nestlé and BP operate in geographies with often disparate political preferences––not to mention here in the U.S., where views on climate change can be polarized. But for both companies, no matter where they are, the recognition that climate change is a business reality remains the same.
As the world’s largest food and beverage business, Nestlé considers climate change––and its impact on crop harvests and food prices––to be one of the biggest existential threats to its business. According to Collier, political leaders of all stripes––who worry about recruiting economic activity in their regions––are increasingly ready to take action on those threats.
BP recognizes that companies can’t keep their heads down on climate. And Stout––tapping into a theme that makes us tick at Future 500––pointed to the need to move from polarization to collaboration. That’s especially true for companies in the oil and gas sector, which must balance a wide range of interests––all while being consistent with policy on a global level. Strong corporate aims––such as BP’s recently charted “five aims to help the world get to net zero”––can help companies strike that balance.
“Performing While Transforming”
To say Nestlé and BP’s net zero emissions goals are ambitious is an understatement. To be successful, both companies will need to transform how they do business in bold and innovative ways––all while meeting (and shaping) market demand, outperforming their competitors, and returning value to shareholders and stakeholders.
The challenge is akin to retrofitting an airplane while in flight, said Stout. You can’t park it on the ground and tinker with the parts; you’re going to have to give it a complete overhaul in the air, while making sure it doesn’t fall out of the sky! It isn’t just about how to reach net zero: it’s about how to reach net zero and deliver market performance at the same time.
BP is fundamentally reorganizing itself, eschewing the traditional upstream-midstream-downstream configuration of many oil majors. Instead, BP has created an internal structure designed to deliver on the company’s new aims.
Saying “Both, And” to Balance Sustainability Goals
Nestlé, like its peers, has a plastics packaging problem. And the company is diving headlong into it, saying it must help lead the shift from virgin plastics to food-grade recycled plastics packaging.
But new packaging options can’t take the company backwards on its ambitious carbon goals, said Collier. By way of example, she pointed out that changing all plastic packaging to glass would blow the carbon budget.
Collier said the company can’t choose between climate or plastic pollution. It has to balance both––along with a host of other sustainability priorities. For example, leaning into lower carbon, plant-based products like the Awesome Burger® also means being mindful of agriculture and land-use considerations, not to mention the impact on workers.
Offsets Create Room For Innovation––But Can’t Become a Crutch
Tackling Scope 3 emissions won’t be easy. There will be failed experiments on the road to net zero, along with successes. Credible, reliable offsets are necessary to allow the flexibility for business to take risks, to innovate and try new paths forward.
At the same time, Stout acknowledged that offsets and natural climate solutions are not enough on their own. The key, once more, is balance. For any company seeking to make bold climate progress, a credible and transparent offset mechanism needs to be paired with changes in company practices to enable innovation.
Voluntary Efforts Set the Bar
Advocates are often skeptical of voluntary corporate efforts, and for good reason. On the flip side, voluntary efforts set a high standard––in ways that regulation can not.
Take the Sustainable Food Policy Alliance, or SFPA, of which Nestlé is a founding member. The SFPA draws together like minded companies to use their collective voice to influence public policy––from carbon price advocacy to opposing anti-LGBTQ laws. Or take BP’s new aim to more actively advocate for “policies that support net zero, including carbon pricing,” one of the five aims mentioned above. These efforts have, or are intended to, set the bar high, charting a path for other companies to follow.
Regulation can have the unintended consequence of compelling companies to revert to the lowest common denominator. Setting the floor with regulation is absolutely needed, Stout said, noting that the discussion between voluntary action and regulation should not be an “either/or” conversation but one about the proper role for each.
Skeptics will justifiably contend that companies like Nestlé and BP might not live up to their words, citing past examples. But hand-in-hand with those are many examples of success. Public opinion––along with a little pressure from NGOs––also plays a role in ensuring companies match tone and deed.
Focus on Net-Zero Won’t Waiver in the Face of COVID-19
Good intentions often get pushed to the backburner in dire situations. But for Nestlé and BP, the pandemic underscores the need to innovate and transform more than ever.
Coming out of this present crisis, they anticipate more public focus on the common good and improving society––escalating the demand for corporate environmental and social leadership. Companies will be judged not only on how they respond to the pandemic, but how they behave after.
For BP, an energy company, COVID-19 has reinforced the need to reimagine the company––all while plummeting oil prices are shifting market dynamics. And for Nestlé, the fundamentals remain unchanged: climate change is the biggest existential threat to the food and beverage sector. It’s business-critical for Nestlé to be a bold leader, during and after the COVID-19 crisis.
You can listen to my full conversation with Stout and Collier, including audience Q&A, below.
As part of the virtual Future 500 Summit at EarthX, this conversation took place alongside five other webinars with activists, NGO advocates, and business leaders, such as Mighty Earth, Halcyon Agri, ClimateVoice, Project Drawdown, and more. The next Future 500 Summit at EarthX will take place in April 2021. To request your invitation, tell us a bit about yourself via future500.org/summit.
Future 500 is a non-profit consultancy that builds trust between companies, advocates, investors, and philanthropists to advance business as a force for good. Based in San Francisco, we specialize in stakeholder engagement, sustainability strategy, and responsible communication. From stakeholder mapping to materiality assessments, partnership development to activist engagement, target setting to CSR reporting strategy, we empower our partners with the skills and relationships needed to systemically tackle today's most pressing environmental, social, and governance (ESG) challenges.
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