[FOCUS] ESG with Professor Ioannou, what has changed in the past 13 years?

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,at the very least, changing their rhetoric and

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some of them even changing their actions.

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and on a personal note, , to be honest with you, uh, teaching these issues for

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13 years, uh, I've seen in real time and in the classroom the generational shift.

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, in other words, , for some of these issues, it.

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Almost easier to teach them because for to younger generations, because for

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younger generations, I do not need to establish how important these issues are.

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They already know how important these issues are.

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The question is, okay, how do we address them?

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What can I do about it through my career?

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What can I do?

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A body as a business leader?

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So I have seen change all around.

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And even though, At sometimes and often around the world, especially

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if you see the world of politics, it's easy to become pessimistic.

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Is, is it's easy to be depressed even sometimes.

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Um, what gets me going and what, continus the momentum for me is

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precisely the, the, the engagement that I have with businesses in general, and

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especially with the younger generations of, , entrepreneurs and executives.

JENN: 00:01:08

Is it becoming easier for, for organizations to go this route?

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I know it used to be we put in some recycling bins and, you know, do, do

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a little bit of surface uh, change.

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But is it becoming easier?

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Um, as you say, the more that that things are being driven by all these different,

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uh, realms, these different areas,

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Um, I think the short answer is no, it's not

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easier because this is a very complex underlying problem to go from business

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as usual to being a responsible or.

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Business.

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It's a very fundamental transformation.

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I often call this a disruption in business as usual because companies are liking the

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skills, the knowledge, and the experience they require in order to address

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this environmental and social issues.

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So I do not think it's becoming easier or, or ever easy.

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I think, um, what is happening is that, The change itself is becoming, first

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of all, more mainstream therefore, second of all, more legitimate.

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Because in the past, I would say, you know, 20, 30 years ago, even though some

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companies had some commitments, if you were to come out so forcefully, um, you

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would probably be guarded as a a, a, not the marginal business, but the except.

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, to the rule, something that was at the periphery of business.

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Whereas now whether we talk about governments, whether we talk about

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investors, whether we talk about broadly the social license to operate, it's

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not only expected, but it's actually demanded that businesses were at

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least engaged in this transformation.

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So, although the transformation itself hasn't become easier, The legitimacy

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of cha of, of, of change and in a embarking this of change is becoming, uh,

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mainstream.

JENN: 00:03:05

Are you noticing that people who are beginning businesses have this, have the

JENN: 00:03:10

environment in their consideration, or are you noticing more established companies

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that are wanting to make the shift?

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Because I imagine one might be, um, one might be far more difficult

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to accomplish than the other

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ESG with Prof Ioannou - IONNIS: It is both.

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I think it is both.

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And I think like every period of disruption, there's challenges

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and opportunities and change's gonna come from two sources.

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Existing players adapting what they do and new players entering and

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disrupting traditional business.

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And we have seen this, and let me start with the entrepreneurship side.

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We have seen this particularly in the last year or two.

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The reason why venture capital and venture capitalists and even high net

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worth individuals are increasingly investing in new ventures because we

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know that these entrepreneurial startups have the potential for groundbreaking

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innovations, which we desperately.

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Need in some sectors, right, technological or otherwise, and

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therefore everybody is looking for the next best idea in this space.

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An idea that is powerful, an idea that can bring about an innovation that can

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solve one of the world's challenges and at the same time be profitable.

JENN: 00:04:18

And why do we need it to be profitable?

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Not because, you know, I mean, yeah, of course it's nice to be

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profitable, but in my view, a viable.

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Profitable business is the business that scales up, and if we want these

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solutions to have a bigger impact on the grand challenges, we desperately

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need these solutions to scale up.

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That's why I personally believe in the power of business as an institution,

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because it's one of those institutions, if not the only one, to be honest,

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that can scale up solutions so quickly.

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And efficiently and effectively, and we have seen this disruption,

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we have seen this entry, right?

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Think about Tesla in the automobile industry.

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Think about impossible foods and beyond meat into the traditional meat industry.

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Think about

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in alternative milks and so on and so forth.

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So we have seen this disruption happening and I think that is

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gonna be a main driver of change.

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But as you, we said at the beginning, there's also the large companies adapt.

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And it makes sense, right?

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You might think about all of the stakeholders they currently have.

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Their customers are demanding more environmentally and socially

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responsible products and services.

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Their investors are demanding the integration of ESG into their and into

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their operations so that they're able to value them in their investment decisions.

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Governments are demanding more in terms of environmental regulations

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and disclosures a lot of the time.

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Right.

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On top of that, they have social movements knocking on their door

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and demanding that they do more.

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Also, their own employees.

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Think about what happened with McKinsey 2021, right?

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They send a letter to the, to the leadership of the organization.

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Look, we are working with some of the world's largest carbon meters,

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but it seems to us that we're not doing enough to their impact.

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No responds by October that year.

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We, we see designations of McKinsey consultants because their vision did not

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align with the align with the business.

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And on top of all that, of course, it is the underlying science, right?

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In recent years, we understand much more, of course, about climate

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change, plastics, pollution, deforestation, biodiversity laws.

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We have the planetary boundaries framework that tell us how bad

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we're really doing as a system.

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With all of those pressures, how could you possibly be a large business and survive

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if you don't adapt to those pressures?

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So we, we, the second kind of, uh, uh, engine of change in addition

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to the startups, is going to be those businesses that, first of

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all understand the scale and scope.

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Of the adaptation challenge and second of all, make it true and honest and authentic

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commitment to really transform themselves.

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There is no such thing, of course, as a hundred percent sustainable

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business, but we have seen.

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A number of successful attempts up to now and you know, the usual suspects that we

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all know and talk about companies like Unilever and the Sustainable Living Plan.

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Uh, leaders like Paul Paulman, leaders like Indra Nui and the Performance with

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Purpose at PepsiCo and so on so forth.

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We have seen those attempts and we have seen how difficult they are.

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So I think those are the two engines through which.

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We are gonna see change.

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And on a, on a, on a slight note here, I think this also highlights the

JENN: 00:07:31

period of disruption we are in, right?

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Because we see a lot of new entry and we see, uh, extraordinary adapt

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adaptation attempts by existing players.

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And we need to be clear that there's no rosy path ahead.

JENN: 00:07:45

Periods of disruption, what do they do?

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They live behind casualties.

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Not all companies will be able to transition.

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In fact, as I often say, the corporate graveyard is packed with

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one's iconic brands that failed.

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To navigate disruptions call Polaroid, Sears, Blockbuster.

JENN: 00:08:04

The LI then is endless.

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And now honestly we are facing a disruption that we haven't seen before

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because the environmental and social challenges, if we are being honest

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with ourselves, these are issues that businesses for sweeping under the rag.

JENN: 00:08:18

Right.

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As long as nobody knows that I have children in the, in the minds, I can

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just keep having them as nobody knows that I'm polluting the local rivers.

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I can keep polluting and so on and so forth.

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And now it's time to pay the bill.

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Right.

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These are issues that in the past businesses were essentially not

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engaging perhaps as much as they should, uh, and that's what makes

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this disruption potentially dangerous for some of them that continue to