Manage. Back. Better.

Tuesday 04 August 2020
We brought together a group of senior CMI members and partners to imagine a world where all management decisions factored in sustainability and net-zero targets. A fascinating discussion ensued...
Sustainable building emerging from trees

Will a future recovery be a green recovery? Will we really ‘build back better’? And how must managers and leaders change their behaviours to help drive the UK towards a net-zero economy by 2050?

These were some of the questions under discussion at the latest special CMI partner and experts roundtable on ‘Sustainability and design’. The group comprised large companies, pension funds, public-sector organisations, small companies, training providers and regional CMI board representatives and, thus, provided a snapshot of attitudes across the economy.

We must change

There was a general feeling among participants – echoed in a recent conversation between CMI chief executive Ann Francke; Dr Hayaatun Sillem CCMI, chief executive of the Royal Academy of Engineering; and Lt General Richard Nugee CCMI climate change and sustainability lead at the Ministry of Defence – that Covid-19 will transform social and economic attitudes towards sustainability.

Dr Paulina Chan CCMI, chair of CMI’s board in Hong Kong, argued that virtual communications is now “a standard, not an ad-hoc process.” The millions of journeys that this saves will have significant, positive environmental consequences. This will trigger new management dynamics. As Crawford Knott, managing director of Hawk Training, said: “you’ll be managing people that you never meet; and have to have difficult conversations virtually. We’ll need to give people the training around communication in this new world.”

The employer-employee dynamic will also change. Several attendees argued that a commitment to sustainability will be the only way that organisations will be able to recruit and retain talent. Especially among the Gen Z age group, there is now a fierce commitment to genuine green initiatives. “The pandemic exposed the vulnerability of the global food system and, in the UK an over-reliance on imported food and an unsustainable diet. As we come out of the crisis, if employers are really seeking to attract to retain great talent, then they're going to have to demonstrate some form of purpose, particularly around the sustainability agenda. For Compass, the crisis has accelerated our focus around sustainability. We already have a UK-first sourcing policy which means in practice 80% of what we serve in B&I is British”. said Morag Freathy​, managing director of the Business and Industry sector within the market leading food services business Compass Group UK & Ireland.

The challenges of the short term

In the short term, many companies – particularly the small companies that are the backbone of the UK economy – have had to take on high levels of debt to keep afloat during the Covid-19 crisis, said Lee Hopley, deputy director of the Enterprise Research Centre at Warwick and Aston Business Schools. Yes, they may have reduced carbon emissions by moving to home-working, but this is “a second-order consequence,” she said. For every company that’s pivoted to a new business model, there are thousands that are on the brink. For these companies, green initiatives may take time to become a priority.

Crawford Knott’s Hawk Training is itself an SME, with 90 employees. He says that many small companies are “in survival mode”. He anticipates an upsurge in entrepreneurialism and people setting up their own micro-businesses with many people being made redundant. It’s likely that these new businesses and jobs will be flexibly designed in a way that doesn’t involve offices and commuting.

Ian Jenkinson, chair of the Staffordshire Pensions Board, gave a vivid illustration of the rapid consequences of the pandemic. The pension fund, which has a large and significant property holding across the UK, received less than 20% of rental income from the estate in the second quarter of 2020. “We're very concerned,” says Jenkinson. “We have deep pockets and can stand a quarter's loss, but if there is a permanent, structural shift away from people working in city centres and offices, it could have serious consequences for many financial institutions”. Jenkinson adds that “if homeworking is going to increase in the future, we also need to start thinking about energy efficiency in private homes.”

CMI research echoes the tension in these comments: the majority of managers (82%) say that Covid has created the opportunity for organisations to focus on environmental sustainability. However, only 58% of managers said that environmental sustainability was a business priority for senior leaders in their own organisation.

Long-term thinking required

There have of course been countless government-sponsored plans and initiatives over the years. Every year seems to bring another ‘green deal’.

Looking ahead, a mixture of policy levers are needed. Regulation (eg, Green Action Plans) can be important but these need to be accompanied by sufficient funding and support from government to enable employers to respond to regulation.

As Neil Reynolds, partner engagement lead for CMI Cymru, puts it: “you do need a bit of push and pull – the regulation ensuring that businesses respond; but also the vehicles to allow companies to respond to the policies and regulations. Without incentives, not a lot will happen. Incentives will also encourage more sustainable innovation” In the past few days, it’s been revealed that the Treasury is drawing up plans for a UK investment bank to plug the gap left by the European Investment Bank now that the UK has left the European Union. A new UK version would, the Financial Times says, pump billions into infrastructure projects. Other ministers argue for a purely ‘Green’ investment bank. The issues related to sustainability and climate change can seem impossibly complex and remote. As Ian Jenkinson wryly says: “I guess there's five to ten years before we even agree some of the definitions of what is regarded as a sustainable agenda.”

In the simplest terms, the government needs to set credible strategies. Companies and financial institutions must be transparent about the environmental impact of their activities and holdings. And managers and leaders must build longer-term views in their decision-making, ones that incorporate the sustainability agenda.

CMI will continue to put forward policy provocations and suggestions, and encourage responsible action. We look forward to engaging with members, partners and stakeholders on a regular basis in the future.

You can read the discussion paper in full here, which has further detail on how Covid-19 may have altered our attitudes, expectations and behaviour towards the environment.

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