 From around the globe, it's theCUBE with digital coverage of IBM Think 2021 brought to you by IBM. Hello everybody, welcome back to IBM Think 2021. This is theCUBE's ongoing coverage. We go out to the events. Of course in this case we do so virtually to extract the signal from the noise. My name is Dave Vellante and now we're going to talk about the intersection of business success and sustainability. It's a hot topic. We have a great panel for you. With me are Ali, Kamali, Sustainability and Climate Practice Lead at IBM Canada. Lucy Bonet is a senior consultant in customer experience and sustainability strategy also from IBM Canada and Karik Morris, executive partner, enterprise strategy, global energy and sustainability lead IBM UK. Folks, welcome to the panel, welcome to theCUBE. Thanks for coming on. Thank you. Thank you. Maybe Lucy you could kick it off to talk about what is sustainability and how has it all of a sudden become such a hot topic amongst leadership? Yeah, sure. So first off, it's actually my pleasure that sustainability has finally become a trendy topic and is now a key imperative in the business world. The pandemic really played a role in it as it made people realize that there's an intricate link between global scale events like the climate crisis leading to the acceleration of viruses spread and their own personal health or of their business. So sustainability really means that you're addressing the needs of the present without compromising the needs of future generations. To do so, companies use different frameworks and standards including ESG, standing for environmental, social and governance criteria to really assess their progress on their journey to sustainability. It comes with many metrics that they track or should track and choose to disclose for the greater benefit of all. One prerequisite I'd say to really building a successful sustainable company is really the need for a new form of leadership style. One that is purpose driven that really focuses on doing well while doing the right thing. And I mean, you might need examples here to illustrate what I'm saying. You could take Unilever and the really radical transformation of the palm oil industry they're leading. If Unilever did nothing, serious risk would really be posed in a few years on their whole business. So the company has started working with all actors across its value chain from training farmers to building alliances with competitors and stakeholders. And what Unilever is doing for the palm oil industry is actually cementing its reputation as an innovator and they're already reaping the benefits of having been first movers. All right, Karik, Lucy talked about an imperative. So take away there, it's not a check box, it's something that's sort of designed in. I wonder if you could talk to that. Yeah, I mean, sustainability is at the end of the day now is built into every decision, every process, every system. And leadership role in that space is about sort of developing new corporate strategies, new cultures, new approaches which are around. You know, actually how do I sort of do this? It's a real paradigm shift. It's not something you add to your business, it's something that needs to be called to your business. And that's requiring us to kind of re-imagining how we sort of go to work, how we do business, the processes, developing new products, leveraging new technologies. It's putting all of those pieces in and sort of making them work. And the key part of it is how do you do this in a way where we're not forcing people to make a choice between sustainability and profitability, sustainability and a way of quality of life. So it's how you kind of build that into kind of the core products and services and again use that ingenuity to kind of develop those and sort of develop the components that you need to as part of that process. The other part of this is then sort of getting into well actually from a leadership perspective, now how do I then change and the way that I sort of work with partners, with suppliers, with competitors? So it's really fundamentally changing the way the business itself works as well. You know, thank you. You know, Allie, when I talk about ESG, I sometimes tongue in cheek say Milton Friedman's probably rolling over in his grave because he's the economist who said that the only job of a company is to make profits and drive shareholder value. And so that's, I mean, that's a historical challenge but there's actually a business case for this. It's actually good business and we'll talk about that but maybe you could address some of the challenges that organizations are facing to really lean in and address ESG. Yeah, that's right. You know, there are a lot of components to go into this and as Lucy mentioned and Karik mentioned the complexities that come with that are a lot. They're significant. And so I'd say that the first challenge that I see is in regards to the alignment and integration of sustainability strategy within the organization's business model. So if we take a look at the typical life cycle which includes sourcing, production, operations, distribution and then end of life and recycling each of these components must consider the conduits for driving positive social impact and environmental stewardship. But that also, as you said drives opportunity and economic benefits for the organization. So these are components that could fall into three categories. The first one is what is the journey to net zero look like for you? How will I transform my operations, my strategy, my business models to achieve a net zero mission? What is circularity in the context of my business? How do I orchestrate for zero waste and include reuse, regenerative processes, restorative processes? And then how do I build in principles of sustainability into the design so that I integrate those components into the ways of working within this new world of sustainability that we're seeing? It's also the what and the how coming together to enable long-term value creation for the company. The second challenge that I see is around the performance monitoring and management. And as they say, you can't manage what you can measure. And so many organizations might not have the complexity roadmap laid out for the systems and data that's required in order to enable transparent and quality reporting. We think about data knowing what you have versus what you don't. Data management, capturing and transforming that data, integrating that data in a way that has a simple but effective use of methodologies as well as benchmarking. And then having a reporting system that allows you to see everything, almost a control tower of your E, your S, and your G. And then finally, we see sustainability has become a board level priority. It is a hot topic, but it's not always properly understood below the board level. So senior executives sometimes approach the conformance to change in the way that we normally approach things like regulation. But I think in this case, it's quite different because it is a bit of a shift to the person with a purpose as the center. Leaders must lead, they must hire, they must think, design and share. They must meet the challenge paradigms for diversity inclusion. And I think at the same time, encourage diversity but also divergence where it needs to be. They have to have the headspace to accept the truth in the collaboration with all stakeholders. So I think there are ways for companies to do this and for them to be successful. And I think that was one of them. For sure. And I think, Karik, that sort of leads me from what Allie was saying about IBM, big company has a big ecosystem. There are other large leaders within industry that can leverage ecosystems. And it may be set the tone and show the point the way for the long tail of smaller companies. But maybe you could talk about that ecosystem flywheel. What we are sort of saying is actually sort of quite a lot of differences between the way organizations are addressing this. And you are seeing some leaders in this space. And you are seeing people who are taking a stand around these components and actually trying to shape just not only what they do, but also what organizations do around them. And if you kind of look at this, there's almost kind of three categories to that. There are organizations that are sort of seeing this as an existential change. If I'm looking at mining, I'm looking at oil and gas, I'm looking at travel and transport. And what you're sort of seeing there is a fundamental shift in their business. And it's requiring them to rethink how they do things in a very structured and actually quite an extended way. If I'm looking at other organizations like retailers, it's actually a little less of an existential change. It's a more of an incremental one. But even so, they still have to change all that they do. But they can do it in probably a more staged approach. And then you've got influencers around that as well. So governments and financial services players, et cetera, who are sort of shaping the agenda and who need help and support around thinking through how they kind of measure the change, how they sort of make sure they're financing the right things, how they make sure they're actually sort of getting the returns they expect and actually the sustainability components are actually being driven by that. And I think that's kind of sort of where an organization like IBM comes in. There's a lot of technical change in here. There's a lot of data change in here. And actually these are the sorts of things that from a sustainability perspective are going to help to drive this in a more seamless and an achievable way, if you will. And so there's an awful lot that we're looking to try to do to enable that quickly, to kind of take things off the shelf, to rapidly test, and to actually sort of show people both what can be done and the value it then can create by sort of going down the sustainability journey. Okay, got it. Thank you. And Lucy, you touched on some examples at a high level in your opening remarks. And I'm interested in kind of the starting point that you see companies taking. And what's the right regime? I mean, you've got to put somebody, somebody's got to be accountable for the measurements and the cultural changes, but where do we start? Right, so one starting point is definitely to be looking at your data, right? And it's really tempting to forget when you're building products or you're creating experiences, it's tempting to forget thinking about their repercussions on the environment, on communities and on society. Their impact is made invisible for the sake of immediate user satisfaction and short-term business value. And, you know, although 60% of executives consider sustainability to be an essential competitive advantage, 80% actually of the products ecological impacts are locked in at the design phase. So that's why, you know, with a team of four IBM superstars, we've created the Sustainable Design Thinking Toolkit that was just launched and is in the process of being integrated into the official IBM Design Thinking site. And that's really a great start because it's meant to help design thinking practitioners take responsibility on making that impact visible from the very start of the process. And we've used it with multiple clients and for internal projects. And, you know, it's really helped infuse a sustainable mindset throughout the workflows and actually from the very, very start of it. One recent example was in the CPG industry where we've applied our new Sustainable Design Thinking activities to the problem at hand to get consumers to recycle more by enhancing their recycling experience. And what it allowed us to do is really to make sure that, you know, the privatization process of the first ideas that emerged included sustainable value into the mix so that the impact on the planet and communities wasn't a blind spot anymore. So thank you for that, Lucy. And Karik, I wonder, you know, Lucy was talking about, you know, start with the data and that's cool. Sometimes I get worried though, there's going to be analysis by paralysis and overthinking the strategy. Are there ways to get in and take smaller bites and iterate? What are your thoughts on that? Yeah, I mean, I think there absolutely are. And, you know, with lots of organizations, they really have to kind of feel their way into this new approach. You know, you actually kind of have to learn both what sustainability means but also sort of what it can deliver. So, you know, usually what we're sort of seeing is as organizations will start off with things which are under their control. So how can I change my manufacturing processes? How can I change some of the internal components of what it is that we do to make them more sustainable, to reduce waste, to reduce sort of kind of the energy usage components which are associated with that. And that's quite a nice controlled starting point using, you know, leveraging things like sort of manufacturing 4.0, intelligent processes, you know, maximum asset management type approaches. The second step we're sort of seeing with lots of organizations is that they're then moving into kind of their own ecosystem, if you will. So, you know, actually, how do I manage my supply chain more effectively? How do I drive transparency? How do I sort of also drive efficiency and carbon management from that sort of perspective? But also, how do I sort of highlight the sustainable gains I'm making on my products and get those messages to customers and highlights of what we're doing with both new products and services but also with the existing products and services. And then sort of your kind of your final piece, and actually this depends, it kind of goes back to what I was saying before about what industry you're in. But, you know, a lot of industries are also having to kind of face the challenge of any to change fundamentally. You know, the business I'm in is not going to work the way it works in a sustainable world. So actually, how do I kind of build an ecosystem-based approach? How do I kind of work with other partners? How do I kind of work with suppliers? How do I work with competitors? And actually, how do I build something at scale around a platform in order to be able to deliver these types of things? At IBM, we've been kind of creating some of those platforms and then scaling them quite rapidly sort of across a variety of different sectors. Yeah, and that's where you're going to see the measurable impact. Ali, do you have a framework for what the successful outcome looks like? Are there companies that are sort of models of success? I mean, I think IBM is one of them but maybe you could talk to that. Yeah, there are definitely companies to emulate and companies have really started to think about the connection point between the value that's driven by their business model as well as the effort and the impact that's being driven by their ESG, their ESG focus. And so while there might be components of success, I think getting it all together and all right is going to take time and it's going to be a bit of a sequence but a bit of a thought experiment. If you could sit into a boardroom or at a senior level executive discussion, when you think about success, would you hear things or discussions around how the company is building the environmental and social inputs to its products and services? And what does that sound like? Are they tangible, are they realistic and what are the methods and the tools that they're using? Would you hear conversations about how the company is evaluating or infusing sustainability across the value chain from procurement all the way to end of life or how about the participation of the company into other ecosystems that's driving the value into other industries? And we see the force multiplier effect that comes with that when companies partner together because we are either vendors or providers or consumers of every other product or service. And then I think lastly, would organizations start to think about how to generate value closer to home and how that value can be driven into communities into where their employees are based and those elements really improve the social element. So what to say last is there are elements of what good and success looks like when it comes to sustainability. But I think organizations can set their targets and meet industry benchmarks and frameworks which already exist and are really well-established but continuously increase their own targets to set better and more ambitious goals for themselves to move beyond, to leverage technology and be innovative and apply these tools and best practices in order to get there. And I think we'll get there over time. So I'm really encouraged by the progress that we're seeing and we hope at IBM to help accelerate that journey. Thank you. And Lucy, one of the things I'm excited about is the tech because this is where I think business does meet. Sustainability mean green tech, EEV. I mean, if I'm a nation, I want to be on top of that. If I'm a company, I think there's opportunities for invention and innovation. Can you talk about some of those innovative texts that we're likely to see? Right. Well, yeah, but to piggyback on what Ale is just saying and I think success can come in very different ways and forms be it creating entirely new business models like some clients we help in the oil and gas industry taking really bold commitments to shift to electric energy or significantly cutting costs such as there's brands in the CPG industry that are doing amazing things to optimize their supply chains and make them more efficient, more transparent, more secure or also protecting brand reputation and mitigating risks or gaining market share by creating differentiating value. You might have heard about L'Oréal taking really bold moves and switching all their products to 95% renewable plant sources and circular processes. It can also be about capturing value by charging a premium for sustainable products. Think about Tesla or Whole Foods, for example. I mean, there's so many great examples out there already. Excellent. So we got a wrap on some of my last question and I'll start with Ali and then we'll go to Carrick and Lucy can bring us home. Talk about why you were talking about ESG reporting and transparency and how it's great for the future and the economy and so forth. Why is this not going to be a fad? Why is it going to be sustainable? The sustainability of sustainable. Ali, please kick it off and then we'll go to Carrick and then Lucy. You're right. This is a big change for organizations and I think naturally their corporate social responsibility and sustainability reports have really been externally focused and I think that has been a great step in the right direction. But I think what's happening now is this convergence of sustainable material and transparent reporting that is equivalent to material financial reporting that we're seeing and eventually I think the end goal would be to be able to read a sustainable report and understand and quantify as well as qualify how much impact is an organization making year to year? And what are some of the initiatives that's driving what we have begun to see as a sustainable business strategy that is also a competitive advantage for organizations? So I think the benefit in the long term is going to create a lot of value for not just the shareholder but for the stakeholders like employees, like the communities in which these companies operate like regulatory agencies as well as municipal, federal governments and state governments. So I think this is a step in the right direction for providing a very clear direction on their sustainable initiatives. Thank you, thank you, Ali. Karik, can you weigh in here please? Yeah, I mean, I agree with all that Ali said there. I mean, I think with those stakeholders, the end of the day, this is a collective responsibility. We have one planet, one rock we all live on and we all need to be part of the process of actually making it change and you can't sort of change what you can't measure. So kind of holding people to account being able to share sort of the data that we've got and making sure everybody understands what the position is, how we're contributing and the role that we're actually still playing is going to be an incredibly important part of collectively coming together and making this change happen and making this change happen quickly which is what it needs to do. And Lucy, your passion shines through here. So it's appropriate that you close it out. Yeah, well, it all comes down to, do you want your business to still exist in a hundred years from now? And it does require courage and determination but we all have it in ourselves. Trying to find the ways that we can change things for the greater good. Find the energy in yourself to inspire others to act. That's why leaders with purpose and ingenuity are so, so important today. Thank you. Folks, thanks so much for the perspectives. You guys are doing a great work. Really appreciate your time on theCUBE today. Thank you. Thanks for having us. All right, it's been our pleasure and thank you for watching. This is theCUBE's coverage of IBM Think 2021, the virtual edition. We'll be right back.