Net Zero, one bite at a time

Rowena Daines (née Morris):

If business is to successfully play its part in addressing the climate’s emergency, then meaningful action needs to start now. The commitments made at COP 26 increasing regulations and growing public and market demand for change are driving this momentum, but the size and the complexity is overwhelming. So where do you start? How do you focus your strategy, get your people making the right choices and sustain that energy to deliver real results? Today, we're taking a closer look from the perspective of the business that is leading the way in embedding sustainable value and purpose in what they do. James Wright, MD of Jude’s Ice Cream is here to unpick their journey producing carbon negative ice cream alongside their B Corp status. He's joined by Zubin Randeria, leader of PwC’s ESG business to explore what others can learn from this journey in order to drive change through their own organisations to make business a force for good.

James, thanks for joining and welcome to our virtual studio. How are you doing?

James Wright:

Hey Rowena, hey Zubin. Great to be with you.

Zubin Randeria:

Yes. Hello everyone. Very nice to be here.

Rowena

Thanks both. Regular listeners to our podcast will be no strangers to the topic of all things ESG, or how businesses are embracing purpose, but even so when you hear about an achievement such as carbon negative ice cream, a step beyond net zero, then you do sit up and take notice. So, James, before we get into the details of that success, let's just take a step back and what spurs that level of ambition?

James:

So we are a carbon negativeB Corp and the idea around B Corporations, is that businesses should, and can be, forces for good and we really believe this. We want everything we do to go through that prism of ‘we want to be a force for good’. We want to make the really difficult but really important and really meaningful decisions in all we do. We happen to make the most amazing ice cream, but we want to be a force for good. As you said in the introduction about being a force for good, I think the carbon negative story for us is a good example. We became carbon negative as a business and for us, that means we offset 110% of our emissions scope 1 to 3 in the middle of COVID when we'd lost half our business overnight. Looking back at that time, none of us really want to look back to two years ago, but it was a really difficult time and very uncertain what was going to happen, but the reason we became carbon negative then, was that it was the right thing to do. We didn't want to wait ‘til 2050 or 2040. Everyone is aware that the climate emergency is real, and it is bigger than we thought. We've always been a sustainable business, but we looked into the detail and we thought, right, we've got to do something. We've got to do it now and like everything we do at Jude’s, we want to do everything we do to the best of our abilities, whether that's making the best ice cream, giving our customers the best customer service, bringing all our consumers bringing them joy in everything they eat. We wanted to really tackle this problem of climate and carbon and really understand it. And so, we put everything we have into it, which has been an amazing journey and I think I’d just say that the most important thing for us in this journey has been carbon reduction and the focus on how do we reduce our carbon intensity. I suspect we'll come to that in a bit as we chat. Rowena, that's just a background on Jude’s.

Rowena:

Brilliant, and just an amazing story. Zubin, is this something that we should expect to see others capitalising on as well?

Zubin:

When I look at what's happening in the world, what we're seeing is that if you're a really long term investor, if you're a pension firm, then climate risk is going to play quite an increasing impact on your long term investment returns. If you're investing money for 40, 50 years, you can see the world of 40, 50 years away could look quite profoundly different if we don't get a grip with climate change, and therefore, we're seeing long term money, moving their money under this agenda. Therefore, where we see companies being able to be agile and transform and meet the needs of what long term money is looking for, then you're going to stand out from the pack, and it comes to a cost of capital question. If you have long term money on your shareholder register, that's the lowest cost of money around. Being able to make sure that you are receptive to what your shareholders want as they are changing their demands from you and that we are seeing pension funds making commitments to say we'll move to net zero investments by 2030 to 2035 unless you transform as a corporate, then, those shareholders are going to exit, and you will have more expensive money. Therefore, what we're seeing increasingly is companies recognising, and the oil industry have been in this place for a long time, recognising that they need to transform, otherwise it's going to have an impact on their business. Whereas if they do transform, as a company, seeing this as a source of competitive advantage, because they can be very valuable in the hands of investors of tomorrow.

James:

Zubin, I totally agree. It is the classic line ‘if we wait for the consumer to tell us what they want, we're going to be too late’ and all of us personally, individually, we're all aware that where we spend our money is the most powerful action that we can take and all of us as consumers, all of us as individuals, we're becoming increasingly aware, increasingly discerning about carbon and the climate. We all want to make the right choices daily and for us at Jude’s we want to be that catalyst for change to say, look, this is what's possible we want to give our customers a choice. If you choose the Jude’s tub of ice cream, you know that we're doing everything we can to reduce our carbon intensity. Last year, we reduced our carbon intensity by 20%. We're really focused on that and for everyone else, we want to show ‘look it's possible’. We can make steps and all together, all these incremental changes, little changes we can all make, and we add them all together can make a big difference, but we can begin that journey.

Zubin:

It’s interesting James actually, it reminds me of in the olden days, clocks used to run at different times through the UK. There was only once the advent of railways on a common gauge, where people needed to have a standard time. I definitely feel this at the moment that I don't think regulation is going to be the final answer, regulation will follow where consumer attitudes and the market and the needs of investors will try this, and I can see the market driving change way quicker than regulation, just like with the standardisation of time when the railways were brought in. It was the need for the market to have standard time rather than somebody invented a regulation saying we need a standardised time system. Therefore, there's a lot of market force and a building market force at the moment.

Rowena:

Let’s build on that then, it seems like the ideal point to start to explore some of those details. James, where do you start with this level of change within an organisation?

James:

Rowena, the first place to start is involving everyone, how we've done at the Jude’s. We've stepped back. We've recognised, there is this huge issue, we've worked with Professor Mike Berners-Lee, who has really helped us with the science behind it and his team, but it's really starting stepping back and involving everybody. This is not just an individual's responsibility; this is a corporate collective responsibility. Okay, this is the issue. How can we resolve this, how can we fix this, what can we do? You had the benefit of the hive mind, everyone now thinks of carbon in terms of their specific areas. We've had a huge benefit over the last year. I mentioned we’ve reduced our intensity by 20% over the last year, and a big driver of that is that everyone has been thinking about it, and a bit like how to make the best ice cream. The best ice cream is made by lots of little fine tweaks, lots of little changes and we have found the carbon side, sustainability side, is that with everyone thinking about, everyone making those little different steps/changes, you add it all up and it can make a big difference. Probably the first thing for me to say is involve everyone, but then also don’t be daunted, because it is really daunting, isn't it? The climate topic is really daunting. How can we impact this? It's such a big topic, but if we just think that we're not going to get it perfect straight away. Perfection isn't the goal. The goal is just to make that first step of thinking, ‘okay, what can I do today, what are the choices we all have, and how can we start to make that meaningful difference?’

Zubin:

It's an interesting question, Rowena in terms of where you start with all this. We're finding companies starting from different places. Some organisations are starting from a position where they've been thinking about this, thinking how this creates a source of competitive advantage and this is, let's call it, a way of creating value. They're quite far down the road in their thinking. We're also seeing companies just waking up to this issue, and got clients where the board has said, we need to appoint somebody to start helping us with this on the board or in the management team who's going to take responsibility for it, and often many come from quite defensive standpoint, saying ‘what do I need to do? Help me here.’ Often the area which people encounter first is when they have to start reporting stuff. When you report stuff, then you're under the scrutiny of external stakeholders, and then companies need to think quite clearly as to how they're going to get the information that they can report, where's this information coming from? Very quickly, that will be interesting to get James's take on it. You don't look just in your own organisation, you’ve got to look beyond the borders for your business, upstream and downstream. Because, for example, when we talk about carbon intensity and carbon emissions and we talk about there's different scopes of emissions, aren’t there? The stuff you do yourself, but also, you're buying stuff from suppliers. You need to understand the scope of their emissions as well and therefore, looking through your supply chain becomes absolutely critical and that is hard at the moment, and I'd be interested in James’s take on how you dealt with that challenge, and it’s no good just Jude’s in isolation being carbon negative, because you rely on so many other parts of your supply chain.

James:

Yeah, absolutely. We want to be a catalyst for change. In all of this, we want to share how we've done it. The goal is for everyone to reduce carbon and everyone to be thinking about this. I totally agree with Zubin like a few years ago, if you ask people ‘okay, what is the carbon in this product or in the supply chain?’ not many people had the answers, but what's great now is that more people are asking you the same questions. Now that information is becoming more available, but it's absolutely not perfect, but that can't be the obstacle for not keeping on going, and as the months and years go on, the information will become better. But a learning for us, especially over the last two to three years is that we are really aware that offsetting, we are carbon negative scoped 1 to 3 in terms of what we offset, but offsetting isn't the answer, for us it's more like we happen to offset but the most important thing for us is, how do we reduce carbon intensity? That's the key question within this whole area for every business, every family, every individual to think in terms of how they live life. How can they reduce their carbon intensity and asking questions related to that. The more of us who ask those questions, the more innovation that will happen, the faster it will happen. It's incredible how quickly things can adapt and change. I definitely agree that the information is often really hard to get to and there's different ways of measuring things. It's probably never going to be perfect, but if we're all collectively focused on ‘okay, how do we reduce? What can we do?’ then it will make a difference.

Zubin:

It's interesting, James. At one level, you can be completely daunted by all of this. How do you cover information on stuff that you've never gathered before? How do you make sense of it? Is certain amount of carbon emissions good or bad? It’s new for a lot of people. One thing that we've found is, I’ll just use the analogy of cost. Many organisations are familiar with how you take cost out of your business and take cost out of your business by you get to the baseline as to what your current costs are, and then you look at what are the demands for activities, which create the demands for stuff that you spend on, and then you work out, do you need those things that you're spending money on, and then you can take the cost out. There is quite a clear analogy in my mind that you can do something pretty similar in a rough and ready way around carbon. You can do a carbon baseline, but typically in organisations where you spend money often is where you emit carbon and where you spend money, you then need to look through what is the demand for those expenditures and therefore, you can then look through not just carbon offsets, but the carbon removals, but carbon avoidance, i.e. you stop the demand for the activity in the first place just by stopping the demand for an activity you need to save money. There are a whole lot of tools and thinking that companies can bring which aren't too dissimilar from what they've had to deal with on a day-to-day basis just with a different mindset.

James:

Absolutely. The information is king, isn't it? Five years ago, if you asked anyone could they tell you the carbon footprints of their different products or services, I imagine the answer would probably be very few, if none. Whereas now, if we can start to build carbon into, as you say essentially our cost matrix, an example for us is that we're working out for every flavour, every skew that we produce, what is the carbon footprint? Then, we have the whole different measurement of okay, what flavours, what products do we want in the market, if this product has a higher carbon intensity because for whatever reason in the supply chain, do we want to be selling that product? The answer is probably no, and we can create an even better and even more delicious alternative, but having that information, so then think okay, look, here's a longtail, here's how our sales mix is made up of the different services. But being able to have that conversation and think about it is, for us, really exciting now that this information is now starting to become available. We can really do that additional bit of analysis, and it will be fascinating. I don't know for PwC, but for you guys and most of your clients of understanding what is the carbon of the different services or the different products everyone produces/supplies and then for us it will be making decisions, including carbon in that.

Rowena:

James, building on that and listening to the transformation needed, obviously that data and clarity on that reporting and progress is really important, but also having that mindset and energy that you mentioned around your people is just such a huge factor in pushing through these goals, it would be really interesting to hear what are some of the practical advice points that you'd give around that side of the agenda?

James:

Yeah, Rowena it's all about involving everyone. It's a bit like we’re a B Corp and that's really embedded in our team. The idea that we want to be a force for good and the different stakeholders and pillars that we approach that for and it's the same for the sustainability side, it’s everyone being involved, regularly meeting and talking about it, but if you can galvanise the energy of your team, then I think you can make a real difference. Everyone would be surprised how much of a difference can be made. I'd say that's really important, and for us another thing that's really important is we're part of the B Corp community. B Corporations is an amazing community. For us, it's great because we will be challenging ourselves internally and lots of questions and we'll know a bit of stuff, but we're never going to know everything and we're never going to be able to challenge ourselves as robustly having been part of the community who is also thinking about the same topics and same questions. The answer really for us is having everyone involved internally and then it's being open to other challenging voices. We want to be challenged ultimately. For Jude’s, we're looking to create the best ice cream, give the best customer service, bring life to people and planet and to do that really well, we need to and want to be challenged so we get better.

Zubin:

It's interesting James. Your story in terms of what you've done with Jude’s and becoming a B Corp is an inspirational story. Many organisations aren't B Corp, what we're seeing is, Bloomberg has pointed by 2025 they expect 50 trillion dollars of assets being managed under ESG mandates, and therefore, whether you're B Corp or not, this is coming. Investors are making demands of organisations that they will have never seen before; and therefore, the more you can build in whether it's a B Corp or not, the way that James has talked about building this thing into integrated decision making, integrated thinking, integrated reporting, this becomes the heart of your business, rather than an adjunct of your business, then that's the critical part. Therefore, there's so much of hearts and minds parts of this here, which otherwise investors will find you increasingly un-investable down the line and that's the bit, which we're finding, companies being engaging, it’s not just the B Corp which are leading the way, but as we see long term money is forcing companies to get on this agenda and shape the agenda.

James:

I totally agree that, because if we all reflect on our spending habits, and how our thinking is evolving. We're all spending differently and that's just going to increase every year. There are real events behind this and for example, I haven't mentioned plant based ice cream, plant based products for us is a huge part of our business, and we're really focused on and we started it five years ago. The example here is that five years ago, if you talk about plant based products, most people probably would be thinking in their mind ‘I'm going to sacrifice a bit of quality if I do that, and it won't be as nice’. We've really focused on creating products, which are as good, if not better than our dairy products, and the huge advantage of them is that they have a lower carbon footprint, and that's being able to get to where we are today is through lots of innovation, lots of work and thinking okay, this is possible, we can make that change. Today, we will see that this is what consumers are really looking for and after, and willing to change their spending habits.

Rowena:

If you had to share some of your top one or two lessons James, from Jude’s, what would they be?

James:

Just begin. No one is going to get it perfect. Just begin, take the first step. Have a team meeting, have all your different teams have a meeting, it’s a shared problem, carbon, how do we tackle this? And then run with it and see how the collective energy of the team and business comes up with answers, ideas, and solutions. Jumping back to Zubin’s last point, to also mention in terms of, we didn’t used to have a sustainability team at Jude’s. We are a relatively small business, but we now do, because, for us, it's the most important part of our business. We are really focused on making sure that every month, every year, we are getting better at this. The first one would be to just begin, involve people, if you can allocate budget to it. It's such a key topic and try to begin. We talked earlier about the information, information is king, try to gather the information on your business in terms of its carbon footprint, and try to understand that detail.

Rowena:

Brilliant advice there, and Zubin, what about companies and other industries do with multinational complex structures and supply chains. What would be your advice?

Zubin:

I will just go back to: this is happening now, this is what investors are wanting. You just heard from James. This is what consumers are wanting; and therefore, this is making the case that transformative change to make your company not just relevant for the future, but the front runners will be the ones, who gain competitive advantage out of this, because they will be distinctive in their markets, to their customers and to their investors, and to their stakeholders and to their people in the future. Therefore, if you can embrace what's happening in the world, and think ‘what does the world in five years’ time need from an organisation like me?’ And change your organisation so you’re relevant, then that's a true source of competitive advantage and it's a source of sustained success.

Rowena:

Thank you, some great advice there too to end on. So that draws us to the close of another ‘in conversation with’ episode in our Business in Focus podcast. Thanks so much James and Zubin for a fascinating discussion and really good advice there. If this conversation has got you thinking about how you can put ESG goals at the heart of your business strategy, please visit our website at pwc.co.uk/esg, where you can find out more about the work that we're doing to support businesses across this agenda, as well as wide practical insights. Of course, thank you to everyone for listening and don't forget to subscribe to keep up to date with future episodes. Thanks everyone, and please tune in again soon.

Participants

• Rowena Daines (née Morris)
• James Wright
• Zubin Randeria