It’s going to be business first and But as you can see from the title of my presentation, it’s Business First, Sustainability First. I hope to show you today in a very short presentation that business and sustainability do not bite each other. Actually, they enforce each other, but you have to do it the right way. Sustainability is very difficult. So let me take you to Africa. Africa is probably the most extreme continent. So I like taking my examples from there because we can learn a lot from Africa.

This is a small town in the Sahara Desert or on the border of the Sahara Desert, really, near Somalia. And as you can see, it is very, very dry. But what you can also see is some people are starting to arrive here. Now, why would that be? Oh, hang on, a river starts to flow, and more people come here, more and more people, and they bring laundry. and then it’s a full river, and I zoomed in a little bit because there’s actually a lot of naked people taking baths now. So, I’m saving you all the naked people, but where there wasn’t a river, there is now a river flowing. So, nothing special, except this is not a river.

This is the outlet of a wastewater treatment plant, and this wastewater treatment plant produces wastewater continuously, but saves it up in a big tank and then lets it flow into this ditch. And for the local people, this is the only water they have for a whole week. So what is sustainability here? For the company, this is a risk. This is an American company, well actually Anglo-American company. So they have a certain exposure because if one of those people gets ill, they can sue the company. That’s a risk. Should they stop putting the water in there? But then the people in the village don’t have water anymore to bathe and to wash their clothes in.

So this is sustainability in real life. There’s choices to be made and those choices are very difficult to make. And I would like to take you into one direction where we can actually deal with these issues, right? So there’s a reputational risk for this company. There is an absolute need for these people to have this water. So, why would you do sustainability? What are the reasons for sustainability? Now, I’m taking a business approach here. I would say, first of all, risk reduction or risk mitigation. And risks are both negative and positive. You actually run a risk every time you buy a lottery ticket.

You run the risk of becoming a millionaire. So, risk and opportunity are basically the same thing. So, when I say risk, I mean the two of them. For the company, Any company’s sustainability could lead to improved profitability. And we heard this before as well. And Amir, you made a remark about short-termism. My clients do not mind what’s going on in politics as long as they can make a profit. It’s true in a lot of cases.

For us, as consultants, that’s actually not bad. We don’t care. If they’re focused on profitability, let them be focused on profitability. We’ll help them. But we also talked about governance in the first panel. And a company that only looks at profitability is not a very well-governed company. Because in financial matters, you also need to look at your balance sheet. So, if a company does not consider sustainability, or in the example that I showed you, water resources, you can have something that’s called stranded assets. You can have, in the case of Ursus, for example, a brewery without water is not a brewery because You need a lot of water to make the beer because beer mainly is water with a bit of fun thrown into it, right? So stranded assets is on your balance sheet. So a well-run company looks at profit and the balance sheet. And believe it or not, most companies go bankrupt not because they’re not profitable.

They go bankrupt because they don’t have enough cash. So a good company looks at cash flow as well. So if you consider risk mitigation, your profit and loss account, your balance sheet and your cash flow statement, you’re a well-run company. And I also claim that you are probably going to be more sustainable than a company that neglects one of those things. And yes, you may enhance your reputation. But in my practice as a consultant for the last three decades, probably lying a little bit there, it’s probably more, Reputation is not the main benefit of sustainability. Reputations go. Particularly because you can only lose your reputation once, right? You make one mistake, your reputation is down the drain and it will cost you a lot of time and effort to restore it again.

So if reputation is your first driver for sustainability, you’re doing something very wrong. If reporting is your first driver for sustainability, you’re doing something very wrong. If those four things on top are your drivers for sustainability, you’re on the right track. So, E, S and G. We had the discussion as well. Do we do GES, GSE? They’re actually all mean things, by the way. Some very naughty things as well. What do you pick first? And again, I’m going to present you with a sort of a conundrum that companies will face. The top one is a combination of several of my clients, and it shows you the water stress risks. Water stress is the difference between the supply and the demand. If the demand is higher than the supply, you’re stressed. If it’s the other way around, you’re not stressed. Very simple.

The more stressed you are, the more difficult it will be to survive things like a drought or other issues around water availability. The other picture is another aspect of water and there’s water access and sanitation. That’s those people in that river. And you can see that now Europe is mainly green, whereas with water stress there’s a lot of red, but we have some issues in Asia, Africa, a little bit of South America and the Caribbean. So the water stress problems and the water stress risks are in different places than the water access and sanitation risks and issues. So how do you address that?

And I would say that this is the key that unlocks the solution. Coming back to my original statement, it’s all about money, right? So if we want to compare the water access and sanitation with the water stress situation, we’re going to express it in the only universal language on this planet: money. Right? First of all, you start with a sustainability risk assessment. Why? You want to know where you are. You want to know what you need to do, and you don’t want to run around doing things that everybody else is doing because it feels like the right thing to do. Oh, climate change. Oh, biodiversity. So, no. What is your risk?

And address that. If biodiversity is not a risk, ignore COP16 in Cali, unless you want to go there and see a really nice city and lovely people. But that’s it. Look what you need to do first. Then prioritize. There’s nothing wrong with prioritizing, right? You can’t have favorite children. My wife keeps telling me, „Oh, you can’t have favorite children.” You can have a favorite grandchild. In my experience, I have one. You can prioritize, right? Can I give that grandchild more than the other ones? No, I cannot, okay? Some other things you can prioritize. You should. You should tackle your biggest problem first.

You should also tackle the problems you can actually do something about. As an individual person, it’s very difficult to solve climate change on your own. But it’s very simple to put your can or your plastic bottle in the right bin. So that’s another way of prioritization. We talked about it. Then you need to understand what is driving those risks. What makes a risk a risk? What triggers it? What’s the first step? What’s the second step? What’s the third, etc., etc.? If you know that, you understand the risk. And then it’s up to you to put the money, the dollars and cents to the issue. you monetize. But you start monetizing with your business as usual.

What does it cost us to do it as we do it now? Okay? That is easier said than done. That’s very difficult. Okay? You need to bring in a lot of thinking from the people in this room. You don’t want to be just monetizing with the financial people because they know a lot about the numbers and the money and the financing mechanisms, but they don’t understand a lot about Greenhouse gases they don’t understand a lot about waste. They don’t understand how collection systems work They don’t know how the legislation is going to be they don’t know the stakeholders You know that right so you bring that knowledge in but now you start looking at okay if we do this We attract more talent to work for our company Okay, how much more what is it worth? Can we find those people? Okay, maybe we can’t okay, so There’s a cost to the business. If we can’t find the people to work for our company, there’s a cost to the business because now we can’t do certain things. How much can we not do?

How much does it cost us, the business? Does it create a cash flow problem? Does it create a balance sheet problem? We do this some time and time again until we have a complete picture of our business as usual. I was at Seawee in Stockholm, end of October. And the CDP Carbon Disclosure Project showed a thousand companies had submitted the data and the total opportunity was $2 billion for a thousand companies. That is utter nonsense. We did the business as usual for one company and the opportunity was $2 billion. So the numbers need to be done correctly because you will see that the opportunities are going to be way higher, way higher, like a factor million in this case.

All right, now we get all creative because we know what drives our risks, we know what causes our problem, we know how much money we can spend, two billion maybe. Let’s come up with the solutions. This is where the innovation that we just spoke about, this is where it comes in. This is also where the trial and error comes in, right? We heard it. Okay, we can do this. It just doesn’t work very well. Maybe there’s another solution that works a lot better. Yeah, let’s bring it all out. Let’s see what is possible to address these problems.

Now we have 300 solutions for one problem. Oh boy, right? Now, how do we choose? You guess how? We’re going to put money against it. We’re going to monetize the improved situation. Say we implement solution number A. How much is the cost of doing business now? And then we say, what’s the difference between the solution and not having the solution, which we did up there, right? We had business as usual. Now we see the difference. And the difference, you can do an internal rate of return, which I personally like a lot because a lot of companies, CFOs, have said, like 15% internal rate of return. You make more than 15, it’s a go. You make less, no go. Or you do, you know, return on investment, whatever, it doesn’t matter. But by doing the sums, you now start talking to the people who actually have the money. I mentioned CFO. Last week, I presented to a CFO of a very large company, publicly listed.

They go from quarter to quarter. month to month in their results. They really don’t care about the long term. I spoke with the CFO. The first thing he said, „Yep, we’ve seen the sums. It’s all right. Now how are we going to tackle this?” He went from, you know, „Hello, good morning.” He completely skipped the business case and he started talking about governance and implementation immediately because the sums made sense. He saw a business case in his language. And if you go and talk to a CFO and you talk her language, and it’s all about dollars, it’s about cents, it’s about cash flow, it’s about balance sheet, that person is going to think, hmm, I understand this. You go to the same CFO and you tell her, ah, we’ve got green energy and we recycle 86%.

That CFO is going to say, „Okay, I understand 86%. I don’t understand what recycle means. I don’t understand what green energy means.” You go to the CFO and say, „Hey, how about doing a project that has an internal rate of return of 47% by doing this, this, and this?” And the CFO will say, „Hmm, I understand this. This is my language.” It’s completely independent of what you’re actually going to do. And I know this very… challenging for a lot of people in sustainability, particularly environmental people like to talk about the environment. But I can tell you, CFOs don’t care.

They may be in the free time, but their job is to look after the F, finance. Speak that language and you’ll get to the final stage, which is implementation of all the good stuff, right? It’s all about implementation in the end. So if you have a good solution that makes money, that addresses the issue and it makes sense financially, you’ll be successful. Not all the time. This does not come with a Peter Penning guarantee of success, right? But in a lot of cases, you will get the money.

In Climate Week, we were discussing, okay, how do we move from where we are now to action? Everybody, you know, big beverage companies and Robert, your colleagues were there as well. We’re talking, it’s all about getting credible business cases. You want a credible business case? This is how you make one. Thank you very much for your attention.