Climate change | The pressure mounts on CEOs to act

Environmental, social and governance concerns have loomed larger for chief executives during the earnings season as pressure from investors, customers, staff and government policymakers intensifies, as reported in The Australian Financial Review

CEOs are feeling the pressure to take action, not just to reduce their companies’ carbon footprints after the International Panel on Climate Change’s (IPCC) landmark 2021 report found the planet accelerating towards a climate tipping point by the early 2030s, but also to reduce waste – especially single-use packaging – in supply chains.

This is much easier for retailers, healthcare and software companies with relatively low energy needs.

Traditional energy companies face a much bigger challenge to reduce their carbon emissions and other pollution as well as broad community scepticism and even hostility about the adequacy of their targets and actions.

CEOs initiating change

Domino’s Pizza Enterprises CEO Don Meij said environmental, social and governance (ESG) spending was a growing part of its proposed capital expenditure of $100 million to $150 million a year for the next three to five years.

“We’ve increased our investment in mergers and acquisitions and tech and ESG. We’ve had the biggest step up in ESG this year, we’re doing a lot more investment. What the pandemic has done has helped us develop our purpose and values and look at this through a long lens,” Mr Meij said.

He said ESG was one of the most significant areas of the Domino’s business. “We have projects all over the business removing single-use packaging, reducing the carbon footprint of distributions to our stores – it’s going to be quite material. Also, the rise of e-bikes and e-scooters – France will have 100 per cent e-transport within a two to three-year window.”

Anthony Heraghty, CEO of Super Retail Group, which owns the Supercheap Auto, Rebel Sports and BCF chains that have flourished from lockdown-lifestyle spending, said the business was under pressure from staff and a wide range of stakeholders and investors to improve its ESG performance regardless of the IPCC report.

“There is very strong advocacy from our stakeholders and especially some of our investors and even more importantly from the team, especially around packaging waste, quality of products and carbon footprints.

“There’s a very strong desire from the team to see the company advance our [ESG] agenda, and we intend to do just that,” Mr Heraghty said.

Setting targets of net zero emissions

Terry Smart, chief executive of electronics and appliances retailer JB Hi-Fi, said the company had set a target of achieving net zero emissions by 2030 and he expected the pressure to keep rising.

“Our staff are very passionate about it. We see that will continue to ramp up from now. It’s not a significant investment [to achieve net zero] as such, we feel very confident that we can achieve that,” Mr Smart said.

“As a retailer direct carbon emissions are generally related to power and we’ll look at LED lighting and solar generation on top of stores. We can do it on and green power for the balance.”

Colin Goldschmidt, CEO of pathology giant Sonic Healthcare, said companies needed to make ESG goals part of their everyday fabric.

“We have been doing ESG activities now for many years, but we’re strengthening it and taking it even a whole step further. We want to actually take it further and hit these targets, and, incorporate sustainability into the fabric of the company.

“People want Sonic to be a clean and green company,” Dr Goldschmidt said. “We are deadly serious about making sustainability an integral part of our day-to-day business in terms of environmental responsibility; we’re continuing to focus on emissions and energy reductions.”