Co-operation not conflict needed between business and third sector

BusinessGreen: Businesses and environmental charities have long had a pretty tense relationship. But in recent years we’ve seen Forum for the Future and other groups try to take a more co-operative stance. Why do you think this is?
Peter Madden: I think the main reason is that it is clear we will only tackle climate change quickly enough if we harness the energy, enthusiasm and skills of the private sector. For me the environmental movement's approach [to business] is too negative. The default position is to be anti things, but there is a real need to turn that attitude around and focus on solutions.

How would you summarise Forum for the Future's relationship with the business community?
First and foremost Forum for the Future is all about working with businesses to find solutions to environmental and sustainability problems and the best way to do that is by building long-term partnerships and really getting to know their business. We want to help them do their day job, which is basically making money, while ensuring they monitor and reduce their environmental impact. We work with a good spread of high profile companies, including M&S, NPower and Unilever.

Does that approach risk compromising Forum for the Future's authority? Surely critical green groups are still required to hold businesses to account?
We only want to work with companies that are really committed to sustainability. We look for indicators that they are serious about it, such as having a board-level commitment and a willingness to assign real resources to environmental initiatives. We also only want to work with companies and industries where sustainability goals are achievable – we wouldn’t want to get involved with tobacco for example. But at the same time we are independent and we do have a charitable purpose so our primary focus is on the public good and not making money. We understand how business works, but that independence means we can be a critical friend. We find that the businesses we work with really appreciate that honesty.

To what extent is the current interest in the environment a solid trend?
There are plenty of people who would argue it is all marketing hype. There is a definite change in awareness and understanding. That is being driven primarily by the science and the extent of information that is now available on climate change. In terms of corporate practice you can see the number of established companies developing sustainability programmes and see the emergence of the new breed of green businesses that are gaining market share. You can also see from the level of investment in green R&D that this is much more than just hype. But there also has to be an acceptance that we are nowhere near where we need to be yet. There are a lot of businesses thinking about it, but it is still difficult to point to a genuinely sustainable large business.

What are businesses doing well when it comes to sustainability and where are they making mistakes?
The most encouraging initiatives we are seeing are where firms are developing a sustainable strategy and are ensuring it fits with their overarching strategy. If you take M&S for example, it has always been about quality and trust, so the Plan A package really focuses on that and works well as a result. Similarly, when you look at Tesco it has had a real focus on value and it is continuing that with ideas like its Club Card points for green products and behaviour. The other encouraging trends are where you see business making fundamental changes to their business model. For example, BP moving from being an oil company to an energy services company. Finally, it is also great to see the emergence of new markets and companies that are seeing low-carbon products as money-making opportunities.

And what mistakes are they making?
Like many people I am concerned by companies pushing to be carbon neutral and just buying carbon offsets. There are some firms that don’t really change their business model and seem to believe they can just buy their way out of the problem.

So you would warn against carbon offsets?
I wouldn't go that far. It can be a good thing, but businesses need to fit any offsetting into a carbon hierarchy, where their primary focus is on reducing carbon emissions and offsetting really is a last resort.

It is still a minority of companies that are instigating large-scale sustainability initiatives. What would be your message to the firms that are still ignoring environmental concerns?
A lot of our focus is on looking at future scenarios and our message is that we will be living in an increasingly resource-restrained world with a larger population and the only way to continue to make money and maintain living standards is to achieve a much lighter environmental footprint. There is a moral responsibility to achieve this, but it is also the only way we will continue to generate growth. Businesses need to look at these realities; look at the way governments are going to be forced to legislate and tax carbon and other resources. There needs to be an understanding that these challenges are now inevitable, but that they can also be turned into opportunities.

What is the main barrier to companies adopting green business models?
The number one problem is the sheer amount of capital sunk into doing things in traditional ways that make it very costly for organisations to turn their business models around. The main problem used to be the cultural barriers, the belief that the environment wasn't a serious business issue, but that is changing. When you see someone like Terry Leahy, who is repeatedly voted businessman of the year, or Richard Branson, saying this is a strategic issue for their business it makes it much easier for others to say, "If they are doing it, perhaps we should be doing it too."

How do you get over those barriers?
It comes back to the reality that pressure to change is only going to grow. Resource shortages will worsen and governments will act to push up the price of carbon emissions and force it out of the economy. We'll also see more and more pressure from consumers for business to react. My hope is that we will see some of the big businesses trail blaze and show that you can make money with low-carbon business models. That will allow others to follow, while regulations will pick up the laggards and force them to change.

You mentioned regulations, but many environmentalists would argue that the government is not doing nearly enough to promote low-carbon business models through legislation or incentives. What is your view on the government's record and what it should be doing?
The best thing the government can do is to set long-term targets that allow people to plan and invest. If you set clear carbon emission targets for example then business will know where it has to get to and will invest accordingly. In my opinion, it can prove counter-productive for the government to meddle too much and start selecting the technologies it thinks you should have and so on. It is better off setting the overarching targets and then letting business get on with meeting them. I hope the new Climate Change Bill will help do that.

What would be your advice to business leaders who want to improve the sustainability of their operations?
The first step is to sit down and seriously analyse the risks and the opportunities to the business from environmental issues. Companies that do that tend to reach some pretty surprising and positive conclusions. For example, you can often detect ways to improve your supply chain or ways to cut energy use and save the business money. I'd also advise that you talk to your employees and talk to other businesses. Getting together a green taskforce really is a great idea that can drive initiatives forward and increase employee satisfaction. Businesses that engage staff tend to find that they have a lot of knowledge and energy in the company. Also there is a real willingness for businesses to co-operate on sustainability and it is always worth talking to those companies that have made good progress.