Building the Circular Economy: Interview with Sustainability Expert Peter Bakker

Umesh Mukhi

Time to roll out the Circular Economy: An exclusive interview with Peter Bakker, President  & CEO of the World Business Council for Sustainable Development (WBCSD)


 Business has a major role to play in dealing with sustainability issues like climate change. Despite such awareness amongst business leaders it is often not that easy to make a compelling argument for a business case of sustainability. This where Peter Bakker, President and CEO of World Business Council for Sustainable Development (WBCSD) is a primary and perhaps one of the most important liaisons between business leaders and other stakeholders to galvanize the sustainable solutions.  In this exclusive interview with him, he outlines the role of business sector to deal with the complex issues of sustainability.

Mr. Bakker, can you share some insights about your career and how you got involved in Sustainability?

I had just become CEO of TNT and was flying to Australia on a business trip. I had brought along a file of work and had time to sit alone and think about what I was going to do in this world. The 9/11 attacks had just happened. The business world was reeling from the scandals at companies such as Enron and WorldCom. With these thoughts in mind, I turned to my paperwork. The first letter I found in my mail was from the organizer of the Dutch Open, the Professional Golf Tournament, which TNT had sponsored for years. The organizer reminded me that the contract, worth €10 million, was up for renewal.

The second thing in my mail binder was a magazine.  An article discussed why 9/11 had happened, describing the difference between “the haves” and “the have-nots” in the world, which had grown to such an extent that “have-nots” no longer had hope.  So I went from golf to contemplating poverty and religion. Then the opinion piece asked: what will you do about it? In the air with many hours to travel, I pondered this question. By the time I landed, I had come up with an idea to start a new division of the company that was called the Distribution of Health and Wealth. We were a logistics distribution company. I cancelled the golf contract and in the months that followed gathered support from executives throughout the company for a concept that evolved into the partnership with the World Food Program. Our commitment to sustainability became part of our message to stakeholders. The food program was only the first step. There was another major topic on the world’s agenda and it was directly related to the core business of TNT: climate change. So the second step for us became climate change. We continuously elevated our goals and worked to stay ahead of the sustainability field.

At these times of political, social, economic and environmental crisis where do we stand now in pursuing the agenda of Sustainability? Can you highlight some examples of best practices?

Our world is in a systemic crisis characterized by increasing inequality and social tensions, economic difficulties and growing environmental problems. Faced with these massive challenges, governments fall short of taking the lead, leaving business with an important role to play in providing solutions that will bring about the transformational change required.

In 2010, WBCSD published Vision 2050 – a wide-reaching report on the priorities for business and sustainability that must be addressed by mid-century for 9 billion people to be able to live well and within the boundaries of the planet. The report was the outcome of an intensive 18-month study of environmental, demographic and development trends completed in partnership with the WBCSD’s member companies, the Stockholm Resilience Centre and the World Resources Institute. For the first time, global business publicly stated that business as usual was no longer an option and outlined pathways for transformational change. Vision 2050’s long-term perspective needed to be completed by an actionable roadmap and Action2020 was born.

The Action2020 platform identifies targets we need to achieve by 2020 to be on track for the longer-term 2050 goal and addresses nine science-based priority areas: climate change; release of nutrient elements; ecosystems; exposure to harmful substances; water; basic needs and rights; skills and employment; sustainable lifestyles; and food, fuel, fibre and biofuels. These actionable priorities, and the societal goals (Societal Must-Haves) that were developed alongside them, form the core of the WBCSD’s Action2020 work platform. With our members, we are working to develop strategic, scalable, replicable and beyond business-as-usual business solutions that can have a measurable and significant impact towards achieving these Societal Must-Haves.

There are remarkable best practice examples within our different work programs. For instance, for more than 8 years now, the cement companies engaged in the WBCSD’s Cement Sustainability Initiative (CSI) have been reporting their energy consumption and CO2 emissions. The information is collected in the database “Getting the Numbers Right” (GHR) and managed by a third party for confidentiality issues and compliance with anti-trust regulations.

It is the most comprehensive source of verified CO2 emissions that any industrial sector has managed to gather and illustrates the value of a collaborative approach in achieving progress. Another important example of best practice relates to water. A shift from traditional farming practices into more sustainable crop management and increased water efficiency in food production will improve water availability while creating new business opportunities. Jains, DuPont, Syngenta and Bayer CropScience are developing products and techniques designed to improve water efficiency in agriculture.

These range from promoting efficient irrigation and farming practices to providing the best available seeds (including drought- and stress-tolerant plants) and training farmers to optimize fertilizer use and employ stress management techniques. BP and Shell are developing biofuels that are particularly water efficient, such as drop-in fuels based on cellulose biomass, using low water requiring crops and focusing on rain-fed crops.

What are the major challenges we face in integrating sustainability in business and what sort of opportunities exist on which business should capitalize now?

Today, the collective CSR and sustainability activities of all companies have not yet achieved the scale and impact needed to reverse the negative environmental, economic and societal trends we face. For companies to achieve scale, we need to create the relevant opportunities and conditions that improve the business case for action. Sustainability must be integrated in a company’s core strategy and performance management systems. We need to develop new business case elements in integrated risk management, natural and social capital measurement and accounting, integrated reporting and eventually true-value management.

This stands for changing the rules of the game through a redefinition of value to incorporate not only financial, but also long-term economic, social, environmental and ethical terms. In this way, more companies will be incentivized to scale up their sustainability efforts, hence allowing the more sustainable companies to be recognized and rewarded.

Climate change is certainly one of the most urgent challenges. Business can bring many solutions and is now starting a dialogue on policies that will help create scale fast.

Collaboration is essential in scaling up the implementation of business solutions. Business has the resources to develop innovative products and services, yet achieving ambitious societal goals will require smart policies and a collective acceptance of the need for change. Governments around the world need to take action to ensure these solutions reach their full potential.

Managing the future needs of nine billion people within planetary boundaries will also require a shift from the old industrial model of take, make and dispose to a circular economic model where all by-products and waste are treated as valuable resources. In an increasingly carbon and resource constrained world, more and more companies are integrating circular economic thinking into their supply chains. The business case is compelling representing enormous economic opportunities.

What is the link between Leadership and Sustainability? Do you think we need a new form of leadership in such crises? How would you define Sustainable Leadership?

Creating a sustainable future demands that you are able to envision a future that is radically different from the world you know today. The role of business in society is changing: companies are increasingly expected to provide solutions to social and environmental challenges. The new landscape requires the leadership of business to understand the complex systemic nature of sustainability issues. Future business leaders will need to innovate and collaborate, effectively manage complex stakeholder relations and drive transformational change toward a more sustainable future. Tomorrow’s business leaders will hence need to have an in-depth understanding of sustainability challenges and feed materiality considerations into their strategic decision-making.

About Peter Bakker

Peter Bakker is the President of the World Business Council for Sustainable Development. Mr. Bakker is a distinguished business leader who, until June 2011, was the CEO of TNT NV, the Netherlands-based holding company of TNT Express and Royal TNT Post. Under his leadership TNT rose to the forefront of Corporate Responsibility via a ground-breaking partnership with the UN World Food Program and ambitious CO2 reduction targets from its Planet Me initiative, holding multiple-year top-ranking positions in the Dow Jones Sustainability Index.Mr. Bakker is the recipient of ClintonGlobal Citizen Award(2009); SAM Sustainability Leadership Award (2010); and has been an Ambassador Against Hunger for the UN World Food Programme since 2011. In addition he is the Chairman of War Child Netherlands.

The Interview can also be accessed on Sustainable Leadership Blog. The Sustainable Leadership Initiative is global platform to showcase best practices and engage trans-sector dialogue from business, government and social sector across the world in context of sustainability and leadership. You can follow them on Twitter: @sleadersummit and make sure you like them on Facebook!