Peter Bakker, CEO of the World Business Council for Sustainable Development, discusses how he is helping businesses find their role in the two big challenges of our time – food security and energy transition
- CEO, WBCSD, 2012 – present
- UN Global Ambassador against Hunger 2011 – present
- Chairman, War Child Netherlands, 2010 – present
- CEO, TNT, 1998 – 11
- Various positions, PPT Post , 1991 – 98
- Various positions, TS Seeds Holdings, 1984 – 91
- Business Economics, Erasmus University Rotterdam, 1983 – 88
- Business Administration, Hogeschool Inholland, 1978 – 82
Peter Bakker, CEO of the World Business Council for Sustainable Development (WBCSD), tells Impact Investor of the novel genesis of the organisation.
In 1992, at the first United Nations ‘Earth Summit’ in Rio, there were only thirteen business delegates “and when one of them spoke he was virtually booed off stage. These thirteen leaders realised this had to change, so they came together to form the WBCSD”, he recalls.
Bakker’s own personal journey was also unusual. “I came to realise the importance of climate change when I was CEO of TNT, the major transport and logistics company. Running a transport company you can do much to reduce emissions but you struggle to eliminate them.”
He adds: “I also came to the crucial realisation that, as a CEO, you must bring your investors with you when you’re making corporate transition. I had quite a run in with some Wall Street hedge funds on that topic, and this was the background to me wanting to move to WBCSD.”
Bakker describes WBCSD as a collective action platform. “While we do have two big conferences a year, we are not a topic talking shop, but a solution building workshop.”
It is now a 200 person organisation with offices across the globe, and funded by an annual membership fee.
“We help companies with their implementations and we are the ‘preparing forum’ for the TCFD,” he says, referring to the Taskforce on Climate-related Financial Disclosures created by the G20 to improve reporting of climate-related financial information.
WBCSD brings together CEOs to collectively work on transition. “Transition is not just a ‘nice to have’. It is about creating a safe operating space for humanity. Our mission as an organisation is to integrate this into capital markets. Without the participation of capital markets, we’re not going to get the transition we need.”
WBCSD focuses not just on climate change, but also biodiversity and social impact. It works on more than 30 projects on energy but also sustainable mobility and food security.
“Transition is not just a ‘nice to have’. It is about creating a safe operating space for humanity.”Peter Bakker, WBSCD
The latter is certainly a growing concern at present. Bakker discusses the dire impacts of the conflict in Ukraine, and how his organisation is involved. “The UN has created a global crisis taskforce, with focus groups on three areas – food, energy, and famine. We are working with the UN to determine the impacts on food and energy systems and exploring what businesses can do.”
The emphasis is very much on practical, real world solutions. “We are trying to help companies map where there are food reserve stocks and where there are deficiencies. In terms of initiatives, we are helping US companies ramp up fertiliser production.”
Bakker believes there are long-term solutions to food security such as indoor farming and other improvements in technology and farming techniques that will raise yields. But in the short term he is keen to raise awareness of the challenges being faced – not least the 40 million tonnes of grain stuck at the harbour in Odessa, Ukraine.
“We need to make sure countries stop imposing export bans which amplify shortages and price.” India recently imposed such an export ban. “There is the very real risk many farmers will go bankrupt. Very soon the poor of the world are about to enter a very severe food crisis. Within the next six to twelve months hundreds of millions of people are at risk of starvation,” he stresses.
Bakker also worries about the effects of the Ukraine conflict on energy markets. “We see the dramatic effects of the crisis unfolding every day. Just follow what is going on in Sri Lanka where they are on their last day of energy [reserves]. There will be many countries where the pricing of energy will cause deep problems in the short term. The world needs to have a more global view of the consequences of these political problems.”
Bakker believes business cannot play the lead role in this but need to be active in helping politicians understand the implications. “First and foremost we have to recognise that all energy solutions are led by the political process. But we must alert them to business consequences. It is easy to ban certain energy flows [e.g. the recent moves against Russia] but the question is what are the implications for business? What are the secondary level effects?”
And business clearly has a key role in the long-term energy transition process. “Transition is not a short-term task – it will be a multi-year event. Better technology is certainly making progress, hydrogen is becoming cost competitive. I am optimistic that the acceleration towards renewables is now unstoppable,” he notes.
Looking to the future, Bakker says: “Our biggest challenge is to ensure that we are able to keep global conversations going as geopolitical tensions rise across the world.”
When asked about the increasing isolation of China, and its patchy record on climate change, Bakker responds: “Fortunately, we have a few companies in our organisation from China and they participate well. We should remember that in some areas China is a leader in the scaling of solutions and I am optimistic as to their contribution in the climate debate.”
“Sustainability is now mainstream and conversations in the boardroom are much easier because of that.”Peter Bakker, WBCSD
Shorter term, one of the other major challenges for WBCSD in the next 12 to 18 months is the more robust sustainability accounting rules coming into force in various jurisdictions.
“The challenge for us is to make sure we get capital markets to truly integrate them, including into valuation models. This is the thing I worry about the most. Once we can achieve this, this is when sustainable businesses will clearly outperform, and this will be a mind flip for CFOs.”
Recently, Bakker built a CFO network to help companies get ready for a world where sustainable considerations are standardised. “We want to help CFOs with capital allocation and valuation models. We need to transform how we define value for companies and lower the cost of capital so capital markets reward those companies who are taking sustainable actions.”
At least one thing is easier now for Bakker. “Sustainability is now mainstream and conversations in the boardroom are much easier because of that.”