Jesper Brodin, President and CEO, Ingka Group, IKEA; Chair, The B Team Halla Tómasdóttir, CEO and Chief Change Catalyst, The B Team In conversation with: Ellie Austin, FORTUNE
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00:00 Hello everyone, welcome back from lunch.
00:02 So now we're beginning our final conversations
00:05 of the 2023 Global Forum.
00:08 As you will know, tomorrow marks the start of COP28,
00:12 the 28th annual United Nations Climate Conference,
00:16 which is taking place here in the Emirates in Dubai.
00:20 The UAE was the first Middle Eastern nation
00:23 to ratify the Paris Climate Agreement
00:25 and the UAE's innovative approaches,
00:28 collaborative partnerships and significant investments
00:31 make it a key global player
00:33 in advancing sustainability goals.
00:36 Just last month, the first comprehensive report
00:39 on progress towards reaching the goals
00:41 of the 2015 Paris Climate Agreement was released
00:45 and I'm gonna be discussing that
00:46 in a second with our speakers.
00:49 So on that note, please welcome to the stage
00:51 our two speakers for the next session
00:53 and they are Jesper Brodin,
00:55 who is the CEO of Inca Group,
00:57 the company that owns IKEA.
00:59 He's also chair of the B Team.
01:01 And Hala Thomas-Dorta is CEO
01:04 and chief change catalyst of the B Team.
01:07 And the B Team is a group of business
01:09 and civil society leaders working to transform business
01:13 for a better world.
01:14 Please welcome them to the stage.
01:26 - Hello Jesper, hello Hala,
01:27 thank you so much for joining us.
01:29 So I mentioned in that introduction
01:31 that we're just kind of on the brink of COP28
01:34 beginning in Dubai.
01:35 And it's at this year's conference
01:37 that we're going to see the first global stock take
01:40 of where we are with the Paris Agreement
01:42 and its long-term goals.
01:43 I'd like to start off by getting your sense
01:46 of where the business community is,
01:48 broadly speaking, when it comes to the Paris Agreement.
01:51 Hala, let's start with you maybe,
01:53 what's your perspective?
01:54 - Yes, thank you, Ellie, and good to see everyone.
01:56 I would like to start with a reality check.
02:01 And that is the fact that the scientists have told us
02:04 that on six of nine planetary boundaries,
02:07 basically all the limits that planet Earth sets for us,
02:10 humanity and all life to be able to survive
02:13 and thrive on this earth,
02:14 we're at them or we have breached them.
02:17 This they told us in September.
02:19 So think about it as living in a house
02:20 with nine foundational pillars holding you up,
02:23 six of them are not holding us up anymore.
02:25 So it is a crisis.
02:27 And we know from all the scientists too,
02:29 that we're off track in doing what we need to do to meet it.
02:33 But let me flip from that reality and tell you
02:35 why I am stubbornly optimistic that we will.
02:38 And it is because of what business is doing.
02:40 I wish I could say I thought our governments
02:42 were doing enough.
02:44 I don't think they are.
02:45 I right now think business is more courageous
02:48 than government.
02:49 And ultimately, I believe the solutions
02:51 are more or less all there.
02:53 They exist.
02:55 And so does the money.
02:56 The capital is in the system.
02:58 Anywhere from two to six or seven trillion a year
03:02 is now invested in basically terminating us.
03:05 It's called environmentally harmful subsidies.
03:08 And that's a lot of money.
03:09 We need about a three trillion a year
03:12 to actually invest in this transition.
03:13 So if we just repurposed the money we're spending
03:16 in our own demise and put it towards the future
03:19 and incentivize the future,
03:20 the way we're seeing the IRA do now
03:23 and more places are trying to align the incentives,
03:26 if we stopped terminating ourselves, self-terminating,
03:30 and started investing in the future that we need,
03:32 I believe we're at the cusp of creating a clean,
03:35 just, inclusive future like never before.
03:37 But it will come down to who we choose to be.
03:40 And right now I see business moving at a much faster pace,
03:43 albeit not fast enough.
03:45 - Okay, we'll come back to that in a second.
03:47 Jesper, what's your take?
03:48 - I agree.
03:49 - Okay. (laughs)
03:50 - That's normally what we do.
03:51 So normally what happens, she goes first
03:53 and then she says everything I want to say.
03:55 - And you agree.
03:56 - I actually, I do agree.
03:57 I think this is, it's of course, it's not a century.
04:02 It's a decade of change that we're experiencing.
04:05 That is, I think at the same time,
04:07 alarmingly critical, stressful,
04:10 and at the same time, breeding a lot of optimism.
04:14 But we stand at that, you can say,
04:17 at the tipping point at the moment.
04:19 So, you know, what makes me optimistic
04:20 is I see, if I start three things,
04:22 I think when you look at the data of people out there,
04:25 we look at IKEA markets,
04:27 we have been recently interviewing in 30 markets,
04:30 30,000 people.
04:32 And the majority of people in every market
04:35 are deeply concerned, deeply engaged,
04:37 and actually actively taking part in being the solution.
04:40 And they're asking us as leaders,
04:42 government leaders, corporate leaders,
04:44 to do more and faster.
04:45 So from any ethical point of view,
04:48 but also from a brand point of view,
04:51 this is the right thing to do.
04:52 And third, which I think is one of the still
04:55 interesting myths out there,
04:57 I think being climate smart
04:59 is probably the best thing you can do for your business
05:02 if you're a business leader.
05:04 And more and more of leaders out there
05:06 are waking up to that reality.
05:08 And the two interesting facts of that, of course,
05:11 when you run a business,
05:13 any sort of waste is of course a bad cost in your system.
05:16 So even if you would put the ethical aspects aside,
05:20 being climate smart means being cost smart
05:22 in the end of the day.
05:23 And I have endless of examples from energy to material
05:27 in an IKEA scope three on that.
05:30 But then on top of that, you see governments,
05:34 which makes me a lot, creates a lot of folks,
05:36 China, US, Europe are basically pursuing legislation
05:41 that will help basically incentivize companies
05:46 to take those decisions sooner.
05:48 But we are at a tipping point between the optimism
05:52 and the opportunities, but also need to face
05:54 that we are not doing enough and not fast enough.
05:57 And I know that IKEA has committed to reducing
05:59 its carbon footprint by 50% by 2050, I believe.
06:03 My first question is, are you on track to meet that goal?
06:06 And my second is, can you give us some concrete examples
06:10 of steps you're taking within the business
06:11 to make that a reality?
06:13 How many hours do we have?
06:14 (laughing)
06:15 - No, I can tell you, this is not a brand IKEA at all,
06:19 but it's to give maybe hope and inspiration
06:21 to companies out there.
06:22 When we took the first steps, we were one of the first ones
06:25 to create the climate plan.
06:27 At those days around 2016, the ambition was minus 15%,
06:32 absolute carbon.
06:33 Then we realized with the movement of 2.5 to 1.5
06:37 that we need to be at 50%.
06:38 So we have plans in place, super good news.
06:41 We have grown since Paris.
06:44 We have grown by almost 25% and we have reduced absolute,
06:48 not relative, absolute carbon by 14%.
06:52 - 14.
06:52 - Already, that was one and a half year ago.
06:55 We are soon about, because our measurements in this field
06:58 is a little bit slower, we are learning,
06:59 but we are probably adding around 6% the last year to that.
07:03 So that will be 20.
07:04 And we have good plans and years to come.
07:07 So we are in all humbleness for uncertainties of the world,
07:11 we are super optimistic that we will manage 50%
07:14 and we will have a lower cost base,
07:17 we will have growth as an outcome.
07:19 It's not charity, it's not philosophy.
07:22 This is actually totally aligned with our business goals.
07:26 - Hala, before I come back to you, have there been,
07:27 'cause you're talking about how sustainability measures,
07:30 they're good for business.
07:31 And I know that to be the case,
07:33 but have there been any examples of climate programs
07:37 that you've put into action at IKEA that haven't worked
07:39 and that have maybe cost you and you've had to learn from?
07:41 - I think so.
07:42 I think that there is like,
07:44 you could almost stack up three buckets.
07:46 We do have things in the third buckets
07:48 where we still scratch our heads.
07:50 If you look at some materials like metals,
07:53 ceramics and our value chain,
07:54 the solutions are on its way,
07:57 but they won't maybe help our equation until 2030,
08:00 more 2035 thereabouts.
08:03 So there are some unresolved topics for us.
08:06 There is a bucket of easy wins,
08:08 which I think we have probably harvested most of them.
08:11 But in the middle bucket, I give you two examples.
08:14 We switched from lighting to LED lighting.
08:18 - In stores?
08:19 - In IKEA's total value chain.
08:22 An enormously difficult decision at the time
08:24 because we didn't have all the answer.
08:26 Commercially, incredibly successful decision.
08:30 We decided to invest into renewable energy.
08:33 Today we are 160% covered in our own value chain.
08:37 So that means we are actually
08:39 a mid-size utility company today
08:41 and it's adding to our P&L.
08:43 And then in some material categories like plastic,
08:46 we have been a little bit in and out of recycle
08:49 because of the fluctuations of world market prices on oil,
08:53 where we had to take a bit of step changes.
08:56 But so there are some calls
08:58 that you have to be a little bit more, maybe tactful.
09:02 But in the end of the day,
09:03 the commitment is there to go from 50% by 2030,
09:07 90% by 2050.
09:10 - And Halle, you talk a lot about courageous leadership
09:12 at the B-team and generally.
09:15 That type of leadership isn't always welcomed
09:17 by all stakeholders.
09:18 It often is, but that isn't always the case.
09:21 Can you give us some examples
09:22 of maybe when you've worked with a leader
09:24 and they've really felt the cost
09:26 of making these bold decisions around climate
09:28 and then how you've worked with them to resolve it?
09:32 - Yeah, I think this is ultimately the question
09:34 we should be asking about
09:35 because we know we have the solutions.
09:37 We know the money is there, but what's missing?
09:39 Leadership, people say, I would say courageous leadership,
09:41 which means the willingness to make mistakes
09:44 and maybe even risk your job.
09:46 And so we have up to a handful of leaders
09:49 on the B-team of 30 global leaders
09:51 who have either lost their jobs
09:52 or face the possibility of losing their job
09:55 for doing the right thing.
09:57 And that is because our boards and our capital markets
10:00 are tethered to the wrong timeline
10:02 for the transition that this decade calls for,
10:04 called quarterly reporting.
10:07 And so Paul Polman,
10:08 who was chair of the B-team before Jesper,
10:10 he stood up when he became CEO of Unilever in 2009
10:13 on the back of the global financial crisis
10:16 and essentially told his investors,
10:18 if you want quarterly reporting, you're in the wrong place.
10:21 I'm gonna report to you once a year
10:22 and I'm going to put sustainability
10:25 at the heart of everything I do
10:26 because we're a hundred year old company and then some,
10:29 and we wanna be around for another hundred years.
10:31 And so there's a couple of things
10:32 that I think we really need to shift.
10:34 One is our time horizon in terms of how we think about this
10:37 because this is a once in a lifetime,
10:39 if not ever transition, because when we faced yet,
10:43 it's not just the sustainability revolution,
10:45 it is the AI tech digital revolution.
10:48 And I would say it's the inclusion revolution
10:50 because we have women, people of the global South,
10:53 the next generation, people who have not been at the table
10:56 demanding to be at the table.
10:58 And so I think you're only gonna be future fit
11:01 if you can kind of bring all that together.
11:03 And honestly, I think Jasper, you have the best answer to,
11:06 should you be willing to lose your job
11:08 by doing the right thing?
11:10 And I mean, Jasper, you always tell me,
11:12 well, what are you gonna choose?
11:13 Are you gonna lose the reputation
11:14 in the eyes of your very children and your employees
11:17 and all the stakeholders that you,
11:18 as a human being care about?
11:20 Or because we're losing their future by not stepping up now.
11:25 So I think it is ultimately all about courage
11:28 and that's actually not a head game, it's a heart game.
11:31 And I'm sorry to say our business goals
11:33 and much of business is practiced with the head.
11:35 And now we're talking about how AI is gonna amplify it
11:38 and make us smarter here.
11:40 But I think the wisdom and what we care about
11:43 needs to come out in leadership
11:44 and much greater speed and scale for us
11:48 to navigate this enormous transition that's ahead.
11:51 It's about courage.
11:52 - A lot of the conversation I think
11:53 that we're alluding to here is about big business.
11:57 And I want to talk about small and medium businesses
11:59 for a moment.
12:00 Companies that maybe don't have the financial resources
12:02 that a company like Ikea does
12:04 to integrate a complex climate program.
12:09 What should big business and governments be doing
12:12 to support those leaders who maybe they can't risk
12:14 losing their job in the same way?
12:16 The risks are too big for them to be as courageous
12:18 as you're talking about.
12:20 - Well, I think two things.
12:21 First of all, there is also a bit of a myth
12:24 about small businesses.
12:26 They are the fastest and the smartest.
12:28 Big businesses means bureaucracy
12:30 and all sorts of things normally.
12:34 And I think if you run,
12:36 typically the small and mid-sized companies
12:39 that will be privately owned generations,
12:42 maybe even has owned the company,
12:43 they are experts in transitioning.
12:45 And they're incredibly smart business people.
12:48 So I think when I meet SMEs out there,
12:52 there are some technical competence
12:54 around what does this mean for me?
12:57 This transition and where do I need to invest?
12:59 But these leaders know perfectly well
13:02 that if you don't invest in your future,
13:04 then your next generation is not gonna have your company
13:07 most likely.
13:08 I think that there is an initiative
13:10 that we are running together with Women in Business
13:12 that is then supporting companies in the climate hub,
13:16 basically to giving them tools and instruments
13:19 to do their own, basically, reviews
13:21 and finding their own ways.
13:23 And secondly, if you're an upstream supplier
13:26 to any of the big companies,
13:28 you're in a hurry because the demands
13:29 are coming upstream in scope three.
13:32 And from a competitive point of view,
13:34 you don't wanna be the last one acknowledging that demand
13:37 that is coming like a fast train, really.
13:40 - And I would just like to compliment the UAE government
13:43 because they actually,
13:44 because I serve on the board of Women in Business,
13:45 and they actually helped support the translation
13:49 of what's called the climate hub,
13:50 which is kind of this resource
13:52 for small and medium enterprises.
13:54 So I actually don't think the issue is
13:57 that we don't have enough how-to guide or access to that.
13:59 I really do think the issue is,
14:01 are we choosing to be the kind of leaders
14:03 that this moment demands?
14:05 And I think that is very much a choice.
14:06 We can also choose conformity
14:08 and continue to do what we've done,
14:09 but it is gonna come at our demise.
14:13 - Hala, in 2016, you ran for the presidency of Iceland.
14:16 And I wonder, as we look ahead to next year's
14:19 very contentious presidential election in the US,
14:21 what did that experience teach you about climate
14:25 as a motivating factor in getting people to go out and vote?
14:28 I know it was a while ago now,
14:29 but what lessons can we learn today?
14:31 - Well, one of the lessons I learned was
14:35 that if it had been those under 44 years of age,
14:38 I would have been president because the young people,
14:41 because so it was actually that those of us who are older,
14:43 and I belong to that group,
14:45 are not moving at the speed and scale
14:47 that the next generation is.
14:48 And so I just, I really believe
14:51 that we need to close the gender gaps,
14:53 the generational gaps, and the global gaps
14:55 in this conversation to truly transform
14:58 at the speed and scale, expand the definition of success,
15:01 expand the time horizon.
15:02 And one of the things that I have enjoyed the most
15:05 with the B team is that we have,
15:07 and Jesper has been a great example with that,
15:09 we've increasingly been bringing the next generation
15:11 of leaders and activists to our annual general meetings
15:14 to kind of navigating.
15:17 And I remember we were in the Ikea store in Manhattan
15:19 in 2019 when we invited 15 global CEOs
15:23 and 15 Fridays for Future activists
15:26 from the street to come together.
15:27 And you could see when they walked into the room
15:29 that the young people were looking at Jesper and myself
15:31 and us old folks in the room and thinking,
15:33 these are the people who have robbed us of our future.
15:36 You could just see them thinking that.
15:38 And similarly, you could see us thinking,
15:40 oh, what do they know?
15:41 They demonstrate in the streets, so they're naive.
15:43 But after three hours together,
15:45 30 global climate leaders walked out.
15:48 And so I think building bridges between generations,
15:51 genders, regions, the global South
15:53 and the global North is critical.
15:55 When we have proximity to those who feel the pain
15:58 and suffering and the mental health consequences
16:00 of losing hope, I think it moves you into action.
16:03 And most of the courageous leaders I know, including myself,
16:06 they show up every day for their children or grandchildren
16:09 or for the next generation.
16:10 And that's what I learned from running.
16:12 I at least could look my kids in the eyes
16:14 and say I did not go to the sidelines
16:17 when called for by the next generation.
16:19 And I gave it all I got.
16:20 And I actually believe that by running,
16:22 I changed what was on the agenda
16:24 and climate sustainability, gender equality
16:27 and issues that might not have been on the agenda
16:29 in the same way.
16:29 So you don't need to win at everything,
16:32 even though business has been built around competition.
16:34 I think new leadership is about caring deeply
16:37 about people and our shared planet
16:39 and competing on that ground is the way to win today.
16:44 - Jesper, do you see any generational, gender,
16:47 kind of geographical differences in the things
16:50 that both your staff and your customers are asking for
16:53 when it comes to sustainability and ESG in general?
16:57 - I'm so lucky I'm not running for president.
16:59 It sounds so stressful.
17:00 Listen, I think it's really interesting
17:02 because it's also like we have a lot of opinions about it.
17:05 In the data, there's very little differences
17:08 around the globe when it comes to the interest in the topic.
17:13 I think in our studies, the average,
17:16 if you look at the caring and the active participation
17:19 in being part of the solution,
17:21 it's about two thirds of the clientele in IKEA,
17:23 which is representing, I think, a fair share of the world.
17:26 The difference between US, Sweden, China, India
17:30 is surprisingly small.
17:32 But what I think Kalla is referring to
17:34 is the interesting difference.
17:35 When you go down in age groups,
17:37 it's up in the 80s, 85, 90s when it comes to the care of it,
17:41 which also tells us, except for the responsibility
17:43 that Kalla is pointing at, is from a brand perspective,
17:47 you better understand what's coming your way.
17:50 So I think there is a global interest
17:53 and there's a global expectation on leaders.
17:56 80% in our study expect me,
17:59 expect government leaders to do more
18:00 and also to engage people more in the agenda.
18:03 So I think it makes both ethical and business sense to listen.
18:07 - You've both mentioned governments doing more
18:09 and we're coming to the end of our time,
18:10 but I'd love to know specifically
18:12 what you would like to see them do to support this agenda.
18:15 Kalla, if we start with you.
18:17 - I believe the courage we're calling for
18:20 needs to come across three agendas.
18:21 We need to accelerate the energy transition
18:24 and I would say triple the renewable energy investments
18:27 by 2030 and give us an end date for fossil fuel.
18:30 We can work our way towards that reality.
18:34 I think we need to transform our relationship with nature
18:36 and that's the whole food and nature space.
18:38 And we need to bring the agendas of nature and climate.
18:40 - How do we do that?
18:42 - Well, why do we have separate COPs?
18:44 Why do we have separate conferences on nature and climate?
18:46 These are so related.
18:48 So that's one way I would like to see us improve that.
18:51 And I would like to place justice
18:52 at the heart of this transition
18:54 because the reason we're moving slowly
18:56 is we've left too many people behind.
18:57 But last but not least,
18:58 I really think we need to rethink
19:00 the global financial structure and align the incentives.
19:03 Governments cannot anymore have a black box
19:06 around all the money that they invest
19:09 in basically eliminating the human species on this earth.
19:14 We need to have transparency around that
19:15 just like we need corporate transparent disclosure.
19:18 So I would say for governments,
19:19 please help us pass the global baseline
19:21 for measuring what matters to all of us.
19:24 And please stop investing in our past
19:26 and start directing all incentives at the future.
19:28 We have at our fingertips if we choose to do that.
19:32 - Forward looking.
19:33 - Yeah, in short, you can say,
19:35 in that case, I will represent also the 130 companies
19:38 in the World Economic Forum's Climate Alliance,
19:40 which is in total carbon footprint,
19:43 good, bad news is actually today bigger
19:46 than any country of the world.
19:48 So huge responsibility.
19:49 But the good news is these are CEOs and companies.
19:52 So I've actually committed to be the leader in climate,
19:54 including committing to Paris.
19:56 So we will call for governments
19:58 to speed up transition legislation changes,
20:01 remove subsidies on fossil,
20:04 incentivize circularity and renewable energy.
20:08 And then we also ask for a dialogue
20:09 when it comes to harmonized and simplified ESG reporting.
20:14 And actually all these topics are on the agenda.
20:16 We need a bit more dialogue
20:18 and a bit more speed in this transition,
20:20 but it seems that it's moving.
20:22 - Hala and Yasser, thank you so much for your time.
20:25 It's been a joy talking to you.
20:27 - Thank you. - Thank you so much.
20:28 (silence)
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