United Nations Headquarters, East River, Manhattan, New York City, New York, USAVARIOUS

United Nations officials and environmentally minded executives discussed some of the sustainability challenges in the CG&R industry Thursday afternoon at the United Nations.

In welcoming guests to the Baker McKenzie program, the U.N. Global Compact’s chief executive officer and executive director Lise Kingo spoke of the need for greater involvement. Founded nearly 20 years ago by former U.N. Secretary General Kofi Annan, the U.N. Global Compact works in conjunction with the private sector to give globalization a human face, Kingo said.

“Personally, this vision has never been more relevant than it is today. We are living in a world where we need a clear lighthouse that we can all steer towards that has the purpose of creating a world that leaves no one behind,” she said. “We believe approaching the 17 goals starts with embedding the 10 principles [which are rooted in human rights, labor, environment and anti-corruption] in the way that any business is run. It is the best guarantee for not being accused of doing a little greenwashing by taking one or two of the goals and putting them into a company’s annual report.”

The U.N. Global Compact has strengthened to more than 10,000 companies from 40, when it first started. As the world’s largest sustainable business initiative, there are now local chapters in more than 70 countries, Kingo said.

With more than 66,000 people around the world working for U.N. Global Compact companies, that big footprint “also comes with a big responsibility,” Kingo said, adding that raising awareness about its 17 global goals, and more importantly having companies adopt them is paramount. Climate, oceans and inequality are some of the current challenges, she said. At the moment, an estimated $2.5 trillion would be needed annually to meet those goals by 2030, she said. “The key message is that whenever companies address the goals and the principles, think about minimizing negative impact and maximizing positive impact, and be ready to account for the negative and the positive impact.”

Afterward, Kingo addressed what is needed for fashion companies to be more committed to sustainability. “Probably, [that will happen,] when all of us start being more conscious about the products we buy at the consumer level. That is something that we could all do,” she said. “In terms of the industry itself and how it conducts business, there are a number of opportunities to run a business in a more sustainable way in terms of optimizing water consumption, optimizing energy, making sure you have people who are engaged working in the company. Improving that is very important for the industry, because it has so many workers in the developing world.”

Fashion companies would be better off being being “proactive” than having to deal with questions from journalists about human rights or labor conditions, Kingo said. “There is the business case but companies also have to make sure that the industry is aligned with its consumers. Many more young people are concerned about sustainability when they buy clothes and fashion. Another interesting trend is that it is becoming more and more in fashion to buy secondhand clothes. That is a small thing that illustrates the thinking of many people today,” she said.

Another sustainability issue that the fashion industry has to face is its prevalence for producing outfits and clothes that don’t last long. “It would be better to apply sustainability to make products that were maybe a little more expensive but would last for a longer period of time.”

How c-suite executives and boards of directors can tackle Environmental, Social and Governance (ESG) was the event’s first panel discussion. Moderated by the U.N. Global Impact’s senior manager of strategic development Ingvild Sørensen, the discussion featured Kering’s lead independent director Sophie L’Helias, corporate governance and sustainable investment specialist Karina Litvack and Baker McKenzie counsel Gloria Santona. While L’Helias noted that she could not speak for Kering, she shared some insights from her experience in the field.

L’Helias noted that the lead director position was created last week, an independent director whose role in addition to the rest of the board is primarily asked to engage with investors. “In our case, the board decided they wanted engagement on ESG,” she said. Through her experience with board members on other investment boards, she’s seen that “the conversation is happening but the reality is twofold. Number one is that you don’t have a common understanding of what the issues are. With that discrepancy in understanding — and sometimes it’s generational and sometimes it’s also by expertise — when you have such a discrepancy, it’s really hard to get on board and have a common conversation. Then you have people who clearly have an interest in it. The level of how a board commits is also reflective of the level that directors feel about this issue. Clearly, if you have a ceo that cares about this, then you’re going to have a board that is attentive to it. If you have a ceo who sees this as a strategic opportunity versus a marketing opportunity, it’s going to be even more on the board’s plate.”

L’Helias noted how Kering was the first company to publish an Environmental Profit & Loss account and how other signs of the company’s forward-thinking are its open-source system and a Plug and Play program where we have entrepreneurs who are tied to our brands that are developing innovative products. “So investors really like that. For us, ESG, if you want to call it that, is something bigger than that. It’s part of values. It’s really the values of the company and those values are shown by people wanting to work at the company, the level of innovation and the attractivity of our products…All this ESG, and I believe this as an investor but I’m seeing this as a board member, that ESG is actually a driver of value.”

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