November 2, 2016

General Mills' CEO is Serious about Climate

Climate change has been nearly absent in the presidential election. But it's front and center in business. We’ve left the era of climate denial and CEOs are talking more openly about what a changing climate means for business. Exhibit A is General Mills, which is, like its competitor Kellogg, sounding alarms about the climate...and for good reason.

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Ken Powell, General Mills’ Chairman and CEO, opened the Business for Social Responsibility conference yesterday in New York and laid out some compelling reasons why climate and sustainability were core issues for the company. One reason he gave was something I don't hear often. As CEO, he said, he is directly "accountable for enterprise risk management"

Powell said that he is expected – by investors, I presume – to have plans in place to avoid disruptions to the business. Issues range from facility safety (making sure a factory isn't wiped out by an earthquake or storm) to fraud and cybersecurity. He used these risks as examples to make an important point: climate change is now firmly on the list of issues he has to manage. And putting any uncertainty to rest, he said, “clearly, there’s a strong scientific consensus that climate is a risk.”

Powell provided another big reason that General Mills is pursuing sustainability aggressively: pressure from key stakeholders, particularly employees, consumers, and retailers.

Employees, he said, care deeply about two things: food security (helping those who don’t have enough) and sustainability. And they let him know it. Consumer expectations "have never been higher,” with rising demand for simpler, less processed, less artificial food. Many executives, Powell included, say that this “clean label” movement is the most dramatic change in the food industry that they’ve ever seen. It’s part of larger shift in expectations. All of us, he said, “want to know that the company that makes your food shares your values.” Finally, Powell talked about pressure to improve environmental and social performance coming from big retailers like Walmart.

But in the end, Powell’s interest in sustainability and climate change is even more fundamental than stakeholder pressures. As he put it, “Sustainability is an important business imperative for us. To feed a growing population, we need clean water, healthy soil, strong ecosystems, a stable climate, and thriving farm communities.” In short, you can't grow food without healthy farms operating in a good climate.

Clearly Powell understands that tackling climate change, as well as ensuring the basic health of the planet, is core to the success of his business. To make that connection clear, last year he set aggressive carbon goals for the company’s own operations and its agricultural suppliers (my firm wrote a report for Oxfam that assessed General Mills’ and Kellogg’s value chain GHG goals).

Watching the CEO of a traditional, old-school company – nearly 150 years old – talking fluently about megatrends and climate change was wonderful to see. It's a great sign that companies are getting focused on climate, even as the country debates everything else.

PS, On a lighter note, Powell did provide one fun factoid. Apparently, Lucky Charms, which most would guess is targeted at kids is mostly consumed by adults. It’s the #1 cereal on college campuses.

(Andrew's book, The Big Pivot, was named a Best Business Book of the Year by Strategy+Business Magazine! Get your copy here. See also Andrew's TED talk on The Big Pivot.

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