Why competitors are working together to achieve sustainability goals

Pep­si ver­sus Coke. BA ver­sus Vir­gin Atlantic. McDonald’s ver­sus Burg­er King. Run­ning a suc­cess­ful com­pa­ny used to cen­tre on beat­ing the com­pe­ti­tion at all costs; the annals of busi­ness his­to­ry are full of feuds between bit­ter rivals, includ­ing many that played out dra­mat­i­cal­ly in the pub­lic eye.

Yet now, while the com­pe­ti­tion for con­sumers may be con­stant, behind the scenes you’re increas­ing­ly like­ly to see rivals get­ting togeth­er to col­lab­o­rate on how best to run a suc­cess­ful sus­tain­able busi­ness.

Collaboration for the common good

The rea­son for this change, accord­ing to Mike Bar­ry, long-time direc­tor of sus­tain­able busi­ness at Marks & Spencer who cur­rent­ly works as a con­sul­tant, is the enor­mi­ty of the chal­lenge to get to net zero. “When you were reduc­ing your car­bon foot­print by 3 per cent a year or reduc­ing plas­tic use by 2 per cent a year, you could do it on your own. But now with net-zero goals, we need to fun­da­men­tal­ly rebuild val­ue chains,” says Bar­ry.

A retail val­ue chain has bil­lions of items being pro­duced in fac­to­ries and farms all over the world, which are then sold to mil­lions of peo­ple. “You have to find a fun­da­men­tal­ly dif­fer­ent way of sourc­ing those raw mate­ri­als, man­u­fac­tur­ing them, using them as prod­ucts and sell­ing them,” he says. “No busi­ness can do that on its own.” 

Archana Jagan­nathan, senior direc­tor for pack­ag­ing sus­tain­abil­i­ty in Europe at Pep­si­Co, agrees. “Col­lab­o­ra­tion is at the heart of sus­tain­abil­i­ty,” she says. “If we tru­ly want to deliv­er pos­i­tive out­comes for peo­ple and plan­et, this is not just about one com­pa­ny. We’re look­ing to influ­ence a sys­tem and crit­i­cal to any sys­tem change is col­lab­o­ra­tion.”

Jagan­nathan has noticed a real shift in the scale of col­lab­o­ra­tion lev­els over the last few years. “There was always col­lab­o­ra­tion between sus­tain­abil­i­ty lead­ers. But what’s real­ly shift­ed is that con­ver­sa­tion has now become a CEO con­ver­sa­tion and an indus­try forum con­ver­sa­tion,” she says.

An exam­ple is UNESDA (Union of Euro­pean Soft Drinks Asso­ci­a­tions), whose mem­bers include Pep­si­Co, Coca-Cola and Red Bull. With its mem­bers full sup­port, UNESDA has devel­oped a Cir­cu­lar Pack­ag­ing Vision for 2030, which pledges that all pack­ag­ing will be recy­cled or renew­able and 90 per cent of pack­ag­ing waste will be col­lect­ed.

The power of a third-party presence

The British Retail Con­sor­tium, which rep­re­sents more than 170 UK-based retail­ers includ­ing Ice­land, Sainsbury’s and M&S, has launched a net-zero goal for 2040, as has the Nation­al Farm­ers’ Union. Bar­ry believes it’s cru­cial for com­pa­nies to work with exter­nal third par­ties on such ini­tia­tives. “They’re com­peti­tors, so hav­ing a neu­tral big tent in which you can oper­ate is real­ly impor­tant,” he says.

Emi­lie Stephen­son, who heads up the Force for Good divi­sion at Inno­cent Drinks in the UK, says the brand has found col­lab­o­ra­tion with oth­er com­pa­nies a lot eas­i­er since they became a B Corp in 2018. She says: “We can shout loud­er togeth­er about the change we want to see.”

Dar­i­an Stibbe, exec­u­tive direc­tor of The Part­ner­ing Ini­tia­tive, an organ­i­sa­tion that facil­i­tates col­lab­o­ra­tion between com­pa­nies, gov­ern­ments, NGOs and the Unit­ed Nations, is sym­pa­thet­ic to the scep­ti­cism some com­pa­nies may have at the start of the process. “They are gen­uine rivals expect­ed to sit in a room togeth­er and some­how col­lab­o­rate,” he says.

Stibbe refers to the impor­tance of build­ing the case inter­nal­ly. “We talk about the insti­tu­tion­al­i­sa­tion of part­ner­ships,” he says. “They start between a few indi­vid­u­als, but it has to be made impor­tant to the broad­er com­pa­ny, with your inter­nal net­work get­ting excit­ed about it; to find things where your CEO can go and speak about this excit­ing new part­ner­ship pub­licly.”

Com­pa­nies can expect tricky con­ver­sa­tions with their lawyers, who under­stand­ably want to reduce risk for their organ­i­sa­tions. “The real­i­ty is these part­ner­ships are risky as they’re doing some­thing new,” he says. But for Stibbe it’s not in the con­tract where you reduce risk, it’s in the way you run these part­ner­ships with trust, trans­paren­cy and a col­lec­tive vision. “Mak­ing it clear you want to get val­ue out of this co-oper­a­tion, but also you’re there to help oth­ers get val­ue from the col­lab­o­ra­tion too,” he says.

Innovating for the future

One of the cross-busi­ness col­lab­o­ra­tions PepsiCo’s Jagan­nathan is most excit­ed about is Pulpex, the world’s first scal­able, plas­tic-free paper-based bot­tle, which should go into pro­duc­tion in 2021. Cre­at­ed by Dia­geo and Pilot Lite, it’s set to be tri­alled by Pep­si­Co and Unilever. “When you have more peo­ple adopt­ing a tech­nol­o­gy, it’s eas­i­er for the com­pa­ny to be able to scale it up,” she says.

This kind of inno­va­tion is where busi­ness can real­ly help dri­ve change, accord­ing to Pro­fes­sor Knut Haanaes, head of sus­tain­abil­i­ty at the Inter­na­tion­al Insti­tute for Man­age­ment Devel­op­ment in Lau­sanne, Switzer­land. “The world has prob­lems gov­ern­ments can’t solve; we need the inno­va­tion of busi­ness,” he says. “We need the abil­i­ty of busi­ness to dri­ve new things at scale to build tech­nol­o­gy and capa­bil­i­ties.”

Haanaes finds it use­ful to look at great exam­ples of swift action, inno­va­tion and col­lab­o­ra­tion from the past as poten­tial tem­plates for the future. “The ozone lay­er, where gov­ern­ments came in strong, there was agree­ment and com­pa­nies adapt­ed very quick­ly. The switch from lead­ed to unlead­ed gaso­line and plas­tic waste in oceans. It’s not there yet, but it’s miles ahead of where it was three years ago. Indus­tries col­lab­o­rate, gov­ern­ments start to reg­u­late and it becomes a vir­tu­ous cir­cle,” he says. And all with­out a Cola war or dirty tricks cam­paign in sight.