No longer just a nice-to-have: Sustainability for SAMs

Are you ready for sustainable SAM? A conversation with Edmund Bradford.

 

Interviewer: Harvey Dunham

 

Harvey: So, it’s my pleasure today to be speaking with Ed Bradford, the Managing Director of Market2Win, who is also the Director of the Good Growth Academy and a frequent and long-time contributor to the SAMA community with a variety of different presentations and articles. Ed it’s such a pleasure to be speaking with you. Thank you so much for giving us some of your time

 

Ed: It’s my pleasure, Harvey and it’s always a pleasure to contribute something to the SAMA community.

 

Harvey: We really appreciate it and I can’t wait to have this conversation. I’ve been looking forward to speaking with you about sustainability and its impact on strategic account management from your perspective. And I see that you’ve been talking to people on the buying side, the customer side, the Chief Sustainability Officers and people at large companies. So why is sustainability on so many corporate agendas now?

 

Ed: Thank you Harvey and it’s a very important question. Maybe if you asked that question 20 years ago, then the answer would be, “it’s not” but there’s three big forces at play here, which is really changing things.

 

When I got my head around this subject about five years ago, when I started looking into it, it was then I realized how this freight train is gathering speed. First of all, there’s investor pressure. So investors have completely got their thinking now around a key term, which we will refer to right at the start, which is ESG, which is Environmental and Social Governance. How that’s really changed the investor world is that it is giving them metrics for measuring many aspects of sustainability. So much so by the way, that the numbers going into ESG-related funds are truly staggering. There’s over $30 trillion currently invested in sustainability assets and if you look at Bloomberg, for example, they’re estimating that this will hit $50 trillion by 2025, which will mean a third of all assets under management just four years away from now will be related to sustainability. And in fact, one of the Chief Sustainability Officers that I was talking to in one of my longstanding clients were saying to me that last year, it was the first time that more money has been put into ESG-related companies than in non ESG-related companies. So you can see from a CEO, CFO point of view, this thing is really a high priority on the agenda.

 

Harvey: Because their Boards must be asking them questions about it and asking what they’re doing to, to improve their sustainability performance?

 

Ed: Absolutely. Pension Funds are doing it. You look at some of the announcements from people at BlackRock, for example, the CEO of BlackRock talking about how he expects companies to be behaving in the future. And so the investors are really now encouraging, in many ways, for companies to do this. Of course, they are not doing this because they have suddenly turned into angels overnight. It’s because they see there’s a real financial threat or opportunity around climate change. If their companies, their portfolios have not got themselves protected against climate change, then these assets, potentially could be losing value in the future. So there’s a very hard financial business case with more and more research to justify it, to say that investing in the right sort of stocks will lead to longer returns, better returns. That’ just one big influence and I will cover the other two very quickly because I know we haven’t got much time.

 

Then you’ve got all the government pressure as well. These massive green funds. The EU, for example, it’s got a $1.82 trillion Green Deal going on. In America, you’ve got the Green New Deal, which is even bigger, $2 trillion. In the UK, where I’m calling from, we are hosting the COP26 Climate Change Conference in Glasgow this November. So, our governments are making a lot of commitments both in law by the way, as well as publicly, about what we want to do. So, even in China, who perhaps we don’t have the best relationships with, China realizing that they can’t keep polluting their own country. And so even they are actually, quite leading in many aspects of environmental change.

 

So the government, and then the final one which I’ll say very quickly is customer pressure. We might come back to that as well. We’ve got the accounts and the strategic accounts that we deal with and also, of course, the consumers they are dealing with down the supply chain. Big changes there. There is lots of research out there about how consumers are changing their habits and changing their behavior to be much more sustainable.

 

Harvey: So it’s a big deal. I mean, sustainability and ESG have arrived.

 

Ed: It is a perfect storm. It really is. It’s not going away. These targets are set for the next 30 years so this is not going to go away anytime soon. In fact, what we hear people currently saying is that many companies are signing up for these targets but what they’re not doing really, is understanding the journey of the milestones to get to the targets. So there’s going to be increasing short-term pressure over the next couple of decades on meeting short-term targets to get to these long-term net zero targets that many of these big brands have signed up to.

 

Harvey: Amazing. So the clients are there. To our SAM audience, your customers are there, or they’re thinking about going there. The question then, Ed, is: Are the sales and marketing organizations of the suppliers there? Are they able to, do they understand sustainability and ESG? And are they able to have intelligent conversations and ask good questions of their customers? What are you seeing on that side?

 

Ed: Oh, of course there are differences and we must recognize that different companies in different industries have different levels of competence in this area. But I would say, if I make a general statement, I would say generally, no. The sales community, I think, and the strategic account management community are kind of playing catch up. So I know anecdotally of many situations with my clients or with conversation I’ve had with SAMs where they’re reacting to requests, ever more serious definitive requests from their accounts asking for, what their plans are, what their level of commitment is from the top, what level of investment is going in, what their milestones are. So the box-ticking days of “yes, yes, we are doing something on sustainability” is over.

 

On the marketing side, the good news I think for the SAM point of view is that they are ahead of the marketing. I think what’s interesting to me is that when I talk to people in the sustainability world, the marketing profession, who are often seen as “the greenwashers” of this, have further to come. While the sales community needs to catch up, I think the marketing community needs to wake up. But we may leave the marketing community for another conversation! But there’s still catching up to be done by a lot of the SAMs out there.

 

Harvey: So I guess the message to our SAMs who are listening is that you should check on your customer right up at the top and see what they’re saying about sustainability and environmental, social, governance issues and ask questions about that and see if it represents an opportunity for you to create value with your customer in new ways. That’s really the message to the SAM community.

 

Ed: Absolutely and there’s lots of practical ways to do that. As I said initially, of course, they need to be aware of where their customer is in their level of maturity in this area. So for example, if they’re in a sustainable, sensitive area like ‘Food and Drink’ then the chances are that those companies are going to be pretty ‘clued up’ on sustainability because they have to be for their own supply chains, for their own customers, etc. And if they’re working with top brands, famous brands in this area, so whether it’s… good companies to look for by the way are, Pepsi is really good in this space. I recommend you just tour around their website, look at their sustainability reports as benchmark, good practice. Another one is Unilever over here in Europe, another really good company. So if you’re in a company that itself is known to be top of its game, then of course the chances are that their sales and marketing function is going to be pretty good.

But if you’re working with a lot of other functions, a lot of other companies, then you’re going to have issues. And as you say, Harvey, that actually is an opportunity in ways, a real opportunity to understand their challenges and to look for opportunities to co-create value.

 

Harvey: Right. Well, in this business, you alluded to it earlier about the companies are going to be asking questions of their suppliers and one of the questions is going to be, “What is your carbon footprint?” Why do the companies want to know this from their suppliers?

 

Ed: That’s a great question and the reason Harvey is because they are coming under pressure from their investors, from the ESG community, all about metrics. The metrics are demanding. Transparency. Good, detailed transparency in a lot of areas including carbon footprint. Now, companies are reacting to investors in different ways. And some companies – let’s face it – have better leadership teams than others in terms of sustainability. So some are going to be a bit more ahead of the game and some a bit more behind the game. But, for example, let’s get back to Unilever. I was listening to a presentation there a couple of weeks ago from their supply chain head who was saying that they’re now going to be asking for the carbon footprint to be written onto invoices from their suppliers so they know, as a company, how much carbon they’re buying with those products and services that they are buying from their suppliers. So when you get a request from a company like Unilever saying, “Before you submit your next invoice, please tell us how much carbon you’re generating” that does focus the mind somewhat. You kind of can’t come back with a motherhood, glib statement to say, “Oh yes, we really are committed to net zero but we’ll get there by 2050 thank you very much!” These measurability issues are, if I borrow an American phrase perhaps, are a real and present danger.

 

Harvey: So what I’m hearing is that when a company like Unilever is reporting on their carbon footprint, it’s not just their organic, their company’s carbon footprint. It’s the carbon footprint that includes their suppliers as well.

 

Ed: That’s right. And this is where you get into the, the jargon a little bit, the terminology. People talk about Scope One, Scope, Two and Scope Three emissions. In general terms, Scope One is what we generate ourselves as a company both in the manufacture of our products and services and our distribution to our customers. That’s kind of within our control. Scope Two includes the energy that we use to make those products and services which, of course, can be very significant. And Scope Three is the most challenging of all. Scope Three is where a company will try to measure all the carbon footprints of all their suppliers. Now that is a huge undertaking for many companies. You just think that many of your suppliers will be in China. So how are you going to get your Chinese supplies to give you statements around carbon footprints?

 

It’s a major undertaking but it depends what they signed up to. And this is another important point: that SAMs need to understand from their customer’s point-of-view, what have you signed up to in terms of your commitment. Is it Scope One or Scope Two or Scope Three because that will make a major impact on their demands on you as a supplier.

So it’s a major undertaking and there’s plenty of opportunity for SAMs to help deliver the right information to their customers but also to ultimately reduce that carbon footprint right throughout the supply chain.

 

Harvey: The world is changing. I can see a Request For Proposal or Request For Quotation coming out and these are the requirements that the first questions are: “What’s your carbon footprint? What’s your commitment to ESG? etc. etc. etc. and then when you fill that part out, then they’ll actually talk about the solution you’re going to provide and the cost and those kinds of things.

 

Ed: I’m building a simulation at the moment, for a university, around sustainability. So a lot of my research has been around thinking about the key challenges around people that will play the simulation and what they need to learn. So I’ve been talking to buyers, SAMs, sellers, suppliers, etc etc, academics, consultants in the area to understand the current situation. Well, one thing that I think is very interesting in all of this is that the buyers are telling me that, “okay, in the past, sustainability has been a bit of a nice to have. We look at the core metrics: price, service delivery, all that sort of core stuff and sustainability is kind of like at the edge, the icing on the cake. We might use that to decide the final supplier.” But now what they’re saying is that as sustainability is much more central and actually if you, as a supplier, are not fulfilling our sustainability requests, well enough, you may even be deselected as a supplier because we cannot take the chance with our investors that we have a dirty supplier. And I think that is a very interesting concept: a dirty supplier. It’s something maybe that we haven’t measured in the past. How many of the SAMs listening to this, for example, when they’re doing their strategic account prioritization work where they’ve got a hundred accounts out there and they need to get that down to a few genuinely strategic accounts. How many of those look at clean accounts versus dirty accounts? Are they doing that? This whole sustainability thinking permeates into almost everything that the SAM does, from choosing who is the strategic account. Do we want to be working with dirty accounts for the next 20 years, a little bit slow to change, or do you want to be linked to working with the green leaders who will help us change?

 

It’s also filters down to the planning in the account plans. Do we have a sustainable-friendly account plan? Do we, in there, understand the sustainability challenges that the customers have? All the way down to: What are we doing on the ground in terms of co-creating value? How do we…how are we measuring progress and who are we talking to?

 

So the whole go-to-market, the go-to-account process for a SAM actually really does need looking at again and saying, “We need to, in order for this process and our blueprint and make it much more sustainable-friendly.”

 

Harvey: Right. Right. Well, and it’s interesting this concept of sustainability and then the environmental, social, and governance aspect of it really expands the areas where the customer needs, your customer might need to go. So how can a SAM probe, ask questions and learn from what their customer’s position is in that area? What do they need to do because it’s not just energy efficiency. It’s what other areas do you need to really understand the customer’s direction?

 

Ed: It’s a really good question, Harvey. When we talk about sustainability, we need to be careful not to think that it’s just about carbon footprint. When we talk about ESG, when investors are measuring companies on their ESG performance they are looking at quite a diverse set of metrics. So if we stick with the planet for a moment. It’s our carbon footprint, it’s our use of water, particularly in high stress areas. It’s our use of land. Do we have any deforestation? How much of the prime land is being used? Then we get into all the metrics around people. So it’s about: Is this an ethical company? Do they embrace diversity? Are there any very unethical pay gaps happening both from top to bottom and also from male to female pay gaps? And things like working conditions. All of these are being looked at and measured as part of ESG.

 

And then you go into even other areas around things like governance. How is this company dealing with risk? Do they have a very good mechanism and process for assessing climate change and how that will affect their own company and how they are dealing with it? And ultimately by the way, they look at community. We were talking earlier, Harvey, you’ve been traveling about. How the weather in Texas is actually affecting not just the workers but also their own home lives. So the impact on the local community is part of the ESG metrics. If they’re a global company then it’s the communities around the world in which it operates. And ultimately, they even go into the leadership and is this a company that is purpose-led, is it purpose-driven? Does it have good purpose-led leadership?

 

So these metrics are very encompassing, very comprehensive. And one of the things I think a SAM should do when they engage in a conversation on sustainability is just check the person you’re talking with (by email or face-to-face or zoom or whatever) to say: “What’s his understanding of sustainability and where is he and his company coming from in this area?” Some will be thinking just planetary issues and they’ve signed up to a carbon footprint target, and that’s where they need support. But others may be thinking in a much broader context, ESG context, and we’re looking for opportunities to help them in that way. So there’s plenty of opportunity to help customers understand what sustainability is and to help them to become more sustainable.

 

Harvey: Well, thanks for, thanks for expanding it. There’s just a lot more things to understand, but also a much bigger opportunity to co-create value with their customers. If you can find a way to help them achieve one of these other metrics that, if you will, the greater shield or umbrella under which sustainability sits. Lots of ways to win, basically.

 

Ed: Yes, absolutely, Harvey. I think we shouldn’t lose sight of the practical things that sounds good to do. I know I’ve talked a lot about the general concepts and I think it’s important to understand the concepts. The actions you can do next week are pretty simple really.

 

First of all, you can get educated about the subject. So just read up on what is sustainability. You can, if it helps, visit our GoodGrowthAcademy website goodgrowthacademy.com because we’re putting lots of little videos and interviews out there talking about the subject and helping people to understand it. You can also have, of course, conversations with friendly people in your own organization.

 

Now I know you were at Schneider, Harvey, so you’d probably do that as well. So you’ve got sustainability people in your own organization. You’ve got logistics people, procurement people in your own organization. Get a coffee with them and just have this conversation about: What are you trying to do with your suppliers? What are the real challenges that we have as an organization? What kind of advice would you give me before I go and talk to my customer about this subject? And then of course you can have conversations with people in the accounts where you’ve got a good relationship and understand a bit more about their challenges.

 

But also make new friends in the customer as well. So a lot of the work being done here is going to be in the supply chain function. It’s going to be done by the Chief Sustainability Officer, procurement are getting more and more involved. So maybe talk to some functions that you may not have spoken to before or make new contacts in those functions and try to get a broad understanding of the challenges your account is facing.

 

It’s a big area and you’re not going to learn this overnight. But with some initial, very well targeted conversations, you can get a much better picture of what some of your key accounts are doing. And then what I’d I say to you (which is what I say to my university students by the way) is bring it all back together. If necessary, do a simple SWOT. It’s a sustainability SWOT. So for this account: What do they see as being their strengths around sustainability, particularly relative to their competition? What do they see as their weaknesses relative to their competition? What are their opportunities? Do they see opportunities with new products, new technologies, doing new things with their accounts? And what are the threats that they are facing?

 

And therefore (you need to finish the SWOT properly) and therefore: What are the key challenges from that SWOT analysis? We need to link them all together, link these four boxes together. And even doing that one-page exercise, you can get a decent handle of, let’s say, the Top 5 Sustainability Challenges that we think our customer is facing.

And then maybe we can play that back to them to check it and get a really good handle on how they are. And, of course, you don’t need to be a sustainability expert in all of this. You just need to be better than your competition. And maybe your competition is not even having that kind of conversation, not doing that little bit of a diagnostic. Generally, it’s a good opportunity to find new areas to co-create value.

 

Harvey: Wonderful. You know, it just occurred to me, Ed, and we hadn’t talked about this up to this point, but there’s a new position that’s been created at the C-suite of many customers that are embracing sustainability, which is the Chief Sustainability Officer and replaying this conversation that we’ve had about how the importance of sustainability and ESG are growing with companies, like huge companies like BlackRock and Pepsi and Unilever, etc. That Chief Sustainability Officer must have a lot of influence at this point and they’ve got a big problem to solve. So I’m imagining they’re pretty receptive to suppliers that want to help.

 

Ed: Absolutely Harvey and you can look at different organizations. You can look at them and say, well, what does the program team look like in this organization? Now some will just have a single Chief Sustainability Officer that’s being given the role of sorting this out. They will need help. They need resources, they need support. And that is a real cue for any supplier to say: “Listen, we’re with you on this. We want to try and help you solve these big challenges, whatever your products and services are.”

 

You’ll be surprised, by the way, how much you can contribute even with cheap products and services so you have a role to play in helping them. And there’s a universal understanding in all this that if we are to save the planet (and this is a nice message, we’re not trying to make a lot of money for a small bunch of people here, we’re trying to save the planet) and there’s a universal agreement now that to do that, you must have cross-company, cross supply chain, sometimes cross-industry collaboration. Now that is actually a skill that I think a good SAM should have. They should be masters of collaboration.

 

So they should be able to help to pull together the right people. Maybe they can pull together a bunch of friendly suppliers to form a group to help them sort out a particular challenge that the customer has. They can’t do it, they won’t be able to do it on their own. Very often they need those extra resources and the SAM has the particular skills and talents that can help.

 

So again, it really is I would say, despite all the challenges this is going to face, to create for many suppliers, this is genuinely also a truly great opportunity. And in the article, by the way, that I wrote for SAMA (which is now out) I said actually on a very nice point as well, that at the end of the day when you reach your retirement age, isn’t that something you can be proud of? You’ve gone out there and you can say to your children and your grandchildren, “I really did help in my small little way to save the planet. And this is what I did.”

 

Harvey: That’s wonderful. And again, I keep thinking about how big this problem is and how many different ways a SAM can affect it. And what I’ve seen is, and what I’ve heard is from our SAMs is if you can pull an ecosystem together to help your customer. So you don’t have to do it all by yourself. You can, you could God forbid, you could probably even involve your competitors (if you do it the right way and make sure you stay on the right side of the fence and not share information that you can’t), but to help the customer get where they want to go. If the customer sees you as that ecosystem captain, that leader, the person who’s helping making it happen, who’s helping our company get better scores. You’re going to be a winner in that.

 

Ed: Absolutely. And do you know something – some of this is not new. I mean, the idea that to be a good strategic supplier, you are genuinely having an impact on the big strategic decisions of that customer, is still there. It’s a timeless principle. We’re just saying that this is actually a new area to collaborate. Actually, I think we talked about this last time Harvey, this is actually an excuse to go up the decision making levels and getting – even if you’re doing a very commodity type product where you found it difficult in the past. If you can demonstrate properly, not as some wonderful sales tool, but with a hard, well-thought-out proposition that you can help that customer to sort out some aspects of their carbon, their sustainability challenges, then there’s a very good chance that you will go up to a higher level of decision-making. Way outside maybe the engineering function or the procurement function that they’re used to dealing with and it will get you into very good executive conversations. So yes, absolutely. It is a really good option.

 

Harvey: So what you’re saying is this is your ticket to engage the C level of your customer.

 

Ed: Absolutely. That’s right. It’s a golden ticket to do that. And I’m not saying you need to be an expert in this subject. You just need to have enough understanding of it, to be able to ask the right questions. I always like that quote by Einstein that says that if you had a problem to solve, he’d spend 55 minutes defining the question, and then only five minutes on the answer. And it’s probably not as simple as that in this case, but I think the point is true. Ask the right questions and they will lead you to the right teams, the right types of collaboration, the right ideas, the right vision, the right messages to take into your own organization to make some real progress.

 

Harvey: Amazing, Ed. It so good to speak with you about this topic. I’ve learned so much. Thank you so much for your time and being willing to share with us and you know, if you want to know who an expert is in this area, folks, it’s Ed Bradford. So thank you from the bottom of our hearts.

 

ED: Thank you, Harvey. It’s always a pleasure to talk to you and to hear the views of the SAMA community as well. They are always welcome to contact me, whoever they are. Just look me up on LinkedIn, for example, or I’m sure there’s various connecting points from this podcast. They’re welcome to contact me and I’d be interested to hear what challenges they have. I look forward to catching you again soon Harvey.

 

Thank you so much. Cheers.