Claire: Welcome to the latest installment of the Curious Capitalist, brought to you by the Conscious Business Collaborative Board in Connecticut. The Curious Capitalist is a series of podcasts where we take the opportunity to speak with a wide range of guests, including board members, business owners, and startups.

Claire: Our purpose is to engage, educate, and inspire business leaders. At all stages in their careers to think and work more collaboratively and sustainably. Please subscribe to this podcast wherever you get your podcasts from. Welcome along to the latest episode of The Curious Capitalist, brought to you by the Conscious Business Collaborative in Connecticut.

Claire: Now, our special guest today is Tensie Whelan. Tensie is the distinguished professor of practice for business and Society. She's also the founding director of the. NYU Stern Center for Sustainable Business, where she's bringing her 25 years of experience working on local, national and international sustainability issues to engage businesses in a proactive and innovative mainstreaming of sustainability.

Claire: Now, her work with the Rainforest Alliance has transformed the brand into an internationally recognized, incredible organization building from a $4.5 million budget. To over $50 million. I'm super excited to learn more about Tensie. So without further ado, I'm gonna hand over to the Conscious Business Collaborative executive director Glen McDermott, who's gonna be firing the questions today.

Claire: Glen and Tensie, welcome to the Curious Capitalist.

Glen: Thank you for a wonderful setup as always, Claire. And welcome Tensie. I'm thrilled to have you in our room today and discuss your impressive career. And you know, I always like to start with the personal journey and, you know, you spent your early career as an environmental journalist in Latin America.

Glen: You know, how, how did witnessing ecosystems in communities firsthand shape your ethos and, and approach to your work?

Tensie: Well, first of all, Glen, it's a real pleasure to be here with you and thank you so much for inviting me. I love the, I love your show, so it's terrific to be, I feel very honored to be part of it.

Tensie: So working in Latin America at the time was a time when. The various countries in Central America where I was based were actually building ministries of environment. They were creating national park systems at the same time they were dealing with the Nicaragua, Honduras Contra kind of military war.

Tensie: There was a lot of challenges in the region. And it was also on the positive side in terms of park systems, a time when ecotourism was just beginning to come into play, and we'd also seen massive deforestation in countries like Costa Rica, which is where I was based. So covering sustainability as a journalist for wire services, publications, et cetera.

Tensie: What I saw and learned from that, that affected my career since is, first of all, that tropical forests are pretty cool, you know, and that wildlife and everything is amazing, but also that. As people concerned about conserving those ecosystems, we have to take care of the people who live in and around them.

Tensie: If we just say, we're just gonna set those all aside, we're forgetting the facts that people depend upon them for their livelihoods. So while I was there, for example, there was a boycott against McDonald's for deforestation related to, you know, rainforest beef. Right? And while the activists were not wrong on the merits.

Tensie: What happened was McDonald's pulled out from one day to the next and what happened to the forest? Well, all those people had been doing ranching now moved to slash and burn agriculture. So it wasn't that the deforestation stopped. So instead, you know, for me, what I learned from this is that you need to figure out how to.

Tensie: So it really drives sustainable development that helps people actually put food on the table for their kids, create good jobs, et cetera, as well as do that in a way that is gonna protect our natural resources for the future.

Glen: Wow. Rainforest beef. Some great keywords there. We might get back to that. Was there a moment when you pivoted from, you know, the media to the NGO into mainstream business partnership?

Glen: 'cause that's, I think, the, the friction point that a lot of people struggle with. So I'd love to hear your version of that.

Tensie: Well, I think, you know, my interest in that started again working as a journalist in, in Latin America because what I saw is that it was the business practices, whether they were small businesses and farmers, or the big buyers of these products, and fundamentally consumer purchasing decisions that were driving negative environmental and social outcomes.

Tensie: Right. And so when I came back to the States, I started to volunteer for an organization called the Rainforest Alliance, which was a tiny organization at the time, and I worked, at that time I had, I had just had a child, so I didn't wanna be traveling internationally at that time. So I was working at National Aman Society and then running the New York League of Conservation Voters in the Federation of State leagues and sort of building out that whole network.

Tensie: But as I did that, I knew I wanted to get back into international work when my daughter was a bit older. Wanted to do it in a way that was engaging with business. So the Rainforest Alliance thesis from the beginning was how do we, you know, public policy to stop deforestation in the tropics wasn't working.

Tensie: So they came up with the idea of certifying good practices so that you could have a marketplace signal, right? So you could really use markets to move conservation and sustainability. And so. When I went over to work for Rainforest Alliance, we were working with businesses as well as NGOs and others to basically transform the production practices of forest, air, agriculture, tourism, et cetera, and to transform kind of the purchasing criteria and then the consumer behavior and that that we were, rather than doing.

Tensie: Boycots, they would dots because Boycots have a negative impact on the people on the ground in those countries. Byt actually help those people on the ground as well as the businesses. So that was sort of the fundamental unlock that I think Rainforest Alliance came up with and that I got excited about when I went to work there for them.

Tensie: And. Built the organization to the organization it is today. And that also is what drove my interest in going to Stern Center for Sustainable Business, where I got so fascinated by the business case that I saw working with, you know, thousands of companies, millions of producers, lots of supply chain partners.

Tensie: Sustainability actually drives value creation. Whether it's better productivity for the farmer, or less theft for the broker, or brand benefits for the brand and the retailer, nobody was capturing those. So I went to Stern to really develop both educational programs and research programs to help get at how embedded sustainability can drive better financial performance, as well as better societal performance.

Glen: So at CSB, you championed the Rossi set up there. What are you, what are the often overlooked financial benefits, like efficiencies through operations and risk reduction that resonated strongest with your CFO community?

Tensie: Yeah. So yes, as you mentioned, we've developed this return on sustainability investment methodology that's identified nine drivers of better financial performance.

Tensie: When you have sustainability strategies and practices that are focused on what's material for the company. In other words, water may be material for one company and not for another. It's not material. Designing strategies around it aren't gonna, is not gonna drive financial value, right. So this rosy model has drivers such as innovation and growth, operational efficiency, risk mitigation, employee retention, any kind of thing that actually good management can drive.

Tensie: But what we find is that sustainability strategies and practices can drive three or four of those at once. So, to give you an example, we've worked in automotive, apparel, agriculture, real estate, et cetera. So let's just look at automotive. So with one automotive company, right? We looked at their waste management strategies, so.

Tensie: There's an enormous amount of waste generated in manufacturing, which if you think about it, waste is the ultimate in an operational inefficiency, you're buying more than you need to pay to dispose of what is left over. Right. So I. We were looking at things like they were starting to recycle paint and solvents.

Tensie: When they recycled paint and solvents. They no longer bought the virgin stuff. They no longer had the waste disposal cost, and actually they were selling a bit of it, so they had some re uh, the leftover, so they had some revenue from it. But here's the thing, they weren't tracking the financial returns, right?

Tensie: So ultimately what we found is that for this company, there was $235 million net benefit of their waste management strategies, which they did not know because they were not tracking it. In another example, you know, we look at kind of the revenue uplift for, for companies and we look each year at with Rcna data, who collects all of our barcode data for consumer packaged goods in this country.

Tensie: And now we've added the UK and Germany for every single product bought and sold right in Mom and Pop, Amazon, target, bricks and mortar, e-commerce, et cetera. We've been looking at this data for 10 years. Sustainably marketed products are growing twice as fast as conventional at a 27% premium. This is every single category.

Tensie: When we first looked at this, 14 categories, were under 5%. Now there's just a handful and there's 14 categories over 20%. Even categories like dairy and yogurt that are pretty high, you know, pretty highly saturated. 60 something, 70 something percent. Market penetration on sustainable are still outgrowing.

Tensie: Conventional. Right. So really a lot of drive that even in this country people don't understand. In the UK and and Germany, it's actually like 35% of all products. The United States it's, is it 27% of all 28% of all products sold have sustainable attributes. In the UK it's something like 35 and in Germany I think it's 42 or maybe a bit higher.

Tensie: So, you know, there there is global demand and people are. Willing in this country, willing to pay a premium.

Glen: Given the recent ESG scrutiny and all the political backlash going on at the moment, how do you see the evolving public perception? You know what, what practices strengthen integrity and counter the greenwashing movement.

Tensie: Yeah. Well, so I think there's a couple of trends here. So one is. You know, reasonable reaction to greenwashing or claiming too much. Another is what I think is unreasonable attacks in terms of this stuff is virtue signaling or not useful or anti-capitalist, or doesn't, you know, make you money, right? So the, the more right wing kind of approach to it.

Tensie: So on the greenwashing front, it's important to have regulations that companies comply with around what they claim, to make sure that it's transparent and authentic. Third party certifications can help with that as well. And I think increasingly companies are being more careful about what they're saying, right?

Tensie: The attacks on this, where this is not aligned with your fiduciary duty. This is just woke. This isn't real. Well, I don't know, like if you're in food. You're not paying attention, or let's just say you're in chocolate and coffee and you're not paying attention to climate change and to the fact that your farmers productivity and quality is dropping exponentially to the, to the point where they can no longer run their farms because of extreme weather.

Tensie: Due to climate change, you're not gonna be in business if you don't. Sort of recognize that and address that. If you're an insurance company right, and you're not understanding and tracking and sort of working with your customers around making them more resilience to, to, to, to climate change impacts, you're in trouble.

Tensie: So from my perspective, there's, there's a risk management element here that the anti ESG movement doesn't under or doesn't wanna understand, honestly, doesn't wanna understand. But there's also, as I mentioned to you before, the consumer. Pull. Right. And a lot of demand for these products. And there's also a lot of B2B demand because the businesses are looking for their suppliers to solve for these environmental and social challenges for them.

Tensie: So you see them increasingly in their RFPs.

Glen: When we talk to conscious business collaborative members, and we're often kind of challenged with what we need to unlearn, you know, some bad habits we've picked up, whether you went to an MBA school or not, but, so in your view, how can business education evolve or do a better job of creating sustainability or dealing with sustainability challenges?

Tensie: I'm gonna answer that. I'm gonna widen it a little bit because I think there's a change in nomenclature that we need as sustainability practitioners, corporate finance, et cetera, as well as in the schools, which is that, and this was my. Frustration in working at Rainforest Alliance and now even in this past 10 years on value creation related to sustainability is companies don't track it and don't understand it and do not communicate it that way.

Tensie: So if you're in an investor meeting as a public company and you're talking about decarbonization and you say, Hey, you know I'm working my decarbonization goals and I drop my greenhouse gas emissions by X, the analyst doesn't care if you say. I'm meeting my decarbonization goals. I reduced my energy costs by XI reduced my exposure to any energy, pricing, volatility.

Tensie: And by the way, through retrofitting everything with LED lighting, I've cut my maintenance costs in half. And this totals X. You have a very different conversation, right? And so from my perspective. We need to lead with the business implications of the work that we're doing and talk about, you know, the sustainability aligned value creation and preservation that we're doing.

Tensie: So in terms of education, 'cause we teach, we, I teach executives as well as undergrads and MBAs. I'm working on helping them understand that business case for sustainability. And so that is really critical that they understand which strategies and practices and which industries are driving better financial performance so they can make the argument and, and, and drive kind of investment against those opportunities.

Tensie: Right. The other. Piece that I would add in terms of business education is the soft skills. We particularly, you know, we, we, we focus on these, you know, like meeting our numbers, which obviously we need to do, but increasingly in this complex world, you need to find coalitions. You need to figure out how to create win-win opportunities for all the stakeholders.

Tensie: You need to figure out how to create value for everybody. Those are a set of soft skills that I think are really important to teach students today as well.

Glen: I was really impressed with your research at Edelman, and you know, we say within the CBC community that every purchase you make is a vote for the kind of world that you wanna live in, right?

Glen: And, and the, the kind of results that you got there were really impressive. And, uh, sustainability claims that can boost brand appeal by, as you said earlier, 24 to 33 points. So what are we missing in, in terms of building communication strategy? What are, what are the missing pieces?

Tensie: Well, what we found in this work with Edelman, which is we did turf analysis, we looked at different, we compared different messages, both core attribute messages and different environmental sustainability messages.

Tensie: We're now working on a social messaging pilot as well. We did this with nine iconic brands in different categories, consumer facing categories. What we found is that like with anything really, you know, this is common marketing understanding, like it's all about what's in it for me as the consumer. So, what's gonna move me to buy a sustainable product?

Tensie: Is it better for my health? Well, generally, sustainable products are produced with less chemicals, et cetera. They're better for your health and for your family. They wanna know, you know, it, it that. So that type of messaging works messaging around better for my wallet. So laundry detergent that you can use cold water with, right?

Tensie: Which is far better in terms of greenhouse gas emissions also reduces my energy bill or a jacket where. Patagonia will will repair. It is better for my pocketbook. They also care about animal welfare. They care about local farmers. So those things all drive purchase intent and they care about sustainable sourcing.

Tensie: And we did not have to explain the word sustainable. They knew what that meant. Generally though, what companies need to do is make sure that they're clear that they're communicating the core attribute. I mean, I'm not gonna buy a bar of chocolate that's sustainable, even though I care about sustainability if it tastes horrible.

Tensie: Right. Or a laundry detergent, that doesn't work. Right. So you wanna start with, let's just say skincare, you know. Healthy for you. Skincare produced with sustainable ingredients in an environmentally friendly way. You know, like, so you have the core ingredients, the core attribute that's gonna moisturize my skin.

Tensie: You can add up to two more of these kind of messages that will really drive purchase intent, as you said, from 33% to 74%. So there's a real opportunity here for businesses because I don't think they're communicating this in, in the best way to, to, uh, consumers.

Glen: So you've kind of answered this in a roundabout way, but I just wanna pop it to you directly again, for people, executives aiming to embed sustainability into their core strategy, how their businesses operate.

Glen: What are a couple of top KPIs for structures that you've seen work best?

Tensie: So for, for businesses who want to really embed sustainability to drive both better financial impact and better societal impact, the first thing to do is to understand what are the most material, environmental and social issues for your industry that are going to drive both opportunities and risks for you.

Tensie: So let's just take. Laundry detergent is an example, right? If you look at what the environmental issues on convenience and consumer issues are related to laundry detergent, you have these huge, big plastic bottles. For every big plastic bottle you require a gallon bottle. You have, uh, five gallons of water embedded.

Tensie: Okay? That's a cost plus. It's big and heavy to transport, so you have emissions associated with that, but also cost. And increasingly we're struggling with getting enough water, right, and manufacturing so. How do you solve for that? For you plus for the customer, they have these big. Unwieldy products, they have to throw them away.

Tensie: They're spending a lot of money on energy associated with the laundry detergent. So enter stage, right? Two new solutions. One is just detergent sheets that you get an entire year and one small cardboard box or a bio-based plastic ball that has minerals in it that will work for 700 washes and right.

Tensie: That's all you need. All of them will work in cold water. Right. You've solved. It's cheaper for the manufacturer. It reduces the environmental impacts. It's cheaper for the consumer and it's more convenient. I use that example because that's how companies need to think, whether they're B2B or b2c. Then they identify kind of where their sustainability strategy is and their KPIs.

Tensie: That should not be ESG reporting metrics. The reason why I say that is that ESG reporting metrics are processed and output based. In other words, do you have a policy on X or have you trained X number of people? Maybe I have a great policy, I have no idea whether it's doing anything right? So it's the outcomes of the policy or the outcomes of the training that you wanna have.

Tensie: So you wanna have a KPI around chemical management policy that says, I want my chemicals to be reduced by X, right? And then with that, you can track the lower input costs, the lower kind of fines, the lower blah blah, blah, right? So you have to have a concrete KPI, and then you need to look at adding a return on sustainability investment, KPI.

Tensie: That will help you track the financial returns on an ongoing basis so you can make better decisions around capital allocation. You can also be able to talk to investors and your board about why you're investing in these issues around sustainability in your company.

Glen: I love the way you bring data into this constantly, but you're also blending it with simple stories like, uh, Washington detergent that almost everyone you can relate to.

Glen: But, um, what, what advice would you give a MCare professional pivoting in, into the ESG role in sustainability leadership? You've, your career has, has transversed so much of this spectrum. I'm just wondering, given the moment we have now, is there anything that's, that's sort of top of mind?

Tensie: So first of all, I think any MIDI mid care professional in any industry will have sustainability issues that are gonna be affecting their company and their job.

Tensie: The company may not realize it, so that's gonna be an issue, but. Every single industry has some relationship to either social or environmental sustainability issues. So my first job as a mid-career professional is to understand what those look like for my industry and who's best in class in my industry at addressing those and what are they doing and what's innovative about what they're doing.

Tensie: Then I would want to bring some of those innovation ideas to my own, you know, whether I'm in finance or marketing or procurement, et cetera. I wouldn't necessarily go look to work for the sustainability or ESG team. I'd look to work with them to bring those concepts into my area of expertise so that I could have an impact on procurement or brand marketing or whatever it is.

Tensie: And I would use kind of what the. Competitive set is doing to persuade my employers to kind of invest and move forward on this. If I find that my company has absolutely no interest in this, no matter, and it's really material and they're not caring, then I would go find a job at the.

Glen: Yeah. Good answer. Thank you. With all these different trends, circular, you know, swirling around, you know, the, and, and the, the names are evolved around now, circular economy, regenerative agriculture, or even climate tech, which ones, you know, excites you the most about impact going forward?

Tensie: I'm bouncing up and down because right now I think circularity is a superpower and people do not understand it.

Tensie: Okay. It's a superpower anyway, but at this moment in time, it's a superpower because of tariffs. So let me explain why. So circularity is about putting used product back into new product when you put used product back into new products. So for example. Dacia is putting 45% of used car components back into new cars.

Tensie: They have created two new businesses to do this. One, which is a disassembly business and one with business that sort of figures out how to do the putting thing, the the old stuff. Back in General Motors just announced a billion dollar drop in their projected income for the year because of tariffs. If they had been putting 45% of used car components back into their new cars.

Tensie: They would not be having a billion dollars worth of tariff implications because they're sourcing from Canada, Mexico, and Korea, where we have these high tariffs, but it's not just a tariff issue, right? By putting used car proponents back into new cars, you have massive operational efficiencies. The cost of a use of that whole program is far less than the virgin input and the waste disposal costs.

Tensie: For example, another ex example we did with an automotive company. I don't have visibility into Reults numbers, but with this company, they were reusing 2.5% of car components in new cars, selling 10% to recyclers and paying to dispose of the rest. They were netting a hundred million dollars from that, which they again, they did not know 'cause they were looking at it as a compliance issue.

Tensie: And here's the thing, corporate finance does not track avoided cost. Period. Nothing to do with sustainability. They just don't do that. And so much of sustainability is around avoided cost. And so circular circularity is a massive superpower in terms of operational efficiency, supply chain resiliency, because even if you don't have tariffs and you have things like the pandemic or you just have general geopolitical challenges, right?

Tensie: You, if you can reduce your dependency on those very. Spread out challenging sustainable supply chain, um, sorry, unsustainable supply chains. You can start to manufacture close to home with used components, not for everything, but for a good portion of it. Right. And increasingly, customers are demanding it.

Tensie: So in the apparel business, the market for used apparel or re you know, sort of upcycled apparel is huge and growing, right? So there's, I think just like, to me, circularity is like a fascinating, and, and finally I'll say about this. It's an imperative. Because when you look at economic development charts, the more economically develops the country, the more natural resources we use and the more economically developed, we're the more waste we generate.

Tensie: We're currently using 1.7 planet Earth. We can't keep that up. We're seeing it in terms of water impacts and all kind and and waste generation impacts, but we need everybody else to be able to live the way you and I live. Right? We can't tell those countries, they can't live the way we do, so we have to shift our consumption patterns.

Tensie: We are only currently reusing 7% of all the materials we extract every year, only 7%. So there's a huge business opportunity and out how to take all that. Junk and put it back, use it, reuse it, et cetera. So anyway, that's why I'm bouncing up and down about circularity.

Glen: No, I, I love your interpretation of it.

Glen: Some great examples of why not, why wouldn't you do that? And you know, there's all always talk about reshoring now. I think that circularity sort of fits into that argument. It does very nicely. So I guess that's what keeps you optimistic is, is really the, I whole idea of circularity could, because it can be applied to so many different industrial cycles.

Glen: So I think that's, that's very exciting. So it, it's just sort of off topic a little bit, but the, there's the race to electrify everything at the moment. The USA and and and China are taking very different roads on that, you know. Any, any, any thoughts on, on how that's gonna shake out?

Tensie: I mean, I, I think electrification is really important, uh, a real, it's the step that we need to be able to move into the carbon transition, low carbon transition.

Tensie: Even if at the moment not all of the sources of that electricity are renewables, and I think that China, China is positioning itself well, first of all, tackling what has been a huge pollution problem and a huge challenge for them by moving to electrification on solar. And, you know, being the biggest investor in solar and what's fascinating to me as well is they're taking that out to other countries around the world.

Tensie: So they're beginning, you know, working with Pakistan and other large emerging and developing country economies to help them transition. So they're gonna be taking a leadership role. In this whole area, and unfortunately I see the United States just completely walking away from its track record of innovation and investment in this.

Tensie: And unfortunately, you know, we had a lot of growth with the Biden Administration's Inflation Reduction Act investments, and then we've seen the Trump administration not only. Fail to wanna carry it forward but actually actively claw it back. So I think we are giving up an opportunity to, to be a leader, not only in the US but globally.

Tensie: However, that said, there are other countries like Germany and you know, the uk. I mean, there are definitely leaders in Europe and around and and around the world because this is like. This is a writing on the wall. This is a, a must have, not a nice to have. And so the trends will continue, but I think China is gonna be in a much better position than the United States will be.

Glen: Well, for now. But, uh, listen, uh, Tensie, it's been a, a treat and a joy just talking to you and a, a, you know, taking on your energy and enthusiasm around some of these topics that you are so well versed at. So, I'm thrilled to have had this time with you and let's hope that we can communicate your message far and wide in this small channel, and let's hope that we can continue this.

Glen: Dialogue in, in other formats going forward. So thank you so much for coming today.

Tensie: It was a great pleasure. Thank you for all the fun and interesting questions and letting me talk.

Claire: Thank you for taking the time to listen to this episode of The Curious Capitalist. If you'd like to find out more about the cbc, the Conscious Leaders Network, or even join us, visit the website, conscious business collaborative.org.

Claire: That's Conscious business collaborative.org. If you have enjoyed this episode, please subscribe and share this podcast today. This podcast was created and produced by Red Rock Branding. Red Rock branding.com.