A Conversation with Mario Abreu, Group VP, Sustainability, Ferrero

Transcription

David Stearns:
Welcome to BSR Insights, a series of conversations on emerging and cross-cutting business, economic, and social issues. Drawing on BSR's expertise from more than three decades of leadership in sustainable business will help practitioners and decision-makers to navigate today's increasingly complex world. I'm your host, David Stearns. The role of the Chief Sustainability Officer is changing in dramatic ways. What began as an entrepreneurial role has evolved over the years into a professional, fully integrated function embedded within corporate governance, compliance, and accountability. While more visible and valued than ever before, heightened expectations and pressures are placing the CSO at risk of becoming overly focused on compliance at the expense of innovation and strategic foresight.

In this series, we chat with several influential sustainability decision-makers from BSR's global network of more than 300 companies, who shared their perspectives on how sustainability management has become more professionalized over the years, how they've addressed their biggest challenges and captured important opportunities, and what they're doing to maintain ambition in a time of turbulence. I'm joined today by Mario Abreu, Group VP Sustainability at Ferrero, and Christine Diamente, BSR managing director in our transformation practice. Welcome to both of you.

Mario Abreu:
Thank you, David.

Christine Diamente:
Thank you. Pleasure to be here.

David Stearns:
Thank you. We're so glad to have you. So Mario, I'd like to start with you and then I'll turn it over to Christine in a few minutes. But I thought we could maybe just level set here a little bit more about you, your background. So can you tell us a little bit about yourself and your current role at Ferrero, and how long have you been in this role, and what specifically falls under your remit?

Mario Abreu:
David, really pleased to be here. So my name is Mario Abreu. I have been working for Ferrero for almost five years now as Group VP of Sustainability. Before that, I had a long stint at Tetra Pak where I started in 1999 as an environmental manager in Tetra Pak Canada.

And in 2015, I became Group VP of Sustainability for Tetra Pak. Originally, I'm a mechanical engineer and my life changed to environment in '99, but before that I was working with paper recycling, which people would also relate to environment. Here at Ferrero, my main responsibility is to embed sustainability strategy into the business strategy long-term for the group, and the long-term strategy of the group is owned by the executive chairman. That's my key role. And setting that, I also support the implementation of the sustainability strategy throughout the many functions across Ferrero, which is led by the CEO. So we have created a very good governance, including the chairman, the CEO, other members of the global leadership team, subject matter experts to secure that we have a good integration between the way we set our ambitions towards the future and how we are implementing them on the day-to-day.

David Stearns:
So you talked about how part of your job is to, like you said, embed sustainability as part of the long-term business strategy. And I'm curious to hear a little bit about what are some of the techniques that you used to do that? How have you managed to build those productive bridges to talk with different functions across the organization, and what are some of the challenges you faced through that process?

Mario Abreu:
David, when I arrived here, I found a company with a very strong culture that had in its nature an idea, like a family idea to do good. So there were many activities already happening in regard to sustainability, and my first challenge or opportunity was to understand how people were driving social and environmental topics across the organization. In terms of techniques, then we have, besides working on the governance per se, we have done materiality assessments. We have engaged with external parties like the Consumer Goods Forum to work with peers and customers and so on, in order to secure that we were aligning both internally in terms of the experience and the knowledge of the subject matters we had, but also getting the external feedback. And then we also worked with other organizations like BSR to inform and influence the way we're working.

David Stearns:
That's really interesting. I want to actually bring Christine to the conversation now. Christine leads a lot of our work on the governance side on issues around materiality, our work with companies on strategic scenario planning. Christine, any follow-up thoughts on Mario's last response?

Christine Diamente:
Yeah, thank you very much David, and Mario, again, thank you for being part of this podcast. It's a real pleasure to be with you here right now. I mean, you've been in this field for a long time, and we know that every leadership role comes with challenges and opportunities. You've talked about the many things that you've done, for example, regarding the governance or embedding in the business strategy or the materiality, but what have been some of those critical impact moments for you? The quick wins or maybe even the long wins as well as perhaps some of the challenges?

Mario Abreu:
Yeah, I would say personally if I start with the, what I would say the challenge, one of the main reasons I moved from Tetra Pak to Ferrero was the idea to go from a business-to-business company into a business-to-consumer company. And also from a business that was, I would say, Tetra Pak was an early mover in sustainability, and moving from there to a company based on agriculture where there is a very strong focus on human rights and farmer livelihood. For me, that was the personal challenge that I was looking forward to. And I would say you make—a challenge becomes an opportunity. So we have been focusing on that idea of farmer livelihood, understanding our supply chains, with the colleagues here, subject matter experts in Ferrero. We have improved traceability of our commodities down to farm level, mapped our sources to prevent deforestation, a number of technical things we have done, but at the end of the day with the ultimate objective of improving the resilience of the farmers. And I'm talking about hundreds of thousands of farmers in our supply chain.

So that for me is the key positive impact that we can make. We're not there yet. We continue to work on it. There's a lot to be done, but I think we have progressed quite a lot, both doing things by ourselves, but also doing things in partnerships with organizations, implementing actions on the ground. And it's great when you visit these places and you find out that you are really creating a positive impact for people. That is something that I really didn't know where things would go when I joined Ferrero, but I think this is something that I think we can all be very proud about this journey that we have had.

Christine Diamente:
But it certainly aligns, as you said, with the entire culture of the organization, which you found when you joined, which is really about doing good. So that human rights element going right down to the farmers and how you source and how you work with them to create your products for your consumers, for citizens, for your employees, for your communities is fully aligned with that. So that sounds like a phenomenal impact on a massive ecosystem challenge. So maybe we can talk also about some of the challenges that you found.

Mario Abreu:
Thanks for saying that, and maybe I'll tell a little bit of an anecdote. So when I arrived in here, the team was working on developing a purpose statement for Ferrero and they had already agreed, and the purpose statement was “for the better.” I first was a bit cautious, understanding what had been done and so on, and it was really done with the best intentions in their heart. For the better.

Christine Diamente:
For the better.

Mario Abreu:
For the better. That's what we want to do. And I said, this might be a motto, like a slogan, but this is not our purpose. We have to have a proper purpose, a proper mission, a proper vision. So we working on that. And for me, the big challenge there was to convince the organization that there was nothing wrong with wanting to do things for the better, but we needed to articulate better what was it that this company was about, why we were in business, why we were doing it, what we wanted to achieve.

And that per se was a bit of a challenge, I have to say, because I came at the very end of the process when everything was set, everything was agreed, lots of people involved. I, of course, had very good support of my manager who believed in what I was saying. But I think the company also grew with that, with the idea that doing good things is good, but you really have to understand how you can make impact and what type of impact you are going to do and why you are doing it, how that resonates with your business' modus operandi and make it integrated. So this was a bit of a challenge, but I think it was also a very nice lesson learned.

Christine Diamente:
It sounds like a phenomenal challenge, but a nice challenge. I mean, creating business for the better and creating business resilience and putting the business impact as well as a societal and environmental impact as part of long-term value. That seems what many companies ideally should be doing today at a time of deep disruption. So I have two questions for you. First of all, just going on your own personal leadership, you said you started your career in 1999, you started in a sustainability leadership role in 2015. You've now been at Ferrero, you're Group Vice President of Sustainability. How have you seen the sustainability field evolve over the years? I mean, has sustainability become more professionalized? And you and I have discussed this, you have seen the role more professionalized today, it's a formal function, but what are some of the changes that you've seen in the field? And related to that, Ferrero is a privately owned company. Do you see a difference in how this role has evolved at Ferrero as a privately owned company versus a publicly listed one?

Mario Abreu:
Yeah, for the first one, yeah, I agree with you. I think the function is more professionalized nowadays. I also see it more spread out. I would start saying we are not alone anymore. Because I would say in the very beginning, I saw my role as a transformative role, but also it was a bit about you are working in isolation. So you see that there are things to be done, but not always they directly connect with short-term results. They don't connect with the immediate KPIs that business usually have. So you are sort of in an isolated space where many people perhaps don't even know what to do. Now, of course, function is more integrated. It is part of the way companies work. I see people getting jobs of head of sustainability in many companies these days also because compliance is kind of asking for that.

So I see happening. On the other hand, we both know, well, that sustainability is always about the long run. It's very hard to have immediate gains on sustainability. Sustainability is always about trade-offs as well. I hardly ever come across something that is say, okay, if we switch A for B, all potential social environmental indicators are going to be better. That hardly ever happens. You always have to make some judgments, very often have to do some compromise. And for that you need experience. Unfortunately, you need experience. This is not something that you just learn at the university and you come and you can apply. You need experience. So for me, what we're lacking right now is a good body of people, the number of people that are necessary to make a huge transformation that we need. Because I often see that as the balance between what we call ESG and sustainability, which is the fact that I see it great that more and more companies talk about ESG as risks and opportunities.

So if we map our risks, we can mitigate them. If we map our opportunities, we can go after them. And that is great. On the other hand, I don't think it is only about the big risks and the big opportunities. I think it is about understanding how your social, environmental, and economic stasis. So you want to do a job where you have the economic viability of the business, but you want to provide for environmental protection, you want to provide for social justice. And these are not ever easy things to reconcile. It's always about finding the right balance.

And I do really believe for that, you need experience. You need to be doing those things. So what I see as a concern is we keep on moving in the sustainability agenda, but not as fast. We see water scarcity around the world increasing. We see climate change happening at the speed that we were only thinking about that in our worst dreams a few years ago. And so we need more people to do things to engage on achieving positive results. But unfortunately, we don't have a full body of experience, knowledge across every organization, every association, every business. And that's for me is where I welcome very much the idea that we're not alone anymore. I see there's more and more people interested to use their life experience and trying to bring value into sustainability conversations.

Christine Diamente:
If I can just summarize for a minute, what you're seeing yourself is that transformational agent within the organization helping with that long-term resilience, that long-term value building. Yes, there are trade-offs. You have to look at the risks, whether it's environmental risks, whether it's the social risks, but you also need to look at the opportunities and the impact, embed this in the business. And as you said, you're not alone anymore because now sustainability has become really a cross-functional element where everybody needs to own a part of the impacts within the organization.

But obviously you are that transformational agent, making sure that you're steering the direction of where it goes. And I can very much see in the conversations we've had where your experience rings through now, your many years of experience in the business. So I want to lead you to the second part of my question, Mario, if I may. Do you see this any different or any differently in a privately-owned organization, the way you approach this transformation versus a publicly-listed one or even in the notion of leadership and the motivation behind the leadership?

Mario Abreu:
Christine, I don't know if I am the most experienced person to answer that question because all my experience, all my life was in family-owned companies. I only have had three jobs in my life and they were all in family-owned companies. But that said, with the network of people interact with, I think family-owned companies can allow you to give this long-term perspective, this long-term journey that sustainability is. I think this is a great advantage. On the other hand, I have seen in the past few years the pressure from investors, the pressure from banks, the pressure from shareholders, et cetera, into listed companies. And this is not something that you would easily see in a family-owned company. I've been talking about CSRD a lot, the Corporate Sustainability Reporting Directive a lot. And very often I ask myself the question, who am I doing CSRD for? Who is going to read it?

Christine Diamente:
That's an excellent question.

Mario Abreu:
If our shareholders want to know what we're doing, my cell phone is available and the family knows where I am. So jokes aside, I see that there is a very big difference, but at the end of the day, I also see convergence. I don't think any company today listed or privately held can avoid putting significant focus on sustainability work because you said yourself, this is about resilience. This is about how are we going to make our business sustainable but also alive in the next so many years. So sustainability is an important part of that resilience work.

Christine Diamente:
Excellent. And I love the analogy you say about making business alive. We started off this conversation where you talked about working across the farmer ecosystems and human rights, but now what I want to say is, let's look ahead. Over the next three years, in which area or which areas do you see the most opportunities for significant progress and what do you hope to be doing more of in the next three years to keep the business alive, as you say, and hopefully also to continue moving it for the better?

Mario Abreu:
I may be perhaps biased here, but I think this nexus of climate change, people, and foods is super important for us. And us, I mean humankind, not Ferrero, I mean humankind. We need to produce more foods in the next decades as probably more than we have in the last a hundred years because we are just more people. And we know, everybody knows, our planetary resources are limited. So with climate change happening at the speed it is, pressure on people along the equator, for instance, because of temperature and the need to produce food globally. For me, these are the three key areas that I think we should all be focusing on. And of course Ferrero, we rely on agriculture, we rely on food commodities. So these are for me key areas. And of course there is also water which connects directly also to climate change, connects to food and connects the resilience of the farm. So this for me is the central point, the core of where we are working as Ferrero, but also in regards to where I believe all of us humans should be concerned about and working to improve.

Christine Diamente:
That's extraordinarily valuable. Certainly the nexus between climate change, people, and food and planetary limits is a huge challenge. Certainly no company can do that alone. But the fact that Ferrero was already positioning on how do we overcome that challenge, what are different ways of looking at it, what are new models for the company and also new models of leadership and resilience as citizens and as leaders and as business people is extremely valuable.

Mario Abreu:
If I may. So as you mentioned, planetary limits. I sometimes feel that we have to understand that we're not doing this to save the planet. We're doing this for the benefit of humankind, right? Quite frankly it is, I would say it is a bit of a selfish thing. But the planet will survive for another few billions of years. Nature will change because of us, some species of animals who disappear, some others are going to be flourishing and so on. We have to understand that we're not doing it because we're good species. We're doing because as a species we need it. Otherwise, we're going to fall into a place where we have been in the past thousand years ago, where we were abandoning cities because there was no food, where people were just dying because they had no other place to go. And we found a comfortable place to be, a comfortable moment in the planet's history. We found that the conditions around us are great for us, and if we want to maintain that, we really need to work on those key areas. Otherwise, the negative effects are going to be on us.

Christine Diamente:
And I agree, it does come down to humankind, and how do we enable people to live and thrive in a healthy way.

Mario Abreu:
Exactly. Yeah.

Christine Diamente:
On the planet. Now you've alluded to this, we're in a period marked by so much turbulence, whether it's a climate crisis, the nature crisis, the food crisis, water crisis, the cost of living crisis, and the conditions in which people are living today. Why is it more important than ever to persevere ahead and maintain a focus on ambition? What message do you have to people regarding how do you persevere on ambition at a time when business is equally being challenged on how it grows and what does this mean to you personally?

Mario Abreu:
If you look at the latest World Economic Forum map of the 10 big risks still is that sustainability-related issues, climate, water, they appear on the 10-year scenario, they don't appear as much on the two-year scenario. And it was the same two years ago, and it was the same problem four years ago. So we have to stop looking at, there will be a problem with extreme heat. There will be a problem with not enough water, not enough land. These are not issues that you can fix from one day to the next. So for me, this is the thing that I believe has changed. I mentioned before that sometimes working in sustainability, we felt in isolation. I think now we can look at the people we are interacting with, and there's going to be much more people listening to the podcast perhaps today than probably that would be five years ago, simply because the audience is there.

If you want to know what has to happen, I think we need to make sure that there are enough people able to answer the question. And in regards to the urgency you mentioned, I think there was a feeling of working in isolation with a lot of challenges ahead. Unfortunately, some of those challenges, actually, they are bigger today than they were 10 years ago or 20 years ago, 25 when I started. They were talking about climate change or doing carbon footprint mapping. But a scenario of 1.5 degrees higher than pre-industrial times in terms of average temperature was not there. We're talking, it was not happening, it was not in scope. Now we know, and very soon, if we find out that already in 2024 we have crossed the 1.5 Celsius barrier, it's going to mean what we're going to be doing next is going to be accepting 2.0 or we're just going to try to have zero emissions from next year on.

I think the problems unfortunately are worse now, bigger now than they were 25 years ago. But my hope lies on we have so many more people involved in trying to get solutions to the problems today also than we have had 25 years ago. And for me, the challenge is, frankly, personally, I would love to find great ways of passing on some of the experience and some of the perhaps knowledge that I have accumulated over the years so that they are not lost by the time I retire and watch things from home, but happening from home. But that for me is my personal challenge. How do I secure that all I have done or have learned I can pass on to future generations?

Christine Diamente:
Well, we're very grateful that you are able to share some of your experience over here today with our audience on this podcast. And you've got a long career, and many accomplishments, many impacts, and a great vision of what's to come. So we hope that you're still going to give this a run for a while. And as you said, the problems are worse, but there are more people involved, there's greater awareness. And I think also there are greater ecosystems of change where companies recognize that they're not alone in trying to solve these greater problems. And when we talk about things, as you mentioned, the nexus between climate, people, and food, these are massive opportunities, but equally huge impacts for humankind. Mario, that's the end of my questions for now, and I'd like to thank you very much. And David, I'm going to pass the microphone back to you.

David Stearns:
Well, this has been fascinating to listen to. And yes, I wanted to thank Mario and you, Christine, for joining to hear both of your perspectives, to learn about how you're addressing some of those challenges and opportunities. And it's also just very heartening to see people like you, Mario, who are ensuring that sustainability is still a priority at the highest levels of business decision making. So thank you so much for your insights and for your time, and thank you, Christine, and look forward to speaking with both of you again sometime soon.

Christine Diamente:
Thanks for inviting me. Thank you.

David Stearns:
Thanks for listening. For more in-depth insights and guidance from BSR, please check out our website at bsr.org and be sure to follow us on LinkedIn.