The ‘Governance and People’ masterclass was the fourth in a series of six sessions in the Cotton 2040 series co-hosted by WTW and Forum for the Future in October 2022. The sessions cover a range of topics, tailored for brands and retailers, to encourage a shift towards a sustainable, regenerative and climate-resilient cotton sector. The focus of the fourth masterclass was on the role of brands and retailers in engaging people from across the value chain, ensuring that the voices of stakeholders and communities are heard in a way that can guide decision-making and supports reducing climate risks to everyone working in and affected by the cotton supply chain.
People are at the heart of a successful strategic response to managing climate risk and building a resilient, sustainable cotton sector. Practical steps must be taken to develop climate strategies in line with a well-articulated people strategy. Effective governance measures need to be in place to support the process including, for example, embedding climate within the executive pay framework and leadership role modelling desired behaviours; and building a workforce with the right the roles, skills, knowledge and capabilities.
“Your organisation's culture, governance mechanisms and engagement strategies should serve to ensure your climate transition plan takes account of the risks to, and opportunities for, stakeholders across your value chain.”
Hannah Summers | Associate Director, WTW CRH
The masterclass opened with a short talk from Ashis Mondal, Director of Action for Social Advancement, a non-profit that helps smallholder farmers in Central India participate in sustainable farming and agricultural supply chains. Mr Mondal explained how physical climate risks to cotton farmers affect cotton prices for brands and retailers; he also emphasised that brands and retailers who make net zero commitments must collaborate with cotton farmers to ensure the supply of sustainable cotton keeps pace with demand.
The Driver: Why people?
The masterclass outlined a taxonomy that can help companies think about how people relate to their operations. The framework broke down ‘people’ into three categories: grass roots, grass stems, and grass tops. ‘Grass tops’ include executives and board members in a business; and politicians, senior government officials, other critical decision-makers and influencers in society. They tend to have the most authority and wield the most power. They also have the greatest ability to empower people at the grassroots and grass stems to participate in decision-making.
The ‘grass stems’ are implementers and liaisons, and include middle management, suppliers and distributors, and civil society leadership. The ‘grass roots’ are farmers, producers, and processors whose work underlies all cotton value chains and makes business possible for everyone else. They tend to be more ‘highly exposed to climate risks’, which in some cases might be exacerbated by living on a low income.
Across all categories, other underlying vulnerabilities – such as those related to disability, age and gender – may intensify risks from climate change.
“Resilience to climate change begins with people. Until you take the time to listen and learn, you can't know all the risks people in your value chain face - and how their risks affect your business.”
Kate Stein | Senior Associate, WTW CRH
Businesses rely on the grassroots. The presenters explained that the grassroots tend to be most exposed to climate risks, because of the kind of work they do and because of what they are paid to do that work. An organisation’s well-being depends on people who are not well-represented in organisational decision-making, and who are often the most vulnerable to climate risks.
After highlighting the challenge with identifying, engaging and navigating that stakeholder environment, the presenters then asked the participants to identify the key barriers they face. Twenty-five percent of the masterclass participants identified a lack of understanding of how climate risks may affect employees, especially at the ‘grassroots’ and ‘grass stems’ levels as their top challenge, highlighting a need for engagement.
25% of the masterclass participants identified a lack of understanding of how climate risks may affect employees, especially at the ‘grassroots’ and ‘grass stems’ levels as their top challenge.
The masterclass then provided information to help brands and retailers actively engage with people along their value chain through four main areas: inspire, engage, incentivise, and build capacity.
01
is about building the right culture to drive the behaviours and decisions needed to meet the climate challenge. Culture is set from the top and grows from within by inspiring employees and connecting them to a climate strategy that makes them feel equipped and empowered. The key here is to make dialogue with external stakeholders a central feature when embedding climate resilience in company culture
02
Engagement is a key enabler of culture and also a component of what will be expected from companies in their climate transition plan disclosures. Looking internally, it is critical to listen to employees and connect them to the strategy so that they understand how it relates to their job and how they can influence it. Listening to them and understanding what they want you to be doing more or less of is essential.
03
Once you’ve defined and socialised your climate strategy, you should review your reward programmes to make sure they incentivise actions and behaviours that are inclusive and equitable. As climate will increasingly form a key pillar of most organisations’ business strategies - climate priorities and objectives should therefore be a part of remuneration. Broader employee incentive plans and benefits and HR policies should also be considered too to incentivise the entire workforce to work towards common goals and to embed climate within the culture further.
04
is about making sure you have the right people with the right skills in the right places at the right time doing the right things. This starts with mobilising internal people and defining their roles and responsibilities. Once these are defined, you can then identify the skills and knowledge gaps across the organisation and take action to fill these to ensure that your climate strategy is governed effectively and with input from grass roots.
This is the session recording from Masterclass 4: Governance and People held on October 20, 2022. This was the fourth of a six-part “Insights to Action” masterclass series on climate risks to the cotton and wider apparel sector.
