Q&A: Understanding sustainability at Qantas

MELBOURNE, Australia — Qantas is Australia’s biggest airline and one of its largest brands. And with the brand name comes an expectation of leadership and best practice. As the Qantas group executive for government, industry, and sustainability, the pressure is on Andrew Parker to build best practice for sustainability within the organization — and engage stakeholders, shareholders, and customers on the topic.

At the Global Compact Network Australia 2019 conference in Melbourne, Parker discussed with Devex how Qantas is thinking about sustainability, and how it sees its role in wider social and environmental discussion.

This interview has been edited for length and clarity.

In coming to this conference and engaging with an audience that includes businesses looking to act sustainably, what are the insights and messages you want to share?

The timing is perfect in the sense that these issues of today — be it sustainability, be it climate change, be it social license to operate — have never been more relevant. Qantas as the national carrier, one of the biggest brands in Australia, our views on this topic are relevant. But we are also doing an increasing amount in this space, deeply and widely within the organization.

The best example is our recent waste announcement, which we believe is one of Australia’s biggest waste initiatives, where we want to reduce about 75% of waste that goes to landfill in the next couple of years. With the scale of Qantas domestically and globally, this is huge. The reason we are doing this is that it is the right thing to but it’s also what our employees and investors want.

How has the narrative on sustainability and environment changed from your perspective, and what have been the drivers of the conversation?

The mechanics of this in large organizations, such as ours and any others, have been ongoing for some time. What is happening now is greater CEO involvement and participation, far greater focus from boards, the investor community has changed dramatically. Business as usual and a lot of the mechanical works we are doing are getting far more significant attention, capital expenditure, and board oversight. This is a great thing.

With greater leadership focus, we can break down accelerate work, we can break down barriers and we can do more.

What has been the Qantas strategy to build capability and focus on sustainability at the highest level?

We have made a strategic decision to do more and demonstrate leadership.

Marriage equality is perhaps the iconic topic where Alan Joyce [CEO of Qantas] and the organization decided this was a debate that was important to us, our employees, and our customers. It’s the same on matters of gender equality, indigenous issues but also key economic issues as well. We need to have a voice on big economic policies and reform such as industrial relations or taxation policy.

This is a global trend that organizations are more than returning profits to shareholders — you have to be participants in the relevant debate to your organization and culture.

As Qantas has a foot in the international space, how does Qantas decide which debate and issues are to engage with internationally?

We have to determine where we can have a meaningful impact. Our own backyard and what we do day to day is our single most important area of attention. Sustainability and policy debates in Australian will, therefore, be our primary focus.

But we are a global organization. The most important way we can participate in global issues such as climate change is through organizations we belong to, including IATA [the International Air Transport Association]. Alan Joyce was on the board of governors for a period as the chair and we helped drive the debate on climate change, including that aviation has an industry-specific, global strategy to reduce our emissions.

Debates we can have a big impact on globally are the most relevant — and I think climate change is the most pertinent internationally. But Alan, as an openly gay CEO, has not been afraid of giving speeches around the world to campaign on an issue such as marriage equality and similarly we are trying to ensure that on marriage equality we are speaking out on the Australian issue globally.

The regulatory environment is important, you can’t go it alone. Is regulation in line with the outcomes you are trying to achieve?

One of our biggest challenges as a global business is that we need to try to have a global program to deal with these complex issues including climate change.

The spanner in the works is that you have a patchwork quilt of regulatory models on emissions globally, which will make compliance harder and the ability to improve performance on emissions harder when you are working with multiple schemes rather than a global one. It is the same as many other issues, including human rights, procurement, ethical standards. The more we can have agreed global standards, the better it is for a global business including Qantas.

But closer to home, we want long-term certainty on a range of issues so we can plan and invest in those areas.

If I look at an issue such as biofuels, Australia is a small player in this space globally. And that’s disappointing. We know one of the core ways to reduce our emissions and meet out Paris target is biofuels.

Qantas could go it alone, but we know this is a topic we need to collaborate on as an industry. We will never solve it alone. We need critical mass, and will work with other airlines, governments, and try to cross borders to solve problems in a more collaborative way.

In focusing on sustainability in an organization such as Qantas, is it important to have a license to take risks and even fail to build a new strategy and approach?

Yes, and culturally we are changing. Qantas used to be government-owned, which made us dinosaurs. But today we are dramatically different, particularly in an entrepreneurial sense. We will invest in businesses, and start up new businesses including health care and data.

Airlines are capital intensive and the money goes into a new aircraft, engineering, or product. But we can now successfully complete for sustainability projects, including solar panels on a roof. And part of that is that we are taking risks and making investment in projects that are less historically typical for an airline, but where we think will make us a better business in the future.

The financial impact of these changes is still important to shareholders — so what has been the impact of sustainability on your value?

The conversations we have now with investors is very different. They want to invest with organizations for the next 20 years, including quality of earnings and financial performance. When we do investor roadshows and talk to investors, so much of the discussion is about climate change policies to build the confidence that in 20 years there is a plan to deal with a very different planet and regulatory environment.

It is really encouraging that this conversation has changed, it is motivating us to do more. If that was absent, the decision could be different for many organizations. Investors have made up their mind that sustainability is one of, if not the main, priority for them.

Devex is a media partner for the 2019 Global Compact Network Australia conference. Follow Lisa Cornish and Devex for more insights.