How Salesforce’s stakeholder capitalism model is unlocking new avenues for net-zero

Flynn spoke to edie as part of Net-Zero November

More than 8,000 companies across the globe have signed up to the UN’s Race to Zero initiative, the world’s largest collective alliance committed to achieving net zero carbon emissions by 2050 at the latest.

Many businesses are still at the starting line of this race. Targets are in place, but now they wait for the starting gun, a surefire sign that the low-carbon markets, political instruments and consumer demand are all pointed firmly towards a net-zero future.

Others, only a select few, have already put the hard yards in. They’re building towards science-based targets and have invested in low-carbon solutions across the value chain. For some, the race has been run, net-zero has been reached, but the hard work doesn’t stop there.

At the end of September 2021, global technology company Salesforce announced that was a net-zero company “across its full value chain” and had reached 100% renewable energy for its operations.

Prior to the announcement, Salesforce had already delivered a carbon-neutral cloud and operations. In a bid to drive further emissions reductions in-house and to reduce the use of carbon offsetting, the company has developed 1.5C-aligned targets, approved by the Science Based Targets initiative (SBTi). These entail halving Scope 1 (direct) and 2 (power-related) emissions by 2030, against a 2018 baseline; halving Scope 3 (indirect) emissions from fuel and energy activities within the same timescale and supporting suppliers representing 60% of Scope 3 emissions to set their own targets in line with climate science by 2024.

For the company’s vice president and global head of sustainability Patrick Flynn, reaching net-zero emissions in the build up to COP26 was a landmark moment assisted by the company’s willingness to embrace disruptive challenges and sit them at the heart of the firm’s values.

“At Salesforce we’ve always believed that business is the greatest platform for change and the planet needs big change and fast,” Flynn told edie as part of Net-Zero November. “Whether you look at the climate emergency, biodiversity collapse or the challenges with equality, change is clearly needed.

“To make business a force for good, we need to make sure we think about all stakeholders, the communities we work with in our employees, the planet and of course stakeholders as well.”

Stakeholder capitalism

Flynn notes that Salesforce has continuously evaluated and evolved its approach to business values and purpose, in an attempt to better reflect the needs of the planet and society.

Salesforce introduced a 1-1-1 model back in 1999, which commits the company to pledge 1% of the company’s equity, 1% of its product, and 1% of employees’ time back to society and planetary causes.

As of 2022, 17,000 companies in over 100 countries have adopted the 1-1-1 model and Salesforce has given more than $240m in grants, 3.5 million hours of community service, and provided product donations for more than 39,000 non-profits and educational institutions since introducing the model.

The company’s approach is evolving beyond the 1-1-1 model in a bid to enshrine its net-zero target and the needs of the planet back into its decision-making processes.

The company officially named sustainability as a “core company value” alongside trust, customer success, innovation, and equality. This has seen Salesforce drive climate action across its business model and services and now embeds planetary consideration into its V2MOM  — a Salesforce alignment process that drives the company’s decisions.

All of this, Flynn states, has seen Salesforce turn to a “stakeholder capitalism model” that unlocks innovation around core company goals, including a net-zero vision and science-based targets.

“We talk about stakeholder capitalism as opposed to shareholder capitalism and the work of the environmental sustainability area of the company falls squarely within all of that,” Flynn says. “So much of it is about culture and values and we’ve worked hard to create a company full of people who got drawn to a business with a greater mission.

“Culture is hard to cultivate. Identifying your values, knowing what your company stands for, being vocal about that, taking action in line with it, all of those things, builds the cultural flywheel over many years…it builds momentum and that’s how we’ve been able to launch the things we have and get the support we need.”

This cultural approach can be seen both at COP26 and COP27. Salesforce was a Principal Partner of the Glasgow summit and has also announced a flurry of new initiatives in Egypt this week at COP27.

A new Nature Accelerator has been launched to provide non-profits with new capital options to scale climate solutions. Additionally, a new Ecosystem Restoration project in Zambia has been announced, with the company partnering with the Global EverGreening Alliance to grow and restore 30 million trees in the nation while supporting local farmers.

The move forms part of Salesforce’s commitment to conserving, restoring and growing 10 million trees by 2030.

Collaborate to innovate

For Flynn, these types of partnerships, where businesses reach out of the private sector to work with governments and on-the-ground non-profits is crucial to ensure that Salesforce’s stakeholders get their say on the firm’s climate actions.

“Whether you’re selling software or soft drinks, your customer without a doubt is getting more and more in touch with the urgency of the emergencies we face right now and I think one of the things Salesforce talks about is connecting with your customers in a whole new way,” Flynn adds.

“We trying to connect with them and our suppliers around values, particularly around climate action. To do that, you need to be clear about your net-zero targets to show that the company is serious about these issues.

“We can create values centered on trust and these can produce great innovation. I think the next big waves of climate action are going to be from those strategies that can only be done in trusted partnership with another organisation. I think most leading companies have really maxed out a lot of what they can do on their own, and the big levers for change are untapped.”

Indeed, partnerships is a key focus for Salesforce. The company announced plans to purchase $100m of carbon credits from technologies that remove carbon from the air at scale, as part of its participation in the First Movers Coalition, which has since added more members at COP27. It has also launched the “Net-Zero Cloud” to help organisations like Mastercard, JetBlue, TELUS, and Deloitte Germany improve approaches to sustainability journeys.

This collaborative approach has also been crucial in the company’s efforts to reach 100% renewables.

The company’s push to 100% renewables has seen its carbon footprint across Scopes 1 and 2 tumble down from 163,000 MTCO2e. Indeed, electricity use accounts for around 90% of the company’s direct emissions.

In 2021, Salesforce achieved 100% renewable energy, purchasing enough renewable energy to match all electricity it uses globally – equivalent to around 746 GWh. However, while the milestone to reach 100% renewables globally has been achieved, it doesn’t mean the company is powered completely by renewable energy due to regional market complexities. The company is working with the relevant suppliers and regions to try and unlock better accounting methods.

Offset evolution

Another constantly evolving part of the firm’s net-zero ambitions is that of offsets.

While many offsetting projects are credible and businesses often see no other path to net-zero, offsetting has proven to be one of the most controversial topics in the climate debate. Corporates have been accused of greenwashing after investing in non-verified credits or of failing to prioritise in-house emissions reductions. Double-counting is a recurring concern.

Salesforce notes the potential of the carbon markets, but also expresses concern that climate goals solutions only received 8% of climate finance in 2017-2018. The market also faces a $711bn annual funding gap through to 2030 that, if not addressed, could hinder global progress on climate and biodiversity goals.

As such, Salesforce recently published a new whitepaper on carbon markets.

“While carbon markets today are far from perfect, they are one of the best tools we have for financing these critical climate solutions,” the document states. “They are not a silver bullet and should only be used as part of a suite of climate actions. But this is no excuse for inaction.”

Salesforce, like many other businesses, is leaning into the “net” aspect of net-zero emissions.

The report notes that Salesforce has offset 85,000 MTCO2e of its remaining Scope 1 and 2 emissions, as well as all of its 185,000 MTCO2e Scope 3 Carbon Neutral Cloud-Related emissions.

Indeed Flynn notes that carbon credits, through the lens of a corporates decarbonisation plan “should be used last, but not later”.

“Organisations who are serious about climate action should first and foremost think about what they can do to help the planet reach net-zero as quickly as possible,” he adds. “They should model emission reduction goals that drive systemic change within their four walls and within their value chain.

“For any emissions that are left, hopefully as few as possible after all of that work, let’s not wait for 2050, or 2040, or 2030, lets invest in projects that deliver impact today, and change people and projects. Credibility is critical.”