Ep.31 Sustainability strategy with Atlassian

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Climate change is a challenge that is still prominent on the world’s agenda, but we’ve now entered a transformational decade where more than 60 per cent of countries and almost every developed economy has committed to some form of ‘net zero’ carbon emissions goal.

COVID-19 has also meant that some targets have been met in record time and others which were thought to be impossible, such as reducing emissions from air travel, are now within reach. So how can businesses, governments and investors keep this momentum going?

One company taking a bold approach to climate change is global tech giant Atlassian. They have an ambitious climate action plan for themselves and also look outwards to their customers, communities and partners to influence change.

In this episode, Aurecon’s Managing Director for Energy, Resources & Water, Paul Gleeson, talks to Atlassian’s Head of Sustainability, Jessica Hyman, about the role of corporate sustainability, the importance of science-based targets and why progress matters more than perfection when it comes to climate action.

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Paul Gleeson: Jess thanks so much for agreeing to have a chat to us today.

Jess Hyman: Thanks for having me.

Paul Gleeson: Yeah, a pleasure. The first thing is, is really about you and your journey. So, you've been in sustainability for most of your career. Can you give us an idea of what motivated you to focus there? And you know, what inspired you to go after that as a career?

Jess Hyman: I sort of got lucky. My first internship out of university was at the United Nations in Bonn, Germany, actually. And by chance, I was able to support a really big climate summit that was coming up. And it was focused on environmental change and migration. And I think reading all of the research on the impact of environmental change on people was the first time I really made that connection between people and planet. And the reality of, the crisis that we were up against. And so that's really been my North Star in finding a way that I could play a small part or role in addressing those issues.

Paul Gleeson: That's fantastic. Can you give us a quick view of how you came to be in the role you're in now?

Jess Hyman: I was at Business for Social Responsibility, which does sustainability consulting for companies for, gosh, maybe seven or eight years. Most tech companies hadn't started sustainability programs yet. Or if they did, they were fairly new. And I don't mean the big Microsoft of the world, but sort of the newer tech startups.

And so, I really felt a calling to be a part of that sort of first generation of smaller tech companies going down this path of thinking about what sustainability means to them. And so, I went to Atlassian, who at the time, it was before we had IPOed. And I think we were less than 1500 people. And I took a job on the people team with the intention to start our first sustainability program. And it's really been an iterative process over the last five years to come up with something that made sense for our business. And that's taken me to where I am now, leading the sustainability team, where we're focused on really embedding this idea of social and environmental progress in everything that we do at Atlassian, really making sure every employee, and every team has this lens over which they do their day job, and they do their work, and the focus areas for us are climate, but it's also looking at people and our diversity, equity and inclusion program, our customers with a focus on human rights and community as well. In particular, we've been doing a lot of civic engagement in the US.

Paul Gleeson: So Atlassian is a company that a lot of us are intrigued by. Being somewhere that is that cutting edge on all fronts, both in terms of, core business, but particularly on this sustainability journey. What’s it like?

Jess Hyman: Yeah, it's really energising, I would say it requires a lot of energy. I mentioned to you that I came to Atlassian, with sort of this vision of starting the sustainability program. And that didn't happen overnight. It's taken me quite a few years to get this fully up and running in its form that it is now.

But I think what kept me motivated for all of those years, is just this sense at Atlassian, that anything is possible. And I really mean that. It's sort of this progress over perfection, if you have an idea, and you can rally the team around it, you know, there's really nothing stopping you. And that feeling of sort of freedom and creativity, I think is really prevalent in the culture.

A good example of that is starting out at Atlassian. No one even knew what sustainability was or why it would be even moderately important for a company like us. And flash forward, you know, 2019, I'm in New York with Mike Cannon-Brookes at UN Climate week announcing our science-based target. So, to just go from that, you know, no one really knows what sustainability is or why we would take a position on climate, to really having the most ambitious climate goal a company could have in a couple of years, just shows that sort of energy and momentum in terms of how we can pivot and kind of get things done.

I think another good example of that, more recently is just, you know, the impact of COVID, and being a distributed team and the founders really took a bold stand and said, Hey, we're going to move to what we're calling Team Anywhere, which is we're going distributed, and we'll always still have our offices, but there is this much more orientation towards being a semi-remote team. And we had a little bit of knowledge around how do that because of Trello, a company that we had acquired. But, you know, you almost saw us pivot really on a dime, and rethinking how the company operates in our culture and our behaviours and how we get things done. So, I just think, that quick pace, and when the team puts their mind to something, what's possible is, is really energising.

Paul Gleeson: I will talk to you a little bit more about some of those commitments and the targets that have already been met or exceeded in a minute. But I just want to spend a bit more time on the people aspect, because for Aurecon, we've got a real focus on what we're calling a purpose-led organisation, and I've heard you talk about values-led, what does that actually mean for you? And how you translate that for others? The ‘why’ of doing this?

Jess Hyman: On the planet side, specifically, we have a value that's called "Don't fuck the customer". And we kind of riffed on that and said, "Don't fuck the planet". And that's sort of been, you know, the call to action for the team. But I think the reality is, the way that we've gone about this work is very much aligned with our values. One of the biggest things I think I've taken from Mike, our founder, he's always said, you know, progress over perfection, and put in the hard yards.

In other words, we're a culture and a company of really doing the right thing. And we have another value called "Be the change you seek". So when it comes to the sustainability program, it's coming from a place of authentically wanting to do the right thing, and be the change you want to see in the world, versus doing something that sounds good or is good for our brand, or marketing or whatever. But it's really doing that sort of tougher, quieter, more honest work and thinking about the real responsibility we have to have an impact, but also the opportunity we have, given the company that we are and the leaders that we have, to have a voice, I think.

Paul Gleeson: There's clearly a link there to talent, attraction, retention, is the theme for the sort of people that you want in the firm?

Jess Hyman: Yeah, absolutely. I mean, we've done this report, I think we know this intuitively. But we ended up really wanting to back it up with data. So we did a research report called ‘The return to action’ report that you can take a look at. And what was interesting is we asked not Atlassian employees, but actually the public more generally, in Australia, and in the US, hey, what issues are really important to you, social and environmental issues? But also what issues do you see as the responsibility of companies to take a stand on, versus, for example, government or you as an individual, and it was incredible to see, I think it's 69 per cent in Australia, and 62 per cent in the US, said, 'Hey, we expect companies to take a big stand on social and environmental issues'. And what showed up at the top of that list of what are the issues we care most about, there were things that I expected to see like climate, but actually what showed up high on the list as well, were things like racial justice, mental health, access to health care.

And so, I think that's a really good signal in the markets that we're operating in that, hey, employees really care about this. It's an expectation that they have for a company that they want to work for, because I think it shows that the company is taking responsibility, but it's also a signal that, this is an ethical place to work that I would want to be a part of.

Paul Gleeson: Okay, so let's talk targets, get a little bit specific. So, the target of being net zero emissions by 2050 and hitting 100 per cent, renewables by 2025, two really bold targets and I note for everyone that the 100 per cent, renewables target was met somewhat early. So, the drivers for those specific goals, do they need to align with anything to do with the regions that you're in? Or are they targets that you came up with? So, this is what matters for us, or we think this is strong enough for us?

Jess Hyman: So, this is maybe a somewhat very Atlassian approach. We're a goal-oriented company, and the way we set goals is that we tend to set things that are ambitious, even if they make us uncomfortable, and we're not totally sure how we're going to get there. But the point of the goal is it sends you in the right direction. With the 100 per cent, renewable goal, when we set that we actually didn't even know what percent of our current electricity use was renewable, or what the shakeup was across our different geos. And we certainly had no idea how we were going to get to 100 per cent renewable.

So, you're really seeing us come out of the gates with a goal rather than a strategy. And I think the reason we hit that early is because we said, right, we don't know how to get there, but full steam ahead, let's figure it out. And we're able to get there pretty quickly through EACs. And I know, we can talk more about that strategy, because it was sort of go fast, then go far approach. But it was like, great, we figured out how to do this, at least the minimum viable solution for this goal. Now, what's the next big ambition that sets us in the right direction in terms of how we want to evolve the business? And that happened to come into play right during UN Climate week in 2019. And the big call to action from the business community from the UN was really to set science-based targets that were aligning with 1.5 degrees Celsius.

So, since that was the clear call to action and expectation from businesses, we said, right, this seems like the right thing to do, it's totally out of our comfort zone, my palms are sweating, even suggesting that we do this, I don't know how we're gonna get there. I don't even know what our scope three emissions are, let alone like what we're going to have to shift. But again, it goes back to the value of 'Be the change you seek', let's do the right thing. And this is gonna set us in the right direction, we'll figure it out.

Paul Gleeson: I can really relate to that. You and I've chatted about this previously, but we work with quite a lot of different businesses in a lot of different sectors around roadmapping, how do you get to net zero, for example. And we've been doing the same with our own organisation.

For me that realisation that setting a target is quite hard in terms of coming up with something you're sure you can achieve, and then getting that signed off at the highest levels. But then the realisation after you’ve set the target that actually all the work is actually getting there, not the target. And with a fairly young organisation that's growing fast. If you're going to say something like net zero or 100 pe cent, renewables, you've actually got to delve into a whole lot of very functional parts of the business. How did you actually go setting up the structure that didn't exist?

Jess Hyman: When we set the goal or committed to it, I remember sitting with our executive team, and they said, how much is this going to cost? And we said, we have no idea. We just have no idea. We don't even know what part of the scope three emissions we're gonna have to focus on. Because we don't know, you know, what the percentage mix is and where we're going to have the highest impact. So, I'd say the starting point was just deciding, we're going to figure it out. Then the next step was really understanding our scope three footprint and prioritising the professional goods and services and capital goods and business travel.

So, then once we knew, okay, that's sort of the focus area for scope three. What do we know about those areas of our business? And how big of an uphill battle is this going to be? And what I did for that is I actually met with our procurement team on the supply chain side and just said, hey, we've got some flexibility here in how we set this goal based on the science based target guidelines. How ambitious do we want to go? And the team said, Look, we have no idea how we're going to get there, but let's go full ambition. And for us that was aligning with 1.5 degrees and then setting the date of 2025, which is what we have consistently across all of our goals. I think the business travel one is so complicated, because we set that goal just before COVID happened.

And so, any plan we thought we might have had around reduction, there's really been thrown out of the water. And we're working with our finance team now to understand what opportunity do we have as we move into this new Team Anywhere world with a distributed team to set suggestions or policy that would help us on the business travel side rather than make it worse. But it's so hard to know until we turn the lights back on and people start flying again, to really know what the plan is there. So, I'd say that's the biggest wildcard at the moment.

Paul Gleeson: I think that particular realisation, as you say, what COVID has done for all of us, certainly for our own organisation, very similar story around, you know, setting targets and figuring out what are the parts of our operations and our scope three that are the hardest to decarbonise? And then, obviously, then how do we minimise those? And we talked about how much do we think we could reduce air travel and still have a viable functional business?

And then, of course, COVID hit, and we totally swamped that. And so we reduced it a lot more. I think long term, though, none of us are quite sure how long you can go with that little direct face to face contact. You've developed a pretty unique culture within Atlassian, and how are you retaining that when you can't get people physically together?

Jess Hyman: We're working right now on the guidelines around Team Anywhere and how much travel are we going to allot by person or by team because while we know our tools, in particular, are really helpful for distributed teams. There's no doubt in our minds that in-person time is important, too. We want to create a structure that facilitates that, I think, and the conversation right now is what are those guidelines? And what does it look like and what's really needed for teams to have that in-person time? My role in that has more been not trying to tell the team that we have to stop travelling because you don't want to lose that culture.

And you don't want to lose the opportunity to be effective as a team, which is hugely important for us. But at the same time, we have real climate goals that we have to balance. And that brings us to a new piece of our strategy, which is even after we do everything we can to reduce business travel, there's going to be this time gap between now and 2050 when the airlines are able to think about more sustainable aviation fuel.

So, in that time period, how are we addressing the remaining emissions? And carbon credits are probably a part of that story. We've also looked at carbon sequestration, for example, and we've really been thinking about if we're going to go that route, what's the right portfolio mix? And then how do you layer on a climate justice lens so that we're doing as much as we possibly can on the impact side with kind of covering that interim gap?

Paul Gleeson: And some of those parts of the operations and supply chain are still on that technology development pathway to actually come up with a decarbonised alternative. Electricity is the easy one. Now, we know we can go out and procure 100 per cent renewables. And then for the technologies that aren't yet there like air travel, you're left with largely an option around what sort of offsetting you're going to do. I guess two-part question is, have Atlassian looked at directly participating in that space? So, running a project that creates, you know, your own offsets or sequestration, as you say? And then part two of that question is, how far do you get into this before it's distracting from your core business?

Jess Hyman: We're putting the thinking together on this right now as we speak. So, I wouldn't want to rule anything out. But I think, in that ethos of progress over perfection and go fast, then go far, the initial phase probably wouldn't be running our own project versus looking to partner. I'm saying that mostly because it's the same philosophy that we would have for getting new renewable energy on the grid, for example. So the same with the EACs, you know, you could critique Atlassian, and our approach to 100 pe cent, renewable by saying, Look, you've just gone out and purchased environmental attribute certificates, you're not adding any renewables to the grid. And of course, to do that, we have options like solar, and we have a new building in Sydney. And so, we can look at what's available there. But, you know, what else can you do? And that's where things like virtual power purchase agreements get really interesting. But again, I think you asked the right question, which is like, at what point does that not necessarily make business sense? That’s when we're saying, hey, we've got a responsibility here to help transition the grid to renewable energy.

And let's see what we can do given our size and scale and maybe it's aggregation, for example, we're partnering with other companies that are doing a VPPA to make it happen. So I think that when it comes to the carbon credits, which is your original question, I imagine our philosophy would be the same.

Paul Gleeson: And I think that's quite reflective of a lot of views out there at the moment, because there's so much development yet to come in this space. It is a very new market, and I think the desire for stakeholders to see how impactful your choice of credits or offsets, it's quite a recent development. And I think that's an exciting one, because that will drive real change. But it means we're no longer just talking about dollars per tonne, for example.

Jess Hyman: And I think that's in particular, where we're thinking about racial justice, for example, and how do you add that climate justice lens to your procurement scorecard for carbon credits, for example.

Paul Gleeson: Having been focused on sustainability for as long as you have, do you think we're at a period of particular acceleration here? Do you think that there is a bigger movement going on?

Jess Hyman: I think the biggest area of optimism I have in real movement has probably been from the investor community. And what I've seen is one, the level of maturity and ESG analysis has really grown. So it's no longer sufficient to have a green team, for example, and a LEED certified energy efficient building, both those things are important, but investors are looking at you in respect to climate, they're actually wanting to understand, have you set a science-based target? How are you reducing emissions and also, how are you understanding your climate-related financial risk and then mitigating that risk? So, investors are really seeing this as, hey, it's not just about what you're doing to not have a negative impact on climate change, but the reality that climate change is going to happen. And you as a business need to be set up, to be resilient, and to be able to survive that. So, I think that's a really big shift.

And obviously, the investor community is quite influential. And when you have a company like BlackRock saying, “We care whether or not you have a climate goal”, I think that matters. The other group that I think is really important in terms of stakeholders where there's been a shift is just employees. It's been really interesting to watch employee activism, not just in something like participating in a climate strike, but you know, unionising and doing employee walkouts, when people don't feel like their companies are taking climate seriously enough. So, I think there's a bit more of a competitive angle to this now. If you're competing for top talent, this is part of the package that you have to consider.

Paul Gleeson: I do share your optimism there, it was a bit of a leading question, but I do think we're seeing some real movement. And it's interesting that, when COVID first hit, I had a bit of a concern that the magnitude of the pandemic would put some of these topics on the back burner for a while and everyone would go into survival mode. But it really does seem that the opposite has happened, that some aspect of human nature has meant that seeing all this vulnerability and fragility means that actually sustainability seems to actually leapt ahead during the pandemic.

Jess Hyman: 100 per cent agree with you, I remember early days pandemic, we were due to push out, I think it was our first ever sustainability report. And we were kind of wondering, Hey, is this the right time to do this? Is this going to come off as totally tone deaf? And we decided, no, it's more important now than ever, because if the health crisis of COVID has taught us anything, it's that we actually haven't built enough resiliency into our systems, and that we're actually quite fragile and exposed and that this is the thing we need to be investing in. And if you think COVID is bad, just wait till climate change fully hits. So, this has never been more important. And I think people are starting to realise these existential crises that we have sat on for a while, you know, are quite real and quite jarring. So, it feels like, actually, we've expedited our work. And we actually achieved the 100 per cent renewable goal in early days of COVID, as well.

Paul Gleeson: Yeah, that's so good. That combined with the mindset shift of so many of us thinking, so many of the ways that we work and live have been turned on their head in the last 18 months. And so, the ability to say, on something like a sustainability commitment or target or goal, oh, that's not possible, we can't shift that much, or that's too hard, or we can't reduce that that much. It's very hard to make some of those arguments now, because we've just proven that you can upend.

Jess Hyman: I mean, the business travel one, right? If I was, I can't even imagine telling the team, hey, in order to reduce emissions, we're not going to travel for a year, everyone would have said, impossible, can't be done. And it's like, you know, in three or four months into COVID, we ran our entire annual summit, totally remote on, the change of a dime. And, yeah, a year later, we're all doing it. So, you're totally right. And it's such a good example.

Paul Gleeson: Are there things that we haven't touched on that you'd be keen to talk about.

Jess Hyman: The one thing that's on my mind you know, it's an interesting time that we're chatting because there's big climate conferences in the US happening right now. And Biden recently made a commitment to halve US emissions by 2030. And it's just really put policy on my mind and what a company's responsibility is to speak up and use their leadership voice to influence policy and legislation, outside of our own walls. At Atlassian, our founders have been very vocal, and our policy team has been doing a great job. In Australia, in particular, we have supported the passage of legislation around a framework for a national goal of net zero emissions by 2050.

In the US, we've been really vocal on rejoining the Paris agreement, which we're very happy to see happen and signing letters, you know, to the House and the Senate here making sure that as we develop COVID recovery packages, we've integrated renewable energy into those incentives. It's important that as companies, we're all doing our part internally and in our walls to reduce our emissions, but also that we're using this, you know, pretty big platform that we have to influence government and our customers.

Paul Gleeson: A lot of the leadership on the topic has come from the corporate sector, in multiple countries, I think in Australia, it's interesting to look at a state level, every state or territory government in Australia, regardless of what side of politics they’re on, have committed to net zero 2050 or 2045, in one case, so it certainly shows that there's an understanding that the will is there, the desire broadly from the electorate is there. I think the challenge, if you boil it down is really around, there has to be a good answer for those regions that are still heavily dependent on the fossil fuel sector. What are the answers for employment for those regions?

Until you can answer that, you can't ask those people to make that sacrifice. That's a learning that everyone's having, and it's one thing to point to a net zero future. And we have modelled it, you know, to show that actually employment goes up, if you can make the transition. And these things are doable. There is a reality that between current day and that utopian future, there's a lot of hard work and the jobs aren’t like for like, not in the same places. So, there's quite a lot to be done there. And so while I think on a simple level, you can look at the politics and think, that's messy, there is a reason why it's been hard.

Jess Hyman: What do you think as you look to the future in Australia? How do you see things playing out, in particular in Australia, both for companies and government? And I'm assuming you're an optimist. So, what's leaving you optimistic?

Paul Gleeson: I am definitely an optimist. And I think you have to be in this space. I think there's plenty to be optimistic about. I think the momentum is there, the desire across most of the regions and most communities is quite high, some are more exposed than others and need some more specific answers. But on mass, the shift is happening. The other thing that gives me confidence is what you talked about before, so the finance sector and the insurance sector are two huge drivers. And so that is forcing change quite rapidly. And I think expectations around climate risk disclosure, and how that manifests on boards of directors. That's a real positive in terms of the focus that's driving now for people to actually quantify what those risks mean. There's a lot of opportunity associated with the transition, of being on the right side of the transition and being an early mover for sure. And I think that's where a lot of us focus. But I think the disclosures also have to include the downsides for not acting and that's the bit that’s lagging a touch at the moment and really needs to get closed up. And I think climate physical risk is a really interesting area for us.

Australia, has made headlines for various natural disasters in the last couple of years. And I think it's clear to everyone that, you know, while obviously we had bushfires before climate change was a topic, the intensity and frequency and duration is what we're talking about. And it's the same with flooding and cyclones, etc. And the fact that that's in the short term, rather than talking about temperatures for 2050. That’s the thing that's shifting people’s thinking, is that similar stuff in the US with California bushfires?

Jess Hyman: We spent all of August in fires where I live, actually. And I remember we had one day, over the summer, where San Francisco was completely black from all this smoke up in, just north of the city and actually quite south. And I think, when you have a moment like that it's impossible for anyone to deny that this feels different.

Paul Gleeson: Yeah, that's right. And so I think there's opportunity there certainly for businesses that have a large physical asset base, that's distributed, to say, Okay, well, let's overlay what are the changes we need to make on the transition risk side, which is largely a decarbonisation conversation, but then also overlay physically. Is anything going to change in the locations we are physically that would also mean there might be two reasons to do something now? Again, back to your optimism question. The fact that we're getting pulled into more and more of those conversations gives me great optimism. And the other thing is, is our people, we know, our staff are so excited about this, and every bit of movement we make, the response that it gets just reaffirms for me that that's the right direction.

Jess Hyman: Yeah, I would agree.

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Climate change is certainly a topic that hasn’t gone away during COVID, and, if anything, as Paul and Jess mentioned, has shown us that we can pivot quickly to make what seemed ‘impossible’ ‘possible’.

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