The business side of sustainability

Back in 1987, when we set up our consulting company called SustainAbility, no one knew the word. We continuously had to spell out the name, over a number of years. Today, according to a, recent Accenture survey of 766 CEOs worldwide, 93 percent see sustainability as important for the future of their businesses, 88 percent accept that they must drive new requirements through their supply chains, and an astonishing 81 percent say they have already embedded the agenda in their businesses.

Job done, you might conclude.  But you’d be wrong.  Unlike CEOs who believe that they have already embedded sustainability, I think we are just beginning a new period of transformative change for capitalism. To create a global economy that works for the nine billion people forecast by mid-century, for the sake of the global climate and for the survival of many other species, we have no option but to turn today’s capitalism inside out, upside down.

And this will not be a box-ticking exercise for companies.  It is a journey that, like the original Industrial Revolution, will take decades, generations and even centuries to effect.

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Childhood experiences with nature

By way of personal background, I stumbled backwards into the environmental field.  For me it all began as a child, literally in a field on a dark, moonless Northern Ireland night in the 1950s, where I found myself surrounded by an undulating sheet of baby eels.  After a moment’s panic, I experienced an intimate connection with the natural world that has never left me. This drove me at the age of 11 to raise money for the newly formed World Wildlife Fund (WWF), then on to four decades of work at the business end of environment.

Creative capitalism: a catalyst for change?

Unlike many friends and colleagues who joined NGOs to target governments, to force them to regulate business, I wondered what might happen if we tapped the creative, innovative energies of business. Although NGOs and governments are often very powerful, they rarely have the clout of markets.  If a giant retailer like Wal-Mart tells its suppliers of packaging to go green, for example, they have little choice but to do so. Under the right sort of pressure, capitalism turns out to be surprisingly good at mutating and evolving.

When I set out to work with switched-on CEOs on solutions, not only was ‘‘sustainable’’ an unknown term, but companies saw anything with an environmental label as likely to go for their corporate throat. Within a few years, however, corporate awareness of environmental issues began to evolve, and we were asked to help write early environmental policies for major companies  —including (ouch) BP.   We were also invited to bring growing numbers of environmentalists and other activists into companies, to discuss their concerns and priorities with senior management. 

Each company needs an individual approach 

I have since worked with scores of companies around the world, though I confess I have often found myself envying James Bond.  When 007 breaks into an enemy command center, he invariably seems to know which buttons to press.  As I began to find myself called into a growing number of corporate boardrooms, I would have to press every button in sight to see what linked to what.

Stranded assets: investing in old values

Luckily, it usually worked out well.  And in the intervening years, our movements have made immense progress. Although massive forces are still arrayed against progress in the inevitable shift to a low-carbon economy  —  particularly by those whose fortunes are invested in fossil fuels  —  today the very terms of the debate are changing.  Increasingly, we hear talk of ‘stranded assets,’ huge investments likely to be become much less valuable as the world wakes up to the fact that it can no longer burning coal and other fossil fuels as if there were no tomorrow.

Focussing on green growth

And increasingly, the environment is seen as part of the wider sustainability agenda. The current United Nations Conference on Sustainable Development, known as Rio+20 because it comes 20 years after the historic 1992 Rio Earth Summit, is focusing on ‘‘green growth’’.

The global revolution has started

Born an optimist, I am confident that we are now seeing concrete expressions of what Thomas Kuhn described 50 years ago as a ‘paradigm shift’ in The Structure of Scientific Revolutions. When I read the book as a teenager, it transformed the way I saw the future. It showed how paradigm shifts can turn our worlds upside down, inside out.  It also explained how energetically those rooted in the old paradigm resist the new. Death and retirement are two of change’s great allies.

In fact, 2012 was brimming with anniversaries of events that have helped drive the 1-Earth paradigm shift. It was the 25th anniversary of the Brundtland Commission report, Our Common Future, which helped put sustainability into the political mainstream. It is 40 years since the Club of Rome’s study, Limits to Growth, argued that we would soon run out of a number of key natural resources, and 50 years since Rachel Carson’s eco-blockbuster, Silent Spring, spotlighted the devastating impact of synthetic insecticides like DDT on wildlife.

Consider another anniversary which shows that capitalism can be forced to adapt under sufficient pressure. It has been 170 years since Marx met Engels, and the Communist Manifesto they produced eventually forced capitalism to embrace social reforms that not long before would have been inconceivable.

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Green growth companies grow faster? 

A report published by the Boston Consulting Group for the World Economic Forum offers interesting examples of the ongoing evolution of novel capitalist solutions to environmental and social problems. Called Redefining the Future of Growth: The New Sustainability Champions, it spotlights 16 emerging-market companies creating unconventional and profitable ways to achieve economic growth and enhance sustainability in their regions.

One promising conclusion is that such companies ‘‘tend to grow faster and have higher-than-average margins for their industries.’’ The Broad Group in China has developed a miniaturized device for measuring air pollution — an increasingly hot issue in the country — that can fit inside a mobile phone.  By putting knowledge about air quality right into the hands of citizens, the business is helping amplify societal pressures for change. Brazil’s Grupo Balbo, meanwhile, has been lobbying to turn the entire sugar industry into an organic sector by building greater awareness of the challenges and solutions among investors, customers and the wider public

Older companies factoring their environmental cost

The scale of our resource addiction was brought home to me when I was recently in Bavaria taking part in a stakeholder process organized by German sportswear brand Puma, where it presented its 2010 environmental profit and loss statement. It was a striking departure from what companies had done before, calculating the impact of Puma’s operations on the environment in concrete financial terms. The company said the cost its operations had imposed on nature through greenhouse gas emissions and water consumption alone came to 94.4 million euros. For Jochen Zeitz, the chairman of Puma, sustainable strategies are not just about enhancing brand and reputation, but are essential steps to meet the longer term needs of key customers.

In an extraordinary development, Puma, along with Adidas, Nike, Li Ning and the retailers C&A and H&M, is aligning with the Greenpeace ‘Detox’ campaign, designed to drive a range of toxic materials out of global supply chains. In a step unimaginable a year or two ago, these brands joined forces to push towards ‘Zero Discharge of Hazardous Chemicals’ by 2020. They plan to verify that nine classes of hazardous or persistent chemicals are not used in their supply chains. 

But even such ambitious experiments in accounting and reporting are relatively small step towards the giant leaps that we must now take towards sustainability. Meanwhile, its temperature rising, our planet is not waiting for us to get our act together.

The need for systemic change and young talent 

It’s no longer a matter only of making industries acceptably ‘green’  —  though the public is becoming more sensitive to a company’s ecological footprint. Transformative, systemic change is needed.  Indeed, many of the leaders I talk to also tell me that a key driver in their sustainability strategy is the need to recruit young talent: the best potential recruits want to be part of a company that is doing something meaningful and effective. And it is also a matter of economic survival as supplies of water and energy are squeezed.

If in the past business leaders lobbied largely against new regulations, growing numbers now know that they must help create the new rules, and legal and accounting mechanisms a sustainable economy will require. A growing number of organizations, such as the Clinton Global Initiative, the World Business Council for Sustainable Development and the C40 group of cities are helping them do just that.

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Financial meltdown: an opportunity for sustainable development 

Every few generations, the global economy goes through a process of meltdown and reconstruction. We are in just such a period of economic rebooting. But I believe that a ‘Phoenix Economy’ will rise from the ashes of this crisis, clearing the way for new and more sustainable technologies, business models and market opportunities.

Just as we moved from traditional reliance on timber and water wheels to fossil fuels, so we will now move to new mindsets and business models and new definitions of natural capital. If Amazonia was previously valued largely for its timber, for example, we will now come to understand that it also works as a natural water pump, supplying rain and water vapor worth untold trillions to vast tracts of South America. It would be dangerous to take such things for granted.

A massive task ahead, but one that’s been done in the past 

As already mentioned, making all of this work will involve huge changes in economics, accounting, valuation, taxation and legal frameworks.  But we have done this sort of thing before, and can do it again — although this time the time scale will be more like three or four decades.

Today’s pioneers in sustainable food, energy, water, infrastructure or finance are in on the ground floor of tomorrow’s economy. They will have their ups and downs, but I really do wish that I was starting all over again.


A personal note

I first met Richard Sandbrook in the early 1970s, when he was at Friends of the Earth, often hidden behind a plume of cigarette smoke, and I was finishing off a postgraduate degree at UCL.  Thereafter our paths crossed repeatedly, not least when we were parallel authors for the Conservation & Development Programme in the early 1980s, a response to the World Conservation Strategy.  He was covering international development (he was then with IIED), while I handled business (I was then with ENDS). 

The conversation continued in countries around the world; sometimes we met according to some sort of plan, other times serendipitously.  On one occasion, when I was driving us both westwards, we stopped off to see my parents in the Cotswolds, and we were so immersed in conversation I grazed a gatepost I had managed to avoid for over 20 years. 

Later, we connected through his involvement in organizations like Forum for the Future and in Tim Smit’s Eden Project.  But wherever we met, and whatever we talked about, I immensely enjoyed his company, if not the passive smoking. And, like many others, I miss him greatly.

The essay above borrows heavily from an article I did for the International Herald Tribune and New York Times in the run-up to 2012’s Rio+20 conference.  It surveys a landscape that Richard did much to shape.

January 2013

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Green business? (A green vision of lower Manhattan.)
Credit: 
L'Amande

About the author

London, UK

Founding Partner & Executive Chairman of Volans (2008 to date) also Co-Founder of SustainAbility (1987-2008, where he remains a non-... (Read more)