How far are companies willing to go to be sustainable?
The days of “sustainability” being about environmental or social issues management are over. We now know that those that want to be around in 5, 10, 50 or 100 years’ time, have to think about both the financial and non-financial health and impacts of the business and that these need to be managed in a responsible way. We also know that the context in which companies operate is changing fast and the financial implications are real. Resource scarcity impacts commodity pricing, extreme weather conditions such as drought, flooding and earthquakes are increasingly a financial risk, and the cost of rural migration and extreme urbanisation has demands on infrastructure and services, let alone on the brain-drain experienced by rural communities and the knock-on effect this has on commerce.
The landscape has to evolve to survive the implications of the resource constraints that we face. With that in mind, the UK Government has recently led an inquiry in to what it takes to grow a circular economy looking at the business drivers and the regulatory facilitators required in order to be successful. Still in its consultative phase, it will be interesting to see what incentives the government provides businesses with to drive innovation.
Companies are responding in various ways and buzzwords like netpositive, circularity, and conscious capitalism have emerged. At the most basic, all of these can be broken down to an understanding that waste should be minimised and positive outcomes maximised however, what we’re really calling for now is a move beyond responsibility. We’re talking about survival.
The linear economic model of take – make – dispose no longer works as the resources required to make more just aren’t available to the scale required and the traditional methods of “making” have been rendered unsustainable. The traditional methods of disposal (waste to landfill) will also only get more expensive for business. Whilst this should fill me with gloom, I actually think it’s a really exciting and creative time. Here’s the chance to do what those of us who wax lyrical about corporate sustainability have been calling for: truly embed thinking in to the very foundations of the business.
In order to embrace the idea of zero waste companies need to really look at their business models, their value chains and their impacts with a new eye. From design, research and development, manufacture, sale and reuse, the possibilities to innovate and get creative are endless.
Some of the thinking is inspiring: Coca-Cola continues to experiment with plant and biomaterials to achieve their target of 100% renewable and recyclable bottles in the next few years, Starbucks is processing coffee grounds in to feed for the livestock that provide its outlets with the milk for its cappuccinos and HP are making printer cartridges from recycled old ones.
Some leading corporates are embracing thinking on what the circular or “closed loop” economy means for them and are finding ways to not only develop their products but to also restructure their business models to create new revenue streams. Businesses such as ZipCar provide car-pools and the hiring, renting and sharing of goods has become more common than ever before.
Kingfisher plc has notably been championing this cause. It rightly states that, “if done well, closed loop innovation can cushion our business from price volatility, provide us with competitive advantage, help us to enter new markets and enable us to build better relationships with customers and suppliers.”[1] Its work as a founding partner of the Ellen MacArthur Foundation, which promotes thinking and practical solutions on circularity, has been backed up with clear targets for the business to sell 1000 products with closed loop credentials by 2020. Its businesses are also exploring ways to encourage and incentivise consumers to change their purchasing habits such as hiring or fixing broken tools rather than buying new ones.
What makes a business embrace this kind of approach? Though there are potentially many, here are my top three:
Leadership: the vision of the CEO to see financial opportunity, market differentiation and brand recognition.
Licence to operate: a discerning consumer base and an increasingly confident critical mass through NGOs means inaction is no longer an option
Lack of choice: in order for businesses to survive the fact that resource demand currently outstrips supply means they either neither change their game plan or risk losing altogether
Leaders in this area are emerging and it’s because they no longer see sustainability as a nice to do but as a basis for corporate survival that they are seeking innovative and creative solutions that’ll ultimately drive their commercial success.
[1] The business opportunity of closed loop innovation: Kingfisher’s progress towards products that waste nothing (https://www.kingfisher.com/netpositive/files/downloads/kingfisher_closed_loop_innovation.pdf)
Featured in Ethical Performance Magazine: June 2014 (http://ethicalperformance.com/news/article/8458)
