Today’s guest post comes from Helen Clarkson, US head of Forum for the Future, a London-based nonprofit that works with business and government leaders to “create a green, fair and prosperous world.” Helen’s got an interesting background: She trained as an accountant because she wanted to work in the international aid industry. “It’s quite boring, but you learn so much about business,” she told me. She spent six years at Médecins Sans Frontières (Doctors without Borders), doing stints in Pakistan, Sudan, Nigeria and the Congo, where she saw first-hand the intersection of economics, health and environment. She joining Forum for the Future in 2007, and opened its office in New York at the beginning of this year.
As you read the green business news over your morning (Fair Trade?) (organic?) coffee, there’s lots to get excited about in the world of sustainability.
2011 is shaping up to be the year of the electric car. Clean tech appears to be thriving. Innovative thinking brings us everything from greener cleaning products to new business models such as Zipcar.
But while these announcements promise more sustainable ways of doing things, turning to the science pages can quickly undo your positive mood. Put simply, water, forests, soil – all the essentials of life – are becoming depleted and degraded at a dangerous rate, and our climate is changing at a speed and on a scale far beyond anything modern humanity has ever experienced.
This is an unprecedented challenge. And when you put the scale of the challenge next to the scale of solutions being undertaken you realize that all is not that rosy in the world of sustainability.
People talk a lot about the business case for sustainability, or taking first steps to going green. The problem is, these approaches can create creeping incrementalism at best – some tweaks here, some product innovation there, and the token green newsletters for employees.
The way to avoid this incrementalism is to start thinking about truly sustainable business models. Ways of doing business that deliver commercial success, within environmental limits, while delivering products and services that improve people’s lives. Transitioning to a sustainable business model requires whole-scale transformation of how a business does business.
The question is, how do you go about that? At Forum for the Future, we have been working for 15 years in partnerships with companies such as Unilever, Marks & Spencer’s and Hewlett Packard, as well as government, to find out how to turn that intellectual case for sustainability into practical action. In that time we’ve learnt a thing or two about what works and what doesn’t.
We’re still learning since there is as yet no truly sustainable business. Here are five things we’ve discovered so far:
1. Talking about corporate social responsibility (CSR) slows down progress
The problem with CSR is that it usually puts social and environmental issues outside the corporate strategy. It provides a cosy reassurance that something is being done and as well as spawning some feel good things to talk about at conferences.
Sustainability has to be hardwired into your strategy, not only so it doesn’t get cut when budgets are reduced, but so that it becomes in the words of Lee Scott of WalMart “the next source of competitive advantage”.
Shift away from CSR and focus instead on respect for the environment and society as a source of profit and business success. People talk a lot about the low-hanging fruit, which usually means eco-efficiency and waste reductions that improve the bottom line. This is a fine first step.
But looking properly at sustainability as a financial investment yields even better results. A great example is Marks and Spencer’s Plan A. In year one of the plan, this was framed as a £200 million investment, in Year two the plan was cost-neutral, in Year three it generated £50 million net profit from a mixture of resource efficiencies and creation of new products.
3. Change starts at the top
Deciding you want to be sustainable and then asking someone who knows a bit about the environment to lead the charge is not going to work. It may get you a decent recycling program, and you may see a few more people cycling to work, but it’s not going to create a business fit for the 21st century.
Leading from the top means the chief executive needs to be engaged and fronting the action, both internally holding executives to account, and externally in front of stakeholder groups such as the investment community, the media and customers.
At companies like Danone and the global DIY retailer Kingfisher executive bonuses depend on hitting their sustainability targets. At the launch of Unilever’s Sustainable Living Plan, CEO Paul Polman was even willing to take on the investment community: “We want long-term shareholders,” he said, who are prepared to accept periods of “average results”.
4. Be clear what the journey looks like.
Identify transformational changes that the business needs to make. By having a clear road map towards sustainability, a business is less likely to shuffle forwards with just small incremental tweaks. The goal is transformational jumps, not incremental chunks.
5. Innovate, innovate, innovate.
Everywhere. From product design to service delivery, to internal and external communication, to business strategy planning, to financial models. Innovation is the key to delivering the holy grail of a sustainable business model.
The time has come to step up our game on sustainability. That means not only business but the NGO, media and blogging community that surround and support them. We all need to play our part. So next time you read or hear about an interesting sustainability initiative, ask yourself: “Is that enough? Does it meet the scale and urgency of the challenge?” And if not, “What am I doing about it?”