As the tide turns on corporate appetite for sustainability, we take a look at the major sustainable business trends that will affect your organisation.
FutureMakers
Wednesday
15 September 2021
Now is a critical time for business, both in terms of responding to the climate crisis and ecological breakdown, but also at a time when assumptions, needs and perspectives that underpin society and business are shifting.
As we work to support businesses across various sectors on their sustainability journey, we’re able to identify key trends, and these are the top 5 trends we want to share with you. These trends are symptoms of accelerating social and environmental problems, the increasingly VUCA (Volatile, Uncertain Complex & Ambiguous) world we find ourselves in, and rapidly changing attitudes to ESG (Environmental, Social and Governance). But whatever is driving the change, it is clear that these trends will have an impact on how businesses work towards achieving sustainability goals, and putting sustainability at the heart of business.
Trend #1: Business is shifting from generic commitment to bold action
Few now question WHY we need to shift to sustainable models (something very much underlined by the recent IPCC AR6 report that we wrote about last week). The discussion is now around WHAT business can do in the context of climate change, biodiversity, wellbeing, and equality and diversity.
There has been widespread realisation that no business can disconnect itself from nature and society and continue to degrade the systems that support us. There is acceptance that business-as-usual has been too costly, and there is growing appetite and passion for building back better—business transformation with sustainability at its heart.
And that is demonstrated by the organisations we’ve seen leading the way with bold ambitions – some from big traditional brands such as Microsoft, Google, Jaguar-Landrover etc, but this commitment is coming from many places; start-ups, not for profits, policymakers, trade associations, and the everyday businesses that you represent:
- We’re now at the stage that over 1000 companies have set science based targets for reducing carbon emissions
- The number of businesses committing to zero carbon no later than 2050 more than doubled between 2019 and 2020
This corporate commitment is to celebrated, but it’s also important to take stock and reflect on whether by committing, we’re doing enough. We have to remember that the ambitions and targets don’t change anything materially in the world without action. We can’t risk a ‘commitment culture’ distracting us from delivering impact, and that’s because this really is a race against time, with only 9 years left to act on the United Nations Sustainable Development Goals.
Trend #2: A growing risk of corporate reporting & disclosure leading to initiative overload
Whilst the commitment is there, the second of the sustainable business trends we see is that in the desire to disclose more about the environmental and social impact of business, there is a risk of organisation’s getting lost in initiative overload. The numerous sustainability certifications, schemes, and initiatives (B-Corp, UN SDGs, Race to Zero, Fairtrade, TCFD, Carbon Neutral, etc) is very positive in one sense, and the trend for increase in disclosure and transparency of corporate performance is certainly a very welcomed one. But there is also a danger of overload. It’s easy to get lost in the overwhelm of certifications, initiatives, and endless terminology, so much so that the window for action gets smaller and smaller.
There is no question of the immense output from businesses on setting, communicating and working towards their sustainability goals, but what about the impact all those conversations, the meetings, the reports the certifications. Is anything actually changing in the world as a result?
Its very possible that ‘sustainability’ as an industry may have confused output for impact.
For two decades progressive thinkers have argued that a more sustainable form of capitalism would arise if companies regularly measured and reported on their environmental, social, and governance (ESG) performance.
But although such reporting has become widespread, and some firms are deriving benefits from it, environmental damage and social inequality are still growing.
– Kenneth Pucker, Former-COO, Timberland
Trend #3: A shift in focus from continuous improvement to new business models
A third, and very positive shift is the growing emergence of organisations who are putting social and environmental considerations at the heart of their business purpose and their operating model.
A great example of this is carpet tile manufacturer Interface – as part of their Climate Take-Back initiative and ambition to become a leader in sustainable business they are working with the biomimicry institute on a ‘factory as a forest’ concept where their factories can sequester carbon, purify water, transform sunlight into energy and transform waste into useful inputs elsewhere in the system. They’ve proven its possible to take a regenerative approach to business whist being profitable in a competitive market.
Danish energy company Ørsted are another great example of the level of ambition required for radical change. They have reinvented their business model over the past decade from being coal-intensive to almost entirely renewable energy. Divesting from fossil fuels and investing in offshore wind power helped the organization reduce carbon emissions by 83%
Fortunately it’s becoming increasingly clear that there are limits to what can be achieved with an incremental, corporate reporting led approach to sustainability.
Organisations are realising that simply managing risks and improving year-on-year (continuous improvement) is no longer enough – sustainability needs to be brought front-and-centre in every business model. This will mean some candid, and inevitably difficult conversations at board level around the role of an organisation in a 1.5 degree world. Difficult conversations about growth, consumption models, poetnially a reaslisation that maybe we can’t have it all – a future for society and exponential growth? And then following those conversations, a huge culture change and people empowerment piece will be needed in support of the transformation. And then most importantly – the step we’re not yet seeing anywhere enough of – innovation of new, and highly sustainable products, services and entire business models.
Trend #4: A cultural shift from technical problem solving to sustainable innovation
For businesses genuinely committed to embedding sustainability, there is a growing recognition that there needs to be a more creative culture. In addition to traditional technical problem solving—focusing on known issues, using existing expertise and assumptions, organizations are working to build the capacity of their employees to solve the transformational challenges we are faced with – climate crisis, ecological breakdown and societal inequality. For this to occur successful, time and space must be provided to solving transformational challenges—exploring and getting comfortable with the “unknown unknowns”, and letting go of existing assumptions without jumping to solutions. This requires quite a mindset shift.
And it’s not to say transformational thinking replaces technical problem-solving, rather it supplements it. Organizations have to quickly build muscle to think systemically, and drive truly innovative solutions. How that plays out for the businesses that are doing this well is clear strategies for substantial year-on-year carbon reductions, whilst also innovation frameworks, programmes and tools that drive the creation of disruptive innovations for zero carbon, and net positive solutions.
Trend #5: A commitment to going beyond sustainability
Given the realisation that no business can operate outside of the planetary boundaries, and that our economy is reliant on nature, the most significant and potentially transformational of the sustainable business trends is that we are seeing more businesses go beyond minimisation, through sustainability—”doing better”, to ultimately taking more of a role in the renewal and restoration of our broken societal and ecological systems to create a net positiveimpact: a regenerative business approach.
20 years ago when I was studying about climate change and international development at University, we were in a place where the vision for sustaining our ecosystems was enough. We learned about sustainability as a response to emerging environmental challenges, and John Elkington’s triple bottom line approach seemed visionary for business, yet an approach that would ensure we didn’t overstep the various tipping points around climate change, extreme weather events, nature loss, resource depletion etc. We’re now in a very different place. We are learning more every day that sustainability is not enough—put simply, we cannot sustain what has already been destroyed.
And we’re also realising that success or failure on sustainability for business cannot be measured only in terms of profit and loss. It must also be measured in terms of the wellbeing of global population and planetary health, and let’s face it—while there have been some successes—our climate, oceans, forests, and biodiversity are all increasingly threatened, and there are millions, if not billions of people’s suffering. So if it’s too late to simply maintain, sustain an ecological balance, we need to restore, and renew, the broken ecological and social systems.
This is something that may be a little way off in terms of delivery, but we’re seeing more and more examples of businesses with an ambition to become a regenerative business—a bold ambition that will inevitably drive significant culture change and business model innovation:
Walmart: “The commitments we’re making today not only aim to decarbonize Walmart’s global operations, they also put us on the path to becoming a regenerative company – one that works to restore, renew and replenish in addition to preserving our planet, and encourages others to do the same.” Doug McMillon, President and CEO – Walmart
Guayaki: “The regeneration of the planet is at the heart of our business model. Every time you purchase Guayakí Yerba Mate, you’re creating a positive global impact. We call it Market Driven Regeneration™, and it’s the driving force behind everything we do”
Interface: “Our mission is to overcome the biggest challenge facing humanity and reverse global warming. It’s no longer enough to limit the damage we do, but to think about reversing it. We want to restore our planet and leave a positive impact.”
While this regenerative concept warrants a whole deep-dive in itself (keep an eye out for a coming piece focusing on this topic), the diagram below provides a helpful framing for any organisation consider where it currently is and look at ways of shifting across the spectrum.
