Sustainability as Competitive Advantage
October 21, 2021 at IE Business School
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“Leaders of business. This is your wake-up call. You’ve been living on borrowed time. Raping the natural world of its resources, and leaving a toxic mess in its place. These weather patterns are not freaks, they are the world you have created. Blinding the man on the street with your superficial innovations and image. What about the sweatshops, the emissions, the packaging, the greed? It doesn’t look good”
Sustainability is the best opportunity for business to drive smarter innovation and profitable growth.
Peter Fisk’s book People Planet Profit explores how to address social and environmental challenges through customers and brands in a way that has more impact than politicians or environmentalists ever could. It introduces a more inspired, more balanced approach to business. Full of case studies and practical tools, it is the essential guide for managers.People do not trust business. They increasingly see companies as irresponsible, greedy and inhuman. Climate change and economic downturn have accelerated new expectations.
Businesses need to reengage people, to understand their new priorities, rethink their role and propositions, work in new ways, and enable people to do more themselves. Resolving the many paradoxes faced by customers who want the best things but also to do “the right thing” and business leaders who want to grow but in more responsible ways.
There are many books about sustainability – mostly around the worthy themes of “reduce, recycle, reuse”. However this goes beyond that initial phases to “rethink” business.
It is positive not negative, about opportunities not problems, driven by creativity not compliance, a whole business challenge, not left to a few people. It is about connecting social, environment and economic challenges, to achieve a new balance, that is more different from competitors and inspiring your people. And its about building brands in way that builds capacity rather than just making sales, enabling people to do more for themselves and their worlds, rather than just buy your product or service.
People Planet Profit is about that these three agendas. But more importantly, about how they connect. How doing more for the Planet can create more for People and more for Profit. Innovation is about making new connections, and that is what this book is about, and why sustainability is the biggest catalyst, for more enlightened innovation, and more enduring growth.
- Purpose beyond Profits : Business should be about making people’s lives better, defining an inspiring purpose and turning promises into reality.
- Strategies for Growth : Business strategy must focus on finding markets with sustainable growth, creating differentiation by doing good and new business models for a new world.
- Inspiring Leadership : Leaders of the new business world are the catalysts of change, the conscience of a better business, and facilitators of rethinking and innovation.
- Conscience Consumers : There is a new consumer agenda, based around me, my world, and the world. Business must create more capacity, enabling people to do more.
- Sustainable Innovation : Resolving the paradox between what people dream of, and what is good for all of us, between what makes most money and what is the right thing to do.
- Engaging consumers : People are engaged through enlightened dialogue, building networks to enable collaborative actions, and delivering a more authentic consumer experience
- Sustainable Operations : Businesses must learn to work better together – good sourcing, transporting and producing, embracing the power of sustainable energy and technology.
- Delivering Performance : Certification, labels and sustainable impacts, linking sustainability to business results, managing business performance and reputation
- Transforming Business : Making sustainable change happen, starting by articulating a better case for change, commercial and caring, and managing the implementation
- Sustainable Futures : Leading in the new business world is about sustainable innovation and lifestyles, where business and brands are the new force for positive change
The book ends with a vision of the future business leader, Joachim Cruz, the CEO of BlueSky, an innovative travel business based in Copenhagen. He embraces the new agendas, the new technologies, the new capital markets. But he also has time to smile, to pick up his kids from school, and sit back and enjoy his home-grown glass of Tempranillo.
- Download: People Planet Profit : The Manifesto
- Download: People Planet Profit : The 7 Transformations
- Download: People Planet Profit : The Business Case
- Download: People Planet Profit : The Executive Development Programme
Covid-19 as the wake-up call
How has the recent pandemic challenged and heightened our thinking about these issues – purpose, sustainability, ESG and CSR, inequality, climate crisis and much more?
At the most fundamental level, Covid-19 has revealed three things:
1. Planet: Human activity is strongly related to climate change. The lockdown has resulted in rare sightings of blue skies from Beijing to Delhi, and worldwide CO2 emissions are predicted to fall by 8% in 2020.
2. People: COVID-19 has been hailed as the “big equalizer,” but the reality is that we aren’t equally resilient as a society. Socio-economic status is strongly related to vulnerabilities of all sorts, with the poor and underprivileged in harm’s way to a disproportionate extent.
3. Profit: We cannot survive for long without economic activity and the creation of financial value. Millions of businesses are failing in the face of the pandemic and as many as 40% of businesses may not reopen after this disaster.
In essence, we need to manage climate-related risks, strengthen our social fabric and inspire economic activity that creates value for humankind if we are to create a world that is sustainable and well-equipped to combat impending crises.
So what will it take to achieve this symbiosis between people, planet and profit – also referred to as the “triple bottom line” – in contrast to the single bottom line of profit alone?
For starters, we must accept a basic truism: in a world of finite resources, maximizing private gain inevitably leads to collective loss – that is, the loss of common goods, a phenomenon known as the tragedy of the commons. For example if, in a bid to boost profits, global multinationals build and run factories but do not pay for the pollution they create, we get global warming. The collective is more important than the individual.
If Covid-19 has taught us anything about how to surmount our socio-environmental challenges, it is that each one of us – as individuals, companies or governments – needs to take ownership of our future. Being a bystander is no longer an option. Yet, if you’re like one of the thousands of executives I have encountered over the years, you likely believe that sustainability – that is, the wellbeing of our planet and its people – is important, but it’s “someone else’s problem”. In companies with a sustainability department, everyone points to that department as being responsible for everything sustainability-related.
Why is it that something as important as sustainability is given short shrift by so many in the corporate sphere? Over the past years, I’ve visited dozens of large, publicly listed companies and spoken with hundreds of employees to try to find out. I’ve been to head offices, mines, stores and factories, travelling from Madagascar to India to Chile’s Atacama Desert.
1. Find more purpose
To take ownership of our post-pandemic future, businesses must start by asking the all-important question of corporate purpose – or “why do we do what we do”? Leaders must articulate how the firm creates value for all stakeholders, not just shareholders, and accept that profit is the consequence of such value creation. This process of defining purpose makes it clear that businesses exist to serve society and not the other way round, and the link to sustainability becomes clear. As Paul Polman, ex-CEO of Unilever, said: “Sustainability is totally driven by purpose. It starts with the overall firm belief that we are here to serve society … and only by doing that well, we can make all our stakeholders, including our shareholders, happy.”
How can leaders discover that “true north” – their company’s purpose? Often, it happens via epiphanies or first-hand experience on the front lines. Francesco Starace, the CEO of Enel, one of the largest energy companies in the world, had his epiphany while working in the Middle East in the mid-1980’s. He realized that an energy company’s job was not to foist new habits on people, but rather to enable them to do what they wanted to do in the first place. Crossing an emotional barrier, as Starace did in the 1980s, and identifying with a company’s purpose in a new and personal way enables leaders to build their own sense of sustainability ownership and address the critical problems of our world. “Sooner or later,” as Starace told me, “you have to face up to the facts about why you do what you do.”
2. Engage all stakeholders
Armed with a sense of purpose and a set of concrete sustainability goals, your company is ready to create motivation and ability among your stakeholders, and to help integrate those sustainability goals into their daily work routines.
Market sustainability to stakeholders as an opportunity to contribute to the future wellbeing of the company and the world. To entice employees and other stakeholders to engage in sustainability, appeal sometimes to the head (this is the smart thing to do), other times to the heart (right thing to do), and often both. Lisa Jackson, vice president of environment, policy and social initiatives at Apple told me: “The easiest and most fun part of sustainability is when you can go to the business – as we have done now several times – and say, ‘It will save you money to reduce the amount of scrap metal that is produced. It will save you money to think about packaging in a different way’.”
Alongside motivation, you also have to create the ability to act sustainably. Increase the capability of your workforce by putting systems, structures and training in place that make it easier to act sustainably. Give your stakeholders the tools, confidence and freedom they need. In a word, make sustainability everybody’s job. “If there’s one exception, everyone thinks they’re the exception,” said Keith Weed, Unilever’s chief marketing officer and head of sustainability at the time.
3. Achieve more together
Form broader industry collaborations to address complex problems. Such collaborations, often with traditional competitors, help create the systemic changes that our planet and its people need – and that businesses need, too. “If everything fails around us, we fail too,” said the chief sustainability officer of Marks & Spencer.
Topics such as deforestation, effluent in waterways, or buying minerals from the Congo can only be addressed by a consortium, in which each party, again, needs to rise above self-interest and think about the wellbeing of the collective. Paul Polman has been quick to point out: “We don’t have the right level of cooperation at the global governance level to deal with these issues, and I hope that the business community will step up and fill that void.”
Watching the pandemic unfold before us and seeing both the healing effects of our slowed economic activity on the skies and our planet as well as the horrific plight of our fellow human beings, leaves most of us “uncomfortably numb” and yearning to do something about securing the future. Issues such as global warming, inequality and poverty – as outlined in the SDGs – are gaining urgency. Taking ownership of addressing such issues should form the new leadership mandate.
More from Peter Fisk
- Article: Adidas to Allbirds – sustainable fashion brands embracing the circular economy
- Article: Upcycling. Reinventing fashion to be more sustainable, interesting and unique
- Article: P&G’s Ambition 2030, sustainable innovation as “a force for a good and a force for growth”
- Case study: Agua Bendita. Handmade swimwear from the colourful scraps of Colombia
- Case study: All Birds. The world’s most comfortable shoes
- Case study: Bolt Threads. Synthetic spider silk for a better luxury world
- Case study: Positive Luxury. The butterfly mark you can trust
More from outside
- Report: New Green Radicals: Alstom to Toast Ale, Loop to Lush, TerraCycle to Triodos
- Survey: The World’s Most Sustainable Companies 2020: Denmark’s Orsted tops the list