BUSINESS BEYOND BREAK-EVEN SUSTAINABILITY

 

Synopsis: It’s here, part two of Elin Enfors-Kautsky’s white paper on why the Anthropocene – the geological era of humankind, is a game-changer for all businesses.

 

To succeed as a company in the Anthropocene, sustainability needs to be at the heart of all business development. But we need to think differently around sustainability than what we have done in the past, since current sustainability approaches will not be able to generate a competitive advantage that is impactful enough, for several reasons.

The first problem is the discourse itself, which is set up and maintained in a way that hampers innovation. Since the 1990s, when issues around sustainability started to become a concern among companies, the discourse has largely been driven by compliance arguments. The rationale for working on sustainability for companies has largely been about adapting to standards and regulations forced by someone else, for example adjusting emission levels to comply with existing environmental protocols. From a societal perspective, compliance is, of course, necessary, but it will not drive business in any other way than through optics, i.e. it may “look good” to customers or investors, but that’s all. Although this argument is a bit simplified, and other reasons for working on sustainability in companies, such as resource efficiency and loyalty among employees have also been part of the discourse, the compliance argument has been the main driver. This has led to sustainability approaches that in a fundamental way are non-visionary and nowhere near as innovative as they have to be to bring about any real competitive advantage. No wonder, since the main goal has been to adapt to existing regulations, arrived at through lengthy and watered-out political compromise that only ever will make the world a bit “less bad”.

Another problem, which follows from the first, is the focus on reporting as the structuring mechanism for the practical sustainability work in many companies today. Of course, since the main reason to work with sustainability is perceived as being related to compliance and optics, reporting naturally becomes a very important task. It is about accountability. Did we follow the rules? Did we do what we promised? Did we take our responsibility? And so on… And there is of course value in that, for transparency reasons, and more. But the problem is that reporting, by its very nature, is backward-looking. There is absolutely nothing strategic about it, and as such, it won’t be able to drive new business and generate enough competitive advantage. Here I think conventional sustainability consultants are partly to be blamed, as they over the past decade have been able to live very well selling increasingly complicated reporting frameworks and metrics, tying up all sustainability resources that companies consider themselves to have, to produce an annual report of what was done in the past. This framing and focus have reinforced the long-lingering myth that sustainability is, by default, costly, as countless sustainability managers have experienced trying to convince their CFOs about the business for sustainability. It has also contributed to the continued silo-approach to sustainability prevailing in many companies. This prevents both progress and impact as sustainability continues to be seen as an add-on and not as an integral part of the business venture.

Today, we live in the hyper-connected and rapidly changing Anthropocene where human action for the first time ever affect basic functions of our planet, where we use up more resources than the Earth produces, and where we (despite opportunities and wealth that previous generations only could dream about) face a new set of severe social challenges. The Anthropocene is a game-changer for all businesses, making sustainability a prerequisite for success. Not because of compliance requirements or optics, but because typical trends of the Anthropocene like climate change and the COVID-19 epidemic directly affect the bottom line in many companies. Thus, to succeed in the Anthropocene, companies need to gear up their sustainability work, but this requires shifting the focus:

First, companies need to move away from the low-performing focus on regulatory compliance and reporting that dominates current sustainability work, towards more strategic and innovative approaches that are based on an accurate and up-to-date omni-view of what is really going on in the world today, and where sustainability becomes a real engine for business development. Here, we must address the elephant in the room – Agenda 2030 – currently seen as a leading charter for sustainability work across the business sector. While Agenda 2030 has been tremendously successful in creating a shared understanding of some of the challenges that the global community faces today, it should be seen for what it is; a five-year old political compromise (that even oppressive regimes felt that they could agree to), containing a minimum level of undisputable problems that we have to tackle to ensure our common future. Basing your sustainability strategy on this framework only, which both lacks a set of critical sustainability dimensions and several facets of the exponential change that we currently experience, is neither forward-looking nor innovative enough, to place you among the frontrunners in the race.

Second, in addition to developing forward-looking and innovative approaches to sustainability, companies today need to set their target right. There is ample research evidence showing that companies that really are good at sustainability are more profitable than others since they are less wasteful with resources since they handle risk better and since they have more loyal customers and employees. But the real opportunity lies beyond this and will only be open to companies that aim beyond what we call “break-even sustainability”. To those that do not try to adapt to the current context, where maximum impact just is being “less bad”, but instead actively engage to transform the world for the better and find a way to drive their business while doing so. In short, the future belongs to companies that honestly can say that they have a positive impact on our planet, and on people’s lives. This is what the goal must be for companies striving for success in the Anthropocene, and the focus of our work at Prosperous Planet AB.

Founder and CEO at Prosperous Planet AB | Former Stockholm Resilience Centre scientist