The Nature of Business
It's easy to feel lost and even paralysed by the amount of bad news we see every day in the media concerning the environment. Climate change, biodiversity loss, plastic pollution, ocean acidification. All painful and complex problems that no one seems to be prepared to deal with.
Especially if you, like me, chose the field of Business Management and Marketing as a career. My thing was to understand the dynamics of markets, to anticipate consumer needs, to develop advertising campaigns or new product launches. A challenge was to revert an abrupt market share loss or to fight an aggressive competitor… But to face mass extinction of species? Not in my job description!
Staying oblivious to the environmental effects of the prevailing economic system that asks for infinite growth on a finite Planet doesn't seem to be an option anymore. Most of it due to the connected world we live in, which not only enables higher visibility of those challenges but also helps to join the dots with the responsibility of governments and businesses.
As a result, increasing consumption of sustainable products and services is observed across industries, which is confirmed by a recent Accenture research that points out that 63% of consumers globally prefer companies that take a stand on social, cultural, environmental and political issues they care about. And according to a previous study from Nielsen, those numbers are even higher for the younger generations, indicating 73% of global millennials are also willing to pay extra for sustainable offerings.
Imagine what can be expected from the generation Z (born after 1995) if, even without the purchasing power, they are already making noise leading school strikes and government petitions to make sure their concerns with the Planet are taken into account by the whole society.
Yet, some businesses still presume these mobilisations are niche trends, and prefer to continue living in an impermeable bubble, focused on their respective industry, their current consumers, and prioritising the short-term results. For those, that perception will end with the inevitable arrival of new regulations that will burst the bubble of everyone who is not fit to respond to the new business scenario. Which in my view, we have seen only the tip of the melted iceberg, in the form of single-use plastic bans, discussions about carbon and meat taxes, or declarations of climate emergency from some governments.
And I'm pretty confident about that because unfortunately, there is no indication that any of the conditions that have made those environmental problems possible are going away, or even diminishing — actually, quite the opposite.
Last July, we experienced the hottest month in history. We also got a new record for the Earth Overshoot Day, the past 29 July, the day we have exhausted all natural resources the Earth is able to regenerate in a given year. As a business parallel, it's like after 29 July there is no more budget to respond to the commitments until the end of the year. We should all go home and live with what we have produced and acquired until that day, to finish the year at a break-even point.
Sadly, that's not an option. The show must go on. So, since 30 July, we have entered a sort of “debt spiral”, borrowing resources from future generations, without a clear plan on how to pay them back…
A new role of business
Business is a great human invention. It can play an incredible role in society, as many do. Beyond providing goods, services, jobs, and being the engine for economic development, it can be a vehicle for exchange, a space to bring to life our creativity, to connect with others, a collective force of change, a source of solutions. An entity with the potential to be the most powerful ally to resolve the monumental challenges that we have ahead of us.
And there are good advancements in that direction. Many big and small companies are now talking about the importance of having a purpose, a reason to exist beyond the solo pursuit of profit. Which is proving to be an excellent vehicle to drive growth, as the Unilever CEO, Alan Jope, has stated earlier this year, by claiming that in 2018 the brands with purpose grew 69% faster than the rest of the business. Even the Business Roundtable, a lobbying group composed by American leading CEOs, has announced a few weeks ago their commitment to move away from shareholder supremacy to enable a new culture that adds value to all stakeholders.
All very promising. Yet, to deliver the changes we desperately need businesses to lead, we need to make sure "purpose" doesn't end in the Marketing department, in the form of an advertising campaign that supports a social cause once in a while, or as a one-off promotion that gives a fraction of its revenue to a particular NGO.
The same with the Sustainability Plans that are now populating every company's website, full of good intentions to cut waste or to reduce CO2 emissions at some point in the future. Most of these goals are still treated as an obligation disconnected from "the business as usual." A set of targets managed mainly by the Sustainability or Corporate Social Responsibility Department, whose accomplishment is not always considered as an integral part of the business success.
The urgency of the environmental crisis we are already experiencing requires structural change. It demands to interrogate the relationship of business with the world, with nature, with society, to add purpose and sustainability at the heart of the business strategy. As a leadership responsibility that informs every decision, and as a new framework for business to thrive.
A little less conversation and more action
The growing Certified B-Corps movement is an excellent example of this new framework for business. To obtain the certification, companies need to report their entire social and environmental performance, the impact on workers, on the community, on the environment, and on customers as well as to meet high standards on all these parameters. So I feel hopeful when I see big corporations such as Natura, the owner of Body Shop and Aesop, becoming a B-Corp. Also leading brands like Patagonia that for the past years has been proving that integrating sustainability with everything they do - Patagonia's new bold Mission Statement says "We’re in the business to save our home planet..." - can invigorate innovation, grow sales and generate brand value.
Having a holistic view of the impact of business in the world more than limiting possibilities, should open up a whole new springboard for the development of goods and services that, across the whole value chain, consider the effect on shareholders' pockets as much as the effect on the environment and on people's lives.
The barriers that many companies face today to implement sustainable practices is often the result of asking the same system that created the existing problems - more profit equals more volume equals more resources - to promote solutions that jeopardise the system itself. We want to eat the cake and keep the cake. Or burn the forest and keep the forest.
We need to rethink the foundations of the prevailing business models to enable new ones. The ones that have sustainability and regeneration at its core, promoting repair, restore, re-use. Or any other circular economy practice that challenges the need to continue feeding the consumerism machine in order to succeed - which has been the mother of Mother's Earth problems.
The clock is ticking. Although it's reassuring to see the rise of many green start-ups and small sustainable companies, the fact is that the bigger the business, the bigger the impact. So, to really move the needle, or the thermometer, big businesses are the ones that need to embrace and accelerate this transformation.
Encouragingly, some of them are already testing the waters and showing this is possible. For instance, Ikea, the largest furniture retailer, in order to reduce waste, has launched earlier this year a pilot subscription model in Switzerland, where people can lease everything from office chairs to kitchen cabinets. With the same intention, Cif, the Unilever cleaning brand, has just launched in the UK a new product called eco-refill that allows using one spray bottle for life through re-use and re-fill, pioneering a new format in the category.
Actions like these are hopeful because they demonstrate that when businesses put their efforts behind understanding where they actually add value – offering the experience of modern furniture rather than the modern furniture itself; or cleaning products rather than cleaning product bottles - with holistic lens of their impact in the world, they are able to re-invent themselves and find new operating systems that can benefit both Profit, People and Planet. They future-proof the business through contributions for a better world.
Reframing the role of business and putting it back to a virtuous place in the history of humankind is not a walk in the park. But it’s the type of challenge that should make us rise to the occasion, attracting the best talents, the most creative minds, and the latest technology advancements.
Because there shouldn't be anything more rewarding than being part of the movement that transforms business as a force for good, and that contributes to guarantee the future of this and the next generations.