What’s your gut reaction when you think of the term ‘sustainability’? Do-gooders and greenies? A ‘nice to have’ when times are good? Or innovators at the forefront of change?
Unfortunately here in New Zealand the term ‘sustainability’ has been misunderstood and even politicised. For some, sustainable solutions have been linked to pre-recession times when business felt flush and generous. Then, sponsorships were flying and NGOs were actively supported by both business and government. This type of ‘Socially Responsible’ activity is very generous and much needed, but often limited to the good times of business.
For many businesses, unfortunately, this narrow view of sustainability has put them off taking a good look at the clever strategy that sits within sustainable practice. Sustainability has been tainted with the notion that it is costly, a ‘nice to have’ when you can afford it, too complicated, or that there is no value to business anyway.
Whether you use the term sustainability or not, it really doesn’t matter; essentially it’s about future-proofing business – meeting current or emerging markets, improving productivity and resource efficiency, innovating, and in some cases creating new enterprise. What was once the territory of ‘do-gooders’ and ‘greenies’ has become synonymous with innovation and entrepreneurialism. It’s now the preserve of business leaders at the cutting edge of progress.
We’re entering a period of massive change. John Elkington, founding partner of Volans, who coined the phrase ‘Triple Bottom Line’ 20 years ago to refer to the financial, social and environmental ‘bottom lines’ of companies, wrote last month that we’re on the cusp of a major shift in thinking. Whereas once sustainability was largely driven by people outside the economic mainstream and was fuelled by bottom-up pressures, the tide is now turning. It’s now embraced by business insiders, driven by top-down dynamics and “critically, focuses on future market opportunities—not just tomorrow’s bottom line but also on tomorrow’s top line and growth opportunities”.
Colmar Brunton CEO Jacqueline Ireland says we are also seeing the beginnings of a seismic generational shift that will drive sustainability into the future. Colmar Brunton’s 2013 Better Business Report revealed the need for businesses to cater to the increasing desires and purchasing power of Generation Y Kiwis. Generation Y “are the consumers of the future so businesses that do not take note should beware,” says Jacqueline.
The issues and challenges facing business today are enormous. According to Paul Polman, CEO of Unilever, they include the shift of power to the East and South that is transforming the world economy; growing citizen power enabled by rapidly changing technologies; and the pressing need to operate within environmental limits.
What impacts big business like Unilever has potential knock-on effects for many, many suppliers and customers, which is why, when systems are failing or faltering, they require re-examining, by bringing together key people and organisations to collaborate on a solution and creating a tipping point. I can cite many examples where systems are failing here in New Zealand: food systems, with increasing environmental stress from intensifying farmland; resource waste, with over-full landfills; services that no longer meet community needs; and failing transport systems.
At the Sustainable Business Network we’re examining these systems using a new framework called System Innovation, developed by our UK partner Forum for the Future. It’s a practical approach to tackle complex issues and is being used around the world by companies such as Unilever, Nike and Marks & Spencer to address business value issues internally. This will be the first time it has been used in New Zealand, and we will be working with companies such as Hubbards, Fisher & Paykel Healthcare, Inzide and Auckland Council, which are already ahead of the game in many areas. Inzide, for example, collects old carpet tiles from customers and sends them back to the manufacturer where they are stripped and remanufactured into new carpet tiles.
We’ll be applying System Innovation to four new work streams – NZ’s food system, smart transport, embedding social value into business models, and the circular economy – to identify business opportunities for New Zealand. If you’d like to find out more, come to the launch at our national conference, Project NZ: #theBIGShift, in Auckland on 17-18 September.
Business needs to remain of service to society – after all, business is a collection of people serving a market of people. Therefore to retain a license to operate business needs to understand the issues humanity faces. If you lose your human connection in today’s world you will fail.
Don’t let yourself be led astray by connotations of the term ‘sustainability’. The ‘S’ word isn’t a dirty word in business. For us, it stands for Smart. Change is afoot in the business world, so make sure you stay smart and don’t miss out on the opportunities ahead.
CEO, Sustainable Business Network
This article was published in the National Business Review on 13 June 2014.