4 Big Ideas in Sustainable Business
Green initiatives have taken root in the corporate world. Rising numbers of companies have promised to cut emissions, protect forests and watersheds, reduce food waste and take other steps to ensure a sustainable future for all. While President Trump recently decided to withdraw the United States from the Paris Agreement, over 900 American companies announced that they are still in. Behind this momentum are passionate CEOs, conscientious consumers and an increasingly purpose-driven workforce.
It’s an exciting time—but there’s still much to do before business, people and the planet reach equilibrium. In mid-May, we brought together our corporate partners for MindShare, two days of open discussion on the challenges and opportunities that lie ahead. As the communications lead, I was listening for trends, shared attitudes and big ideas. Here are four themes that emerged.
1. Follow the science
Science-based targets are quickly becoming expected practice among leading American and European companies. When the Science Based Targets initiative launched in 2015, only 40 companies had promised to shrink their carbon footprints to sizes that are compatible with the global goal of limiting temperature rise to less than 2 degrees C (3.6 degrees F). Today—only two years later—more than 266 companies have made this commitment, with new companies joining at an average rate of two per week. Nearly 50 companies, including household brands such as Walmart, PepsiCo and Procter & Gamble, have taken the commitment to the next stage by adopting specific, ambitious targets that have been approved by climate experts.
The next step is to apply this concept to water. Unlike targets for emissions, which are global in nature, water use targets must be tailored to local conditions. It’s a tricky task. Companies must ask, what are the limits of our watersheds? Who else relies on them? How do we sustainably operate within those limits? For companies with massive water-use needs, such as fabric mills which typically use 200 tons of water per 1 ton of fabric produced, addressing these questions can mitigate serious operational risks and protect local communities.
It’s clear that corporate leaders want reassurance that they are doing enough to protect the resources that keep their companies running and that other companies are doing their fair share, too. Arbitrary goals may placate stakeholders, but they won’t stabilize the climate or ensure a long-lasting water supply—only science-based goals can do that.
2. We need new business models for tomorrow’s markets.
Between 2009 and 2030, the global middle class is projected to grow by 3 billion people—that’s 10 times the U.S. population. This represents a victory for human development and an exploding market for consumer goods—but also a looming ecological crisis. The elephant in the board room is that companies can’t meet this demand with today’s resource-hungry business models.
Some believe that we can thread this needle with efficiency improvements, but our recent research says otherwise. We are on track to triple our use of natural resources by 2050. It is unlikely that businesses can make their products efficiently enough to keep total global resource use constant with today’s levels. The solution: embrace new business models, such as those that allow customers to share and repair physical goods. For example, we need more high-quality, affordable clothing rental services and less cheap fast fashion piling up in landfills.
3. Get savvy with marketing
Sustainability professionals often bemoan the fact that consumers are unlikely to purchase products for their environmental benefits alone—but this does not mean that customers can’t be champions of environmentally-friendly products.
The Better Buying Lab studies how the same marketing techniques that make potato chips fly off the shelves can drive sales of sustainable food options. Shopping is rarely a careful, rational process—it is what most people do on autopilot on their way home from work at the end of a long day. Thus, people tend to buy:
- What they’ve bought before
- What they remember
- What is socially normal
- What they notice
- What meets their needs
Sustainability leaders should ask, “How do we work with shoppers’ known behaviors to drive sustainable consumption?
[The Better Buying Lab’s Shift Wheel can help companies develop an effective marketing strategy.]
4. We’re in this together
You can’t compete for customers if you don’t have resources to make your products. That’s why some competing companies are banding together to tackle environmental risks. For example, in 2010 the Consumer Goods Forum, which represents more than 400 retail and consumer goods companies, approved a resolution to achieve zero net deforestation by 2020 (the group has made some progress, but many companies are still trying to turn this resolution into internal policy.)
Most MBA students have played some version of the Prisoner’s Dilemma, a game where players are tempted to undercut each other but are best served by a collaborative strategy. The same is true with businesses facing resource issues. No single company can solve climate change or save the forests, but together entire industries can make progress against social and environmental challenges while creating more favorable conditions for themselves.
At MindShare, we heard attendees asking: How else can we collaborate? What else could we solve if we worked together? This mindset may characterize 21st-century business leadership.