Thoughts On Piers’ “Why Build Sustainability into your Business”

  • 29 november 2007

A recent post entitled ‘Why build Sustainability into your business’ highlighted some great profit centred arguments for building sustainability into business strategies. The basic premise behind them being that “greed got us into this mess and greed will get us out”… “being green means making more profit”. Piers Fawkes illustrated this paradigm with some exciting contemporary examples of win-win scenarios arising from corporate responses to the sustainability agenda. Yet there seems to be something rather unsettling about the notion that our last hope should be greed. Einstein once said that you can’t solve a problem with the same thinking that gave rise to it. Was this to be the exception?

In the late 1950s and early 1960s we saw the mass produced, mass prescribed drug Thalidomide given to tens of thousands of pregnant women to combat morning sickness, resulting in a generation of children born with severe malformities including phocomelia. Last year we saw results published confirming that yet another widely distributed antidepressant (Seroxat) was shown to actually increase the risk of suicide in adults and teenagers alike, and last month Scientists found traces of poisonous pesticides in 70% of samples of free fruit and vegetables destined for schoolchildren. Add this to the unimaginable damage caused by our simplistic linear economic systems that extract resources at one end and pollute and dump at the other, and you can’t really blame consumers for being sceptical about companies having our best interests at heart. Yet Peter Drucker reminds us that our opinion really does matter; it has always been the customer who determines what value a brand has, and whether it will survive:

“It is the customer, and he alone, who through being willing to pay for a good or a service, converts economic resources into wealth, things into goods. What the business thinks it produces is not of the first importance—especially not to the future of the business and to its success. What the customer thinks he is buying, what he considers ‘value’ is decisive—it determines what a business is, what it produces and whether it will prosper.”

This is especially significant now that consumers are looking for ways to become change agents in the context of global social and environmental issues… yet leveraging this requires companies to build a more fundamental form of trust among consumers. We, the customer, have not only to believe that companies are genuinely committed to helping us overcome global issues, but also that they are doing it for the right reasons. The idea that corporate strategy was the simple mechanistic product of a cost benefit analysis, although probably true in most scenarios, doesn’t really tell us that they now have our best interests at heart. We want to see them doing the right thing even where the ‘balance sheet says no’. This means adopting a longer-term perspective.

Too much focus on the bottom line has historically led to short-termism and has been attributed to the failure to capitalise on many fantastic brand-building opportunities. Elkington pointed out that in 1991 many green technologies remained uncommercialised simply because their payback period was longer than that of conventional alternatives. There’s also the very common mistake of values only finding expression in areas where they make short term economic sense, leading to compartmental ethics, and resulting in conflicting brand messaging. Ray Anderson also talks about how, for similar reasons, accountants often miss the bigger picture:

the accountants can never get there on the investments in photo voltaics today. If the market place is telling us they’ll buy it, who cares if the electricity costs a little bit more. So we put on our marketing hat and it becomes an easy decision to invest in solar made carpet.”

Many of the word’s leading strategists also argue that obsession with efficiency and costs doesn’t necessarily lead to competitive advantage, and that instead, competitive advantage is derived from a company’s desire and capacity to change.

“Detailed case studies of hundreds of industries, based in dozens of countries, reveal that internationally competitive companies are not those with the cheapest inputs or the largest scale, but those with the capacity to improve and innovate continually.” (Porter, 1995).

A rationale for this philosophy was brilliantly encapsulated by the ‘creating passionate users’ blog:

Another thing that the profit driven approach often overlooks is the human element. Businesses are made of people, and people are motivated and inspired by more than just money. To this end, sound ethics and forward thinking business values can help inspire higher levels of productivity, participation, creativity, loyalty and retention, and can improve a company’s ability to attract the best talent.

What this all points to is that, although an understanding of how going green can benefit companies economically is undoubtedly a catalyst for improvement, they’ll enjoy it more and have a much greater chance of success if their efforts are not driven by greed, but by a genuine and holistic desire to change, stemming from a shift in corporate values in response to global social and environmental agendas. This requires companies to look beyond cost structures and profit margins, and like Ray Anderson (who Piers credits for pointing out that sustainability is not the holy grail), to really think about how to profoundly re-engineer their operations into formats that are more compatible with nature, building on their ability to make a positive impact on individuals, communities and the environment.

+Customer retention
+Environmental / Green

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