Sustainability is something that concerns us all
Sustainability can be defined as development that meets the needs of the present without compromising the ability of future generations to meet their own needs. At least as to the UN Bruntland Commission report ‘Our Common Future’ in 1987. By executive management teams and boards, sustainability has long been considered something outside of the core business. But times are changing.
Sustainability is no longer something for conscious consumers and brands in some of the most developed countries in the world but something that concerns us all. Across the world. Across industries. It should have been since the beginning of the industrial revolution. As corporate business leaders (and consumers), we have seriously contributed to the dire situation that our planet is currently in. We have far too long left it to others to solve the problems that we have created. But what got us here will not get us into the future. We must realize that the challenges ahead are bigger than what we could have ever imagined and rethink how we do business so we can hand over a thriving planet and society to the coming generations.
We also need to realize that this is not only about climate change (as if that was not enough). Consumers are already taking social and environmental issues more seriously and rewarding businesses and brands that do good, even though they still have major challenges in adjusting their own behaviors and consumption and need our help in doing so. This will increasingly be embraced by purpose-driven companies and brands that aim to ‘build back better in the post-pandemic era. The companies that aim to rebuild a more equitable and greener world will not only unlock new business opportunities but also gain competitive advantages and be rewarded with renewed trust and a social license to operate.
Today, even investors have come to understand that the values they have built up over the past century may be at risk if corporate leaders fail to act and ESG (Environment, Social and Governance) investment is gaining ground. BlackRock, one of the world’s leading investment firms with a focus on sustainability, can testify that the investor community is waking up: “[They are] driven by an increased understanding of how sustainability-related factors can affect economic growth, asset values, and financial markets as a whole”.9 BlackRock has also stated that they will proactively challenge companies that are not pursuing this agenda. Already today, there are no contradictions between sustainable returns and sustainable investments. On the contrary. As the CEO of Credit Suisse told CNBC, “In many cases, sustainable investments are actually higher returning than non-sustainable investments.” He added, “I think companies that are behind the curve in terms of sustainability, they are already forced to pay higher cost of capital.”10
Many companies are facing not only increasingly demanding investors but now also nimbler and more adaptive start-ups and new competitors that are less wasteful and damaging to the environment – and not afraid to say so to challenge the establishment. Others have their own customers asking for more sustainable solutions, or employees and future talent requiring transparency and action. Many have realized that sustainability will need to be an integrated part of their core business as they strive to stay relevant and fit for the future. Some have completely transformed and changed their business models already. A few even aim to become fully regenerative and planet positive. Most companies have at least found that applying some of these principles to their own businesses has helped them reduce risk, become more effective and efficient, and at the same time attract both customers and talent. Also, many have realized that the sustainability revolution is opening vast new business opportunities. Amazingly though, far too few are really on the ball. Several studies have shown that we are still seeing more talk than action.
Read more in my coming book Better Business Better Future (late 2021).