Better Business Better Future — the introduction
This is an edited excerpt from the introduction of the book Better Business Better Future, by Elisabet Lagerstedt (2022). First shared on Medium.com
“The sustainability revolution has the magnitude of the agricultural and industrial revolutions but the speed of the digital revolution.”
In The Future We Choose, authors Christiana Figueres and Tom Rivett-Carnac — who led the United Nations’ (UN) negotiations during the Paris Agreement of 2015 — outline two futures for humanity in 2050. One describes a dark and gloomy world in which we fail to meet the Paris Agreement’s climate targets. The other paints a more positive picture of a regenerative world with net-zero emissions. They also show that the latter is possible if governments, corporations and each and every one of us work to fend off disaster and grow on the way.
In the face of this massive adversity, it is, of course, easy to feel too small to make a difference. But instead of seeing our potential contribution as limited, we need to realise that our zone of influence as corporate business leaders can be much larger than we tend to think. This is because the world of corporate business is particularly well equipped to help solve the problems of the world through the ingenuity, creativity, collaboration and resources that it can so often call forth more effectively and efficiently than other human organizations. And we, as corporate business leaders, can go far beyond demonstrating in the streets. We can actually move capital, minds and action, and cooperate to nudge consumers into making choices that co-create the healthy future that we want and need for our business, humanity and the generations to come — our own children and grandchildren included.
Because the digital revolution is now being followed by a sustainable one, the message from the World Economic Forum is clear: “Like the digital revolution before it, the sustainability revolution promises to change everything. Yet, just as with digital, many companies are moving too slowly, taking an incremental approach to a challenge that demands a radical rethink.” The pandemic only seems to have accelerated the trend. In the wake of this development, some real and important change is happening, but we are also seeing a flood of seemingly empty promises and greenwashing from businesses across the globe.
What has been especially striking to me in the deep dive into relevant research and reports for this book is that the emergency that we are now experiencing in the field of climate change and biodiversity loss is far from new. The first conclusions from the ambitious undertakings of The Club of Rome, published in their 1972 report The Limits of Growth, Medows and collegues, clearly outlined the challenges and predicaments of modern society.
The same year, the world’s first global conference on the human environment was held in Stockholm, the capital of Sweden. There, the participants adopted principles for “sound management of the environment” based on the scientific findings and insights of their time. Already there was an understanding of the link between economic growth and the pollution of the air, water and oceans and the well-being of people across the globe.
These insights, however, seem to have taken far too long to trickle down to other members of society, including policymakers, entrepreneurs and corporate business leaders across the globe. And since the 1970s, growth has increased exponentially, lifting billions out of poverty, but at the same time accelerating the environmental damage to all life systems. Hence, we have not been able to decouple growth from its negative environmental impact.
In this VUCA (Volatile, Uncertain, Complex and Ambiguous) world of accelerating change, global warming and biodiversity loss, a transformation beyond business as usual is, however, both urgent and important. 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 realise 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 realise 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 behaviours 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 licence 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”. BlackRock have 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-sus- tainable 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.”
Many companies are facing not only increasingly demanding investors but now also nimbler and more adaptive startups 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 realised 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 mod- els 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 realised 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.
Interestingly, no single industry seems to have risen above the masses and taken the lead in this transformation — at least if you study aggregated ESG measures going back a decade, which have not improved substantially over time and are surprisingly even across industries. It is, however, clear that some industries now experience stronger transformational forces than others, with the energy industry being in the middle of this vortex.
What has become increasingly clear to me, however, is that sustainability is not “only” a matter of transformation. It is rather a multi-dimensional journey that changes as our world changes and evolves over time. The transition to a low-carbon economy will take decades, but the future starts now. Only if we dare to listen to our hearts and visualize the future that we want, play our cards right, change our consumption patterns and utilize the progress in technology and innovation for good, will we be able to co-create a better world and companies fit for the future.
This will, however, not happen by itself. As business leaders, we will simply need to embrace this unique situation with all its opportunities and threats, roll up our sleeves, and step up to the challenge on both strategic and operational levels going forward.
As a first step, we will need to build Better Business. Yes, you guessed it right. Patagonia is already there, but now keep evolving even further.
The text you have read is an edited excerpt from the book Better Business Better Future by Elisabet Lagerstedt (2022). Sources to citations above are available in the book.
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