Sustainability Is The Largest (And Only) Opportunity Of Our Times
We have no choice — here’s why
According to the World Business Council for Sustainable Development (WBCSD), sustainability focuses on the long-term context, a concern for future generations, leaving our people and planet better than it is today, hence, “sustainable”. It is a crucial mission, but as I’ve always said, the task at hand is challenging given its complexity — sustainability is interdisciplinary — you cannot generate actual solutions with a siloed-approach. Sustainability not only encompasses a triple bottom line that includes economic, social, and environmental considerations but with many overlaps and intricate connections in between. Sustainability cannot happen in isolation and requires a coordinated approach from businesses, investors, civic groups, global citizens, and governments.
2020 has witnessed the most tumultuous legacy of both environmental and social challenges, and perhaps the connection between the two. From COVID-19 to Black Lives Matter to Fridays For Future and everything in between, sustainability is finally being recognized as the only solution we may ever have to recover — and stay that way. In other words, I would say sustainability has finally started its journey of soon becoming mainstream through the following themes:
Consumers want sustainable products and are influencing their purchasing decisions accordingly. More than 2/3 of millennials will pay more for products from sustainable brands, according to Nielsen. For example, reducing plastic has become more of an incentive to purchase a product over the price. Brands like The Sustainabilista™ plants a tree for each product purchased while having a strict returns/exchange policy to bolster environmental stewardship, not to mention that their product designs are 100% fueled by the sustainability movement. To date, the company has planted hundreds of trees in the world’s most deforested and vulnerable regions with its global partner networks, improving the health of the local environment while empowering local economies through job creation. Just like the move towards being GMO-free or organic, being plastic-free could become a competitive differentiator.
However, some brands might be boycotted by consumers if they are perceived as unsustainable, from the controversial use of palm oil to greenwashing marketing and PR campaigns.
Iceland has led the charge for sustainable shopping by banning palm oil and removing plastic from own-brand products, citing growing demand for the oil was devastating tropical rainforests across southeast Asia. However, some Icelandic retailers supplying outside of Iceland may still use palm oil in their products. Starbucks recently came under fire for banning plastic straws only for consumers to point out that its plastic lid replacement actually used more plastic.
Sharing economy platforms are also accelerating, largely due to the pandemic, taking advantage of users’ new needs of prioritizing access over ownership. If a product is underused during its lifetime while it sits idly at home, it makes sense to be used by other people. Making better use of products during their lifetime reduces acquisition and, thereby, production, which stays in line with the UN’s SDG#12: Sustainable Consumption and Production. Some ventures like Rnters, a rental marketplace for everyday items, and Omocom, a full-stack digital insurance solution for the circular economy, reflect these new, much-awaited, sustainable consumer trends.
Talent is moving to employers that place sustainability at the core of their strategies and action plans. The need for sustainability is now being felt in the workplace more than ever before. About 75% of millennials want a job where they feel there is a sense of purpose towards people and the planet, according to Deloitte’s annual survey. Professional services firms whose business model relies on selling their talent through advice and counseling have been the first movers to keep an edge on talent acquisition, who’ve realized the shift in just how much more values now drive performance.
80% of Millennials and Generation Z prefer to work for organizations that have sustainability practices and policies in place. Businesses that are perceived as unsustainable, therefore, might find themselves struggling to recruit the right talent in the future, which will prove to be a significant threat in the long-term.
Lining up recycling bins around the office is not enough — sustainability comes down to more than recycling, turning off electronics, reducing printing, and going digital. It needs to become part of organizational culture and weave into the corporate mission, with employees actively engaged in sustainability initiatives.
For example, HP Canada has partnered with WWF Canada to work together on environmental initiatives, giving employees the opportunity to go on outings to beaches for shoreline clean-ups, which also helps with team-building. IBM has been upgrading its old servers to modern ones that use less energy and produce fewer greenhouse gases, improving operational performance while decreasing environmental load and supporting IBM’s future growth plans. Companies are being called-out for unsustainable practices more than ever before in modern history. This trend is set to continue, especially as the spending power of millennials and Gen-Z increases. Social media has put consumer concerns front-and-center.
The 17 UN Sustainable Development Goals are estimated to cost the global economy more than $10 trillion. Food waste costs $1 trillion to the global economy leading to 3.3 billion tonnes of CO2 equivalent per year. Unemployment levels reached all-time highs in several OECD countries due to the pandemic, with more to come in the months ahead.
Investors have also noticed the increased focus on sustainability via government policies on plastic use and unsustainable business practices, which is reflecting in their investor portfolios. According to the WEF, the 100 most sustainable companies in the US were found to have higher share price growth compared to the S&P 500 index.
As I always say, the measure of a successful business is no longer solely tied to its financial performance — non-monetary profit has a huge impact on business success. Black Rock CEO Larry Fink also has much to say about this. “The public expectations of your company have never been greater. Society is demanding that companies, both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance but also show how it makes a positive contribution to society.”
Green and sustainable investments reached $30 trillion globally in 2018, up 34% since 2016. With most of these assets being encompassed by green bonds, this trend is likely to demonstrate that sustainable businesses will soon see a lower cost of capital when compared to non-sustainable alternatives.
Simply put, sustainability is a driver of better business. Businesses cannot ignore the value created, investors are allocating funds accordingly, and governments are pushing for regulation that favors such investments. The economic opportunity lies in the sustainable solutions we will eventually develop to solve the world’s most pressing problems.
Complex as it is, businesses need to take a multi-faceted, cross-department approach to become more sustainable, from operations to supply chains and everything in between. Siloes, as I always say, never work. Nestle, for example, failed in its sustainability strategy because of child slavery built within its cocoa supply chain. Suppliers and partners cannot be ignored in an organization’s sustainable plan.
Non-profit and/or governmental partnerships are useful strategies to address global sustainability since non-profits carry a majority of the workload mitigating climate change and cleaning up plastic waste, hence benefitting from the resources of for-profit businesses. Governments tackling global warming through legislation can provide businesses with foresight over incoming laws while businesses can contribute valuable industry insight. Teamwork is key. The larger global problem of sustainability will never be solved optimally without everyone working together. It's a giant team effort, but not impossible once differences are successfully set aside for the greater good.
Companies that develop and successfully incorporate stellar sustainability practices into their business will unquestionably prove to be more resilient in the future. Not only will they be attractive to stakeholders and consumers, but will help mitigate the effects of climate change and global warming, striking a double-profit with both business and environmental sustainability. With the right acumen, today’s sustainable businesses are tomorrow’s industry leaders. Failing to address global issues such as climate change and slavery will lead to ultimate business failure. All businesses have the opportunity to make significant sustainable changes in their organization’s culture and practices to create the sustainable future the world desperately needs — and with the increasing amount of resources to spur sustainable change — there’s no reason to say no.