Thursday, 2 December 2010

It doesn't have to be one line for the shareholders and another for the environmentalists

I got back from the Ten+One conference in Bradford last night. My understanding of the sustainability and business was satisfactorily advanced, thanks largely to the conference, but also unexpectedly by an article I gleaned from The Times over breakfast at the independently run and very hospitable Ivy Guest House!

Many environmentalists feared that the economic crisis would delay corporate action on Sustainability, as David Wighton put it in The Times yesterday (December 1st, 2010, Opinion, p. 29 [paywall]): ‘If you are in a fight to save your business, you might forget to save the environment.’ Wighton points out however that the opposite appears to be true; the economic crisis seems to have had a galvanising effect:

[S]ome of the increased focus on green issues is a direct result of the economic crisis. Companies are faced with slow growth in mature markets, but rising and volatile prices for many commodities driven by the insatiable appetite of China. It makes sense for businesses to be more careful about how they use such resources, particularly energy.

Wighton speculates further that investing in sustainability is also a very good public relations exercise:

Business leaders have also been alarmed by the slump in the public’s trust in big companies... Some chief executives talk about trust as “the scarcest resource of all.”

Bosses fear that their businesses could pay dearly for this loss of trust and believe that demonstrating a commitment to the environment could help to rebuild it. A survey of global chief executives, conducted by Accenture with the UN this year showed that boosting trust in their brands was by far the most important motivation for taking action on the environment.

It is of course easy to cynical about this, I must point out that Wighton is not presenting these findings in a cynical way at all, he is just exploring a business trend, taking his cue from this year’s UNGC/Accenture CEO Study ‘A New Era of Sustainability’. That study surveyed 766 CEOs from around the world and interviewed a further 50 CEOs and 50 business and civil society and business leaders; ‘the largest such study of CEOs ever conducted on the topic of sustainability’ (UNGC & Accenture, 2010, p. 10). The study says this: ‘Demonstrating a visible and authentic commitment to sustainability is especially important to CEOs... Strengthening brand, trust and reputation is the strongest motivator for taking action on sustainability issues, identified by 72 percent of the CEOs’ (UNGC & Accenture, 2010, p. 10). So what is an authentic commitment to sustainability, do CEO's even know? And what about the shareholders? I’ll deal with that last question first.

Wighton argues that because a commitment to sustainability is good for a company’s brand, employee retention and running costs it is good for the company full stop. It follows therefore that it must also be good for its shareholders. But, Wighton throws up another interesting observation: ‘Many [CEOs] privately believe that being environmentally responsible is a good thing in itself. But they feel that they must adopt utilitarian ethics, justifying everything on the basis that it leads ultimately to the greatest happiness of the greatest number of shareholders.’ Are CEOs therefore acting on their environmental concerns (a la ‘Social Business’ as practised by Professor Yunus) but having to justify their sustainability activities on financial grounds to their investors and shareholders? This creates a difficult balancing act in communications around the win, win, win; People, Planet and Profit triumvirate. The result is that authentic commitment is often masked and difficult to detect (whether it is there or not).

At the Ellen MacArthur Foundation ‘Ten plus One conference’ this week, Douwe Jan Joustra of the NL Agency (the Netherlands governmental agency for innovation, energy and sustainable development) explained how the Netherlands government is trying to nurture a business led Cradle to Cradle revolution. He made three key recommendations for policy makers: Firstly, using the slightly lost in translation phrase ‘steering on conditions’, he argued that Government’s need to provide the right conditions for innovation (basically don’t intervene; let creativity flourish). Secondly he advises policy makers to make use of ‘coalitions of the willing’, start with the businesses, like Desso, who already ‘get’ the C2C model and are living and breathing it; the rest will eventually follow. He thirdly stressed the need to ‘educate, educate, educate’ specifically on systems thinking and Biomimicry.

A Cradle to Cradle revolution has a huge potential to realise the sustainable development dream; the holy trinity of a balance between People, Planet and Profit. This is why it is so powerful and it makes the communications balancing act possible. At present those concerned with People and Planet are sceptical that they can win while Profit wins. Those concerned with Profit alone worry that prioritisation of People and Planet will lessen the wins for shareholders and investors. This is why CEOs are caught in the difficult position of trying to convince shareholders that sustainability is good for business, while also trying to convince environmentalists that their commitments to sustainability are authentic. Either by accident or design the Ten+One conference was priced such that it attracted Corporate Businesses as well as independent business, academics and one or two scruffy environmentalists like me. Because of this mix, the speakers from Desso, Aveda and B&Q were thrown into the communications dilemma, they had to convince environmentalists and business simultaneously. Although wild enthusiasm never quite broke out, I detected very few raised eyebrows or deep sighs. Why? Because of a recognition that Cradle-to-Cradle is not about limiting the impacts of business on the natural world, it is about creating positive impacts on the environment. Cradle to Cradle, when thoughtfully applied, enhances the natural world; companies can say ‘we are in the business of enhancing the natural environment’ and can show the tangible results to prove it. It is a natural ally of the Social Business concept championed by Muhammed Yunus.

Ten+One was framed around Cradle to Cradle, Systems thinking and the Circular Economy. Looking at the world from these perspectives is transformative, it is game-changing. We often think of the world in a reductionist, mechanical way in which we are separate from nature and seek to control and tame it. We think of natural resources being infinite and send them linearly from cradle to grave in a take, make, transport, use (re-use and recycle a bit) and dump progression. These linear models are embedded in business practice and environmentalists have been trying to limit the negative impacts of businesses that use this model for decades. Instead of focusing on greening that model to make it ‘less bad’, we should be focusing on the promotion of an entirely new model (one, as Bucky Fuller said, that makes the old one obsolete). This is where the Cradle to Cradle model comes in. In this model resources don’t travel along a linear path they cycle. Technical resources and biological resources cycle in two discrete closed loops powered by renewable energy sources. If that can be achieved the environment no longer gradually declines, it gradually improves. Michael Braungart describes this as the difference between eco-efficiency and eco-effectiveness. This model is incredibly positive, it ‘sells the sizzle’, it is inspiring and transformative. At the moment it is in an early embryonic form, but as a concept it allows us to dream of true balance of People, Planet and Profit and a better future.

The examples of Cradle to Cradle presented during the Ten+One conference illustrated what could emerge when you ‘steer the conditions’ correctly. By their own admission Desso, Aveda and B&Q are far from perfect; they have a long way to go to be truly cradle to cradle. They are limited by ‘the conditions’ they exist in but, as leaders, and as part of a ‘coalition of the willing’, they have an opportunity to help ‘steer the conditions’ for others, like Unilever (?) to follow. Despite the positivity of the UNCG/Accenture study, it is notable that it only carries one reference to cradle to cradle on page 44 of 60. Apparently ‘the Timberland Company’s new range of “Earthkeepers 2.0” are conceived with “cradle-to-cradle” principles in mind, and designed to be disassembled for recycling at the end of their useful life’ (UNCG/Accenture, 2010, p. 44). This suggests that sustainability is not properly framed yet in the business world, the objective of being ‘less bad’ seems to remain.

Despite the phenomenal success of the Cradle to Cradle book, as a concept it still remains on the margins of both the business and sustainability worlds. It mustn’t stay there, it is a concept with a huge potential to unite these two worlds. For it to gather speed in the mainstream, an imperative must be placed on education. But, it is not enough to simply educate about Cradle-to-Cradle in isolation in the business world. Education based on a mechanistic worldview needs to move towards education based on a systems worldview and ecological intelligence. It is a paradigm shift called for by Sir Ken Robinson, Stephen Sterling and now the Ellen MacArthur Foundation.

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