Many feel pessimistic about the pace of change in building a sustainable future. Certainly the science is looking increasingly challenging, extreme weather events are increasingly becoming the norm, austerity tempts us to focus on the short term and there appears to be little coherent global policy movement. But I retain an optimistic steak. I believe that the 'flywheel' of business change is starting to spin faster. Why? Because the drivers for change (the subject of my previous blog) are becoming starker and because the necessary business response is better understood.
It is this latter point that I'll pick up in this blog, offering 10 thoughts about what business will do more on in 2013.
1. Advocacy - with Governments failing to provide leadership but business needing long term policy certainty, companies will have to proactively lobby Governments for stronger policy frameworks. The World Economic Forum will play an increasingly important role.
2. Commitment - in the absence of a policy lead, companies will increasingly group together to make their own voluntary commitments e.g. the Consumer Goods Forum's commitments on deforestation and low carbon refrigeration.
3. Partnerships - a new sharing, closed loop economy and the scale of the sustainability challenge point to the need for business to be better at creating partnerships (with NGOs, charities, communities, suppliers, other companies, even competitors). What we call 'partnership' today, in most cases, is still engagement, a conversation not a true partnership that seeks to create mutual long term value for all.
4. Supply chain management - supply chains throw up two types of challenge for business. Firstly there is one of scale, literally tracing, communicating with and organising 1000s of manufacturers/farmers/ raw material sources. There will be an emphasis on simplifying, shortening and making more transparent long global supply chains, delivering greater sustainability/resilience but also basic business efficiency. Secondly is the scale of the problems in the supply chain (water, deforestation etc) that defy any business to solve alone. A series of collaborative roundtables (on palm oil, soya etc) have been created, not without 'teething problems'. In the past business might have given up on them, the politics just too complex, but 2013 will see companies increasingly recognising that the alternative (going alone) is even less palatable. In addition, the Sustainability Consortium's work to create a common science base for consumer products will become increasingly important.
5. Valuation - business is used to valuing what it does. This allows it to prioritise investment decisions, monitor performance and assign rewards. At the moment nature and society are not assigned a measurable value. Puma has shown what is possible with an environmental profit and loss account. Now more businesses will explore valuing their impacts (as well as the positive benefits for nature they create). Expect more from Accounting for Sustainability.
6. New technologies - From 3D printing to remote sensors; artificial intelligence to nanotechnology; nutra-pharmaceuticals to robotics a wave of new technologies are emerging fast. Done 'right' these technologies will be an enormously helpful in creating a sustainable economy, where we are much more precise in identifying need and delivering it (less waste, less carbon), closing the loop, improving wellbeing (prevention not cure) and helping the most marginalised sections of society reach their potential. Companies need to be at the forefront of innovating with these technologies but they need to do it in the right way, one that is trusted by consumers, citizens and stakeholders.
7. Globalisation - sustainable development has largely been based on western market pre-occupations. A more balanced global economy is likely to introduce new environmental/social priorities, expectations and best practices that may be very different from what we know today and occasionally in conflict with a western world view. More companies will seek to emulate SAB Miller and take a truly global view of sustainability across multiple markets. Globalisation will also throw up new issues to do with how business allocates ('offshores' and 're-shores') jobs, pays taxes and respects privacy (the cumulative amount of data business holds on individuals). Sovereign owned companies and wealth funds will also be asked more questions about their transparency, governance and political connections.
8. New business models - in the latter half of 2012 we've seen more and more businesses thinking beyond 'making today's business model less bad' to 'what is a truly sustainable business model?' This will accelerate as the reality of the resource crunch, social disquiet with traditional business fanned by social media and a nascent alternative sharing economy prompt leading businesses to re-imagine their business models, taking theories from the pages of text books and starting real world exploration of sustainable consumption. The ground breaking work of Patagonia and Interface will feel less isolated and more like the precursor for change. Watch Forum for the Future's sustainable business model work with companies like Bupa and O2.
9. Business skills - reflecting on the challenges outlined above few companies yet have the people with the skills necessary to deal with this new complex world full of ambiguity, globalisation of production and demand, new business models and new partnerships. There will be an 'ask' of business schools to build sustainability into their curricula. An understanding of the drivers for change, the new business models and the new business skills (particularly collaboration and partnership). Where Exeter University's One Planet MBA and the Cambridge Progamme for Sustainable Leadership have led many other business schools will start to address sustainability and Net Impact's influence will continue to grow.
10. Investors - business will stop berating investors for 'not getting' sustainable business and recognise they have to be much smarter at showing investors their forward looking strategy for sustainable value creation.
2013 will not be a breakout year for sustainable business but behind the scenes it will be a year when more and more businesses are putting in place the capacity, skills and partnerships to prepare for a shift to a sustainable business model.