Today, the public expects every company they interact with to behave responsibly, and punishes those which do not. Furthermore, consumer demand keeps evolving, meaning that businesses have to do more to meet expectations. Sustainability has moved on a great deal from seven years ago, when everyone was talking about corporate social responsibility and philanthropy, or as the cynics would say, 'corporate do-goodery and giving money to charity to bolster reputations'. Today, companies are held to account for their social and environmental performance.
I recently attended a conference held by the London Business School, focussing on Corporate Sustainability. The conference was interesting because it looked specifically at the future of corporate sustainability and the importance of innovation in achieving this.
Most companies have now realised that sustainability can result in streamlined processes and long-term business success, even on a financial level. What is more interesting, however, are those businesses who have looked to the future and are innovating, or changing their business models, to further promote sustainability.
Sustainability throughout the supply chain
One key area over the next few years will be innovation throughout the supply chain. That this is a key issue for consumers, has been clearly shown by the recent horse meat scandal. It is no longer good enough when a brand tries to shunt blame onto its suppliers, as we expect them to source responsibly. One best practise example of sustainability throughout the supply chain is Marks and Spencer's Plan A campaign, which commits to working with their 2,000 suppliers around the globe to combat climate change, reduce waste, use sustainable raw materials, trade ethically, and help customers to lead healthier lifestyles. This highlights how forward looking companies are finding innovative ways to partner with their suppliers, from packaging to palm oil, to ensure that values are upheld.
The best practise for companies that want to succeed with sustainability is efforts is to see their programmes as a change management initiative. In order to overcome the inertia of the past and find innovative new ways of promoting sustainability, employees need to be fully engaged and see responsibility as one of their KPIs (key performance indicators). It has been repeatedly shown that business change must take place throughout an organisation, if it is to be successful. One example of a company that has done this is AT&T who implement their Do One Thing (DOT) programme last year. The programme challenges employees to take one simple action every day, such as signing up a customer for paperless billing, in order to promote sustainability in the company and wider community.
Changing the business model
Businesses will look radically different in the future. Consumers don't just buy from businesses anymore: they reuse, re-sell, and use peer to peer platforms for services such as lending. This means that companies that want a sustainable future must find new ways of operating to fit in with the changing landscape.
British Gas, are an interesting example of a company that has done just that. Much of their resource is now spent on reducing the amount of energy that people use. This, at first, seems counter-intuitive for an energy company, no matter how laudable carbon reduction is. Surely the aim should be to sell as much energy as possible, at the highest price possible? Ian Peters, the Managing Director, British Gas Residential Energy - Centrica, argued that it made sense for British Gas to build trust with its customers, and to shift from selling energy to becoming an energy service provider. Furthermore, shifting to a service model also makes financial sense amidst a consumer backlash against energy prices.
Peters also made the point that in order to have a long and sustainable future, the company needs to look into forms of energy that are not just clean, but renewable. Coal may be cheapest, but it will run out eventually. So British Gas needs to move towards researching and providing new clean energy sources.
The point of these best practise examples, is that they show how smart businesses are starting to use more joined up thinking when it comes to sustainability. They also highlight how these companies are dealing with the key trends of the future: employee engagement, providing sustainability at a lower cost, and sustainability throughout the supply chain.
Those companies that want to be successful must build collaboration across an ecosystem. The best initiatives will happen more quickly with a clearly defined vision, which clearly shows how stakeholders can help with the journey.
All in all, I think sustainability can provide a great opportunity for businesses, as very few have managed to get fully engaged on this issue. Given that consumers expect sustainability, those companies that innovate to find solutions that resolve costs with social and environmental issues, or who change their business models to accommodate the rapidly shifting consumer landscape, will find that they build brand loyalty, and thus, a sustainable future.