Time for change - telling a new sustainability story
EXCLUSIVE The ultimate aim is to ensure sustainability is embedded in everything UK plc does, an integral part of our corporate DNA. We may be getting closer to the heart of business, but we're not there yet. So, Michael Townsend asks, is it time to change our story?
It is often said that the biggest barrier to change comes from within ourselves, and how we look at the world: that genuine transformation can only really occur, if we go within ourselves and challenge how we see things, our worldview. This can mean changing our story.
This insight might also resonate with us in the sustainable business movement, at this time. Perhaps our biggest problem, in the push towards genuine business sustainability, is how we frame the challenge and how this might align, or not, with our story of business itself.
What we really need is the biggest overhaul in business thinking, ever - a new, holistic story of sustainable business success - not based on minor tweaks or incremental changes, but a new paradigm; one that integrates sustainability principles at its very core. This will mean a complete re-design of business, to meet the challenges of our time, and to ensure shared and sustainable prosperity.
The wrong story?
When you boil it down, our conventional narrative for business is fairly straightforward. It relies, almost exclusively, on the narrow pursuit of short-term growth and profit; selling as many goods and services as we possibly can, maximising the price commanded by virtue of leveraging our customers (usually branding seems to work well, here), and minimising resource costs (through consolidated sourcing, negotiating hard with our suppliers, and by extending payment terms for as long as we can). Oh, and fending off our competitors - by fair means, or foul. And all this activity, regardless of whether it leads to a sustainable outcome or not, is justified on the basis of our singular responsibility to our shareholders.
For years, the popular narrative has been driven by reference to Milton Friedman's rather restricted view of business and responsibility - that business is solely about making profits for the benefit of shareholders, and that the ends justified the means. Furthermore, this view of business is often backed up with reference to evolution, natural selection, and the laws of competition - as if these offer us fundamental and indisputable truths.
When we bring our sustainability narrative into the frame, there is a huge clash. The problem is that so much about the sustainability agenda raises serious and fundamental challenges to our current notions of business, including our expectations of continuous growth and consumption, along with our singular focus on making profit.
We need to fundamentally challenge existing business models
including the singular focus on making profit
Our response to these inconvenient truths is not always robust, and we can often end up diluting the agenda - focusing on the easy stuff - or simply accentuating the positive. We should not be too surprised, therefore, by the recent MIT Sloan Management Review/BCG survey that demonstrates a very real disconnect between thought and action - with only 10% of companies tackling key sustainability issues that, without proper attention, can thwart the company's ability to thrive - or even survive. Could it be, that what we are trying to do simply goes against the grain?
Clearly, we need to do something to resolve this clash of ideals and develop a compelling new narrative for sustainable business and economy. But in developing the right story, it is essential that we find the right framing.
If we simply try and frame sustainability within conventional business terms, not only are we missing the point, we are also likely to cause ourselves incalculable stress and most likely deliver very little real impact.
As we know, our established business case tools do not adequately incorporate sustainability factors and metrics, and this makes sustainability projects and strategies difficult to model. Without a truly integrated business case, there is no meaningful budget for investment and - surprise, surprise - nothing changes. But, even with the careful injection of Environmental, Social and Governance (ESG) metrics, the fundamental problem is that our business case and tools are configured for the wrong story.
So, let's start to explore what our new story of sustainable business success might look like.
Changing the story
We need to start with our aims and purpose. Conventionally, we tend to develop a narrow view of business aims, often focused on becoming the biggest and most profitable, all in support of maximising shareholder returns. But, the notion of shareholder primacy is being challenged and - according to the findings of the international Sustainable Companies Project - this misguided focus is the key barrier to business sustainability.
In our new story, perhaps we should no longer see the firm as the centre of the universe, seeking to maximise its own interests, but rather as living cell in a wider network of interconnected and inter-dependent organs, striving to deliver a truly positive impact for the whole body. This positioning creates a playing field for progressive companies, redefining their aims and purpose.
Businesses should be re-positioned as living cells in a wider network of
interconnected and interdependent organs
Look at the growth of the B-Corporation Movement - there are currently 976 Certified B-Corps across 32 countries - which provides a vehicle for businesses to incorporate a range of goals in addition to the profit motive. Ben and Jerry's, for example, not only aims to make the best product it can, but has also formalised the goal of creating positive social change - specifically to advance new models of economic justice, that are both sustainable and replicable.
We also need to be looking beyond the ends of our noses. The reality is that now, more than ever, we need to be adept at managing both short and long-term perspectives concurrently, if we are to be genuinely and sustainably successful. This is not easy, but Unilever's bold approach to breaking the tyranny of quarterly reporting shows what can be done. Paul Polman's emphasis on customers first, rather than focusing primarily on the short-term demands of shareholders, is a bold and refreshing move; one that will drive investors towards longer-term perspectives. If this approach spreads, it changes everything.
Those businesses that will prosper, will be those that create what Umair Haque calls 'thick value' - meaning sustainable and meaningful value - in meeting the real needs of people, communities and the environment in universally affordable and sustainable ways. The opposite of this is of course 'thin value', which Haque describes as a mirage; something that ultimately evaporates.
Sainsbury's approach to New Fashioned Values appears to be taking a step in the right direction. The retailer seems to be making a genuine attempt to keep pace with its customers, recognising the difficult economic times that have led to the rediscovery of thrift in our shopping and cooking habits, which also align with a desire for quality, sustainability and great value.
In fact, the whole retail model has many challenges. Shopping has become the story of consumers and consumption; it is the very antithesis of our new sustainable business narrative. Consumption is all about our insatiable desire for more and more stuff.
Jules Peck urges us to draw a most insightful distinction between consumers and citizens. The 'perfect consumer' has a higher than average environmental footprint and is more closed than others to pro-social and environmental behaviour-change messaging. The 'perfect citizen', on the other hand, has a much lower environmental footprint, and is far more open to pro-social and environmental behaviour-change messaging. The key point is that we need to develop products, services and brands that help take people on an authentic journey towards citizen-centric lifestyles and to maximise the ecological efficiency of a well-being economy.
But, fundamentally, we also need to wean ourselves off the triple-drugs of growth, profit maximization, and consumption. This is not easy, and while circular economy principles will help, we also need to engage with more mindful consumption. Patagonia, the Californian outdoor clothing company, is perhaps one of the best known examples of a company that is really engaging with a mindful approach - not just by pushing the re-use, repair and recycling business model - but by taking the seemingly counterintuitive approach to encouraging customers to buy less. This point has to be at the heart of our future story.
We need to wean ourselves off the triple-drugs of growth, profit maximization, and consumption
While business will likely always involve earning money, we need to become more mindful about how we earn our money, how much we accumulate and what we do with it. There is a huge responsibility that goes with the stewardship of money. Money is power. As with any form of power, it can be used for great good, but it can be also be used for great harm.
We all know that money was originally intended as a means of exchange, but in many cases it has now become the end goal. We need to break our addiction to the singular pursuit of accumulating money, for its own sake, to form a wider view - what David Korten calls real, living wealth.
This will mean businesses taking a values-based approach, putting money and business back in the service of people and planet, to support social and environmental balance, investing in how we meet the challenges of our time in creative and affordable ways - with more money flowing through the real economy. This signals a move away from false models of business that focus on consumption, short-termism, gimmickry and greed, and a shift towards a 'higher purpose' for business in which money and profit are means, not ends.
Unilever's Sustainable Living Plan offers some ambitious leadership from the corporate world - aiming to help more than 1 billion people to improve their health and well-being, and to enhance the livelihoods of at least 500,000 smallholder farmers and 75,000 small-scale distributors across their value chain - all by the year 2020.
Sustainable banks, such as Triodos Bank - along with other members of the Global Alliance for Banking on Values - are a big part of our move to a story based on living wealth. For Triodos, its very raison d'être is to help create a society that protects and promotes the quality of life of all its members, and to enable individuals, organisations and businesses to use their money in ways that benefit people and the environment, and which promote sustainable development. All investments are, of course, focused on these positive outcomes.
It is also important to think through what to do with our money, when we've made it. Judy Wicks - community entrepreneur and co-founder of the Business Alliance for Local Living Economies (BALLE) in the US - talks about making a 'living return', where one makes a modest financial return from supporting and enabling the creation of a more sustainable local economy and a healthier community.
Wicks made the decision to take all her money out of the stock market and put it into Philadelphia's Reinvestment Fund - through which she gets a straight financial return of between 4.5 and 5.5 percent - on the money she invests in providing community benefits - for example, the financing of wind turbines to produce electricity for the community.
How we share our wealth is also an important factor. We might want to add a greater emphasis on collective ownership models to our story, which are experiencing a great resurgence in interest, since the financial crisis.
Ownership drives everything; it provides the power and authority to make decisions in the long-term interest of all stakeholders (including the planet); it affects our ability to deliver sustainable business strategies; it also provides the power to distribute wealth. Owner-employees gain real empowerment, along with a share in the rewards, which can also have a greater impact in local communities.
Collective ownership businesses - according to a new report by K2A - generate a quantifiable benefit of an additional £40 for local suppliers, customers and employees for every £100 in sales. This is termed 'sticky money', as it stays close to home, supporting the local economy.
Collective ownership businesses generate a quantifiable benefit of an additional £40
for local suppliers, customers and employees for every £100 in sales.
In finding a new story, a big part of the exercise is also about rediscovering and reclaiming some of our forgotten truths about business, economy and human nature.
Underpinning the whole narrative is the need to move from self-interest to cooperation. Our emphasis on individual self-interest - often backed-up by reference to Darwin and survival of the fittest - is now being challenged, by reference to what Darwin actually said; it wasn't all about natural selection, he also recognised that co-operation was a key factor in the evolution of our own species and of others.
And as Joel Magnusson points out, human beings are in fact wired for co-operation, as well as competitive behaviour, especially in the face of danger. David Korten also reminds us that Adam Smith, the often-cited 'father' of the free market, actually believed 'that people have a natural and appropriate concern for the well-being of others and a duty not to do them harm.'
Perhaps it is time to embrace the more positive and collaborative aspects of human nature, in focusing our businesses on the challenges of our time?
Our stories are important. They help us share a picture of a better future. They can be inspiring - liberating even - and help us realise that we don't have to be constrained by our current dysfunctional stories of business and commerce.
Our new story can include a refocusing of business towards higher purpose, on creating 'thick value' for citizens, optimising growth and consumption, earning a living return, based on shared ownership and living wealth.
Our new story for business could provide the power to free-up people and organisations, to make the real shift that is needed - to deliver real innovation in our businesses that will contribute towards and frame our longer-term sustainable success.
But, the future is unwritten. This sketch is just the start of an ongoing process. No single business has the whole story mapped out yet. There are fragments out there, but we just need to pull them together into an accessible and compelling narrative.
As David Korten shares, in his excellent new A New Story for a New Economy essay; "It remains for those of us engaged in such conversations to connect and to collaborate on a national and global scale. We must bring the elements of the emerging New Story out from the shadows and engage an open and respectful public dialogue."
Michael Townsend is the founder and CEO of earthshine