Businesses must embrace the 'radical paradigm' of sustainability
Many businesses are at risk from being left behind in the global low-carbon transition by failing to address the "elephant in the room"; choosing to focus on sustainable business models rather than products that combat real issues and global trends.
That is the view of Ramon Arratia, sustainability director of carpet tile manufacturer Interface, who believes the only way for companies to truly thrive in today's ever-changing world is to “cut the fluff” surrounding sustainability.
Speaking at a sustainability event within Interface’s London showroom on Monday (1 August), Arratia claimed that incumbent businesses operating with old business models that continue to view sustainability and CSR as “beauty contests” will soon be washed away by the fast-moving and “radical” sustainable business movement.
“I’m still amazed about how the business case still plays on PR stories and awards and how much of the business case for sustainability talks about reducing waste and energy,” Arratia said. “Where it starts getting interesting is when companies begin to think about the impacts outside of their own business.
“The old-school business thought is to tackle issues to create good stories without acknowledging the elephant in the room, which many are scared to address. The reality is that most of the impacts that a company has is outside of its boundaries and we need to account for a product's impact, markets and potential innovations.
“Many companies operate by setting targets that constrain them to what they know and they end up with targets inside of their comfort zone. You need to have an element of risk and search and strive for things that otherwise wouldn’t exist.”
Arratia noted that there is a growing trend of companies moving from the “old paradigm” of using sustainability as a PR mechanism to boost revenue, to a “new paradigm” that makes substantial changes to in-house operations in order to develop sustainable products.
As the world's largest carpet tile maker, US firm Interface has been exploring its own "radical paradigm" through its new Climate Tack Back initiative. This unparalleled pledge goes "beyond the boundaries" of any single company and aims to completely transform the way that Interface and others create products that account for holistic change.
Legislation and disruption
However, Arratia added that even these new models are failing to address core issues across certain sectors. Taking the transport sector as an example, Arratia claimed that carmakers are too busy trying to advertise themselves and their products as 'sustainable' in the wake of dieselgate, that they are actually failing to address the “elephant in the room” of fuel efficiency.
In order for companies to truly embrace sustainability, Arratia believes legislation is the current driver for product standards, and that a point will come where businesses go beyond minimum requirements to produce products that address sector-wide issues.
“Respectable businesses are currently viewed on reputation, but I don’t necessarily think this works, businesses should be viewed on their products,” he said. “There’s a lack of trust and belief when it comes to products and you need to have a look at the lifecycle assessment of a product to find out what the main issues are that it should be addressing.
“Legislation is one of the things that really works and it can change the entire market. In regards to transport, somehow the EU got it right because they asked what the biggest issue was and they introduced a magic metric for vehicles to be judged by - it has negated the need for labels and certification, because the magic metric has created the benchmark for vehicles.”
For Arratia, this “magic metric” within transport is fuel efficiency, and he noted that it was driving product standards. In certain areas, cars that perform well on fuel efficiency and emissions get cheaper road tax and free parking, while diesel vehicles are beginning to be banned altogether. Arratia believes that incentives driven by legislation are more likely to accelerate sustainable action compared to companies that “broadcast their best stories”.
The majority of established companies are “happy with the status quo” and are unlikely to bring about sector-wide transformational change unless legislation demands it, Arratia said. However, the introduction of disrupters into established markets – such as Tesla in the automotive sector – can also address the broader issues facing sectors, and their success could force the incumbents into change.
Arratia noted that Tesla had explored an innovation in a niche market before introducing it into the mainstream. As well as addressing fuel efficiency by electrifying the system, Tesla is also pushing other companies into the “radical paradigm”. Nissan was an early adopter of electric vehicles (EVs) and is currently trialling vehicle-to-grid systems, while Volkswagen has been attempting to put its emissions scandal firmly behind it by turning to EVs.
“Around 90% of the incumbent companies are happy with the status quo," Arratia concluded. "Disruption will be caused by the companies with nothing to lose, and standards and legislation are allowing these companies to go into the market because there is a need for new standards and thinking.
“Once this is in place, the radical paradigm can take over and sustainability won’t just account for products but the market as a whole, and these markets can stretch across sectors and even countries.”