Sustainability: business as usual out of the question

10 March 2020: too many organisations still view sustainability as a “nice to have” rather than integral to the way they do business. But this approach is inherently unsustainable, and companies need to adjust to a new reality.

The idea that businesses can profit from acting sustainably, or doing the right thing, is nothing new. What is changing is that virtue is fast becoming a necessity. 

“Ultimately, it’s about making sure your business model is aligned to the future and is future proof,” says Craig Bennett, outgoing CEO at Friends of the Earth. Speaking during a podcast in ICAEW’s More than a number series he warned that “companies that don’t do this, that don’t treat these issues seriously, will become Blockbuster videos in a Netflix age”. 

Noting the many companies that have “gone the way of extinction because they’ve not kept up with the times”, he stresses that “following the UN Sustainable Development Goals (SDGs) and tackling climate change is keeping up with the times.”

Lord Malloch-Brown, Chair of the Business and Sustainable Development Commission, also joined the podcast. Three years ago, the commission produced a report showing that seizing the market opportunities associated with just four of the SDGs could deliver at least US$12tn for business. 

“It’s profiting from the planet,” says Malloch-Brown, “but for the first time living within the resources of planet, not plundering its resources but recognising their finite character and adjusting business models to do that. And the rewards will go to those who have the imagination, get up and go, and willingness to adjust their business models to take advantage of these new markets and frontiers.”

A single strategy

One of the shifts in thinking that needs to take place is in how businesses view their approach to sustainability. Often the focus is too much on cost, and too little on investment. It’s a fact that some sustainable practices come with extra costs, and firms may be deterred from action fearing it could put them at a short-term competitive disadvantage.

“You can think about something being a cost or you can think about it being an investment, and often it’s the same thing,” says Bennett, who is about to become CEO at The Wildlife Trusts. “Either companies will invest for the future or fail to invest. That’s what it’s about. Yes, there will be those that undercut in the short term, and there is a requirement on governments to govern and put regulations in place to stop that – because it’s not in the public interest.”

Unilever’s Sustainable Living Plan has been at the heart of its business model for a decade. “Ultimately we believe if you don’t make this investment, consumers will have a challenge in supporting your brand, in particular younger consumers,” says the firm’s CFO, Graeme Pitkethly. 

Rather than having a sustainability strategy and a financial and corporate strategy, Unilever now takes a highly integrated approach. “Our sustainable business strategy is our strategy,” Pitkethly explains. “We don’t have another separate strategy.” In practice, this means that in discussions at board and executive level, and in discussions around Unilever brands, the focus is always on the sustainable business strategy. 

Right side of history

There is an even wider dimension to this discussion. “The 21st century is surely going to be the century when humanity works out to live on planet earth as if we mean to stay, and that will require big changes in how the world economy works and how we live,” says Bennett. “The big question for business is: do you want to be on the right side of history or the wrong side of history?” 

He uses William Wilberforce’s work to abolish the slave trade as an analogy. During those campaigns, some people argued abolition would harm the economy and competitiveness and that it was better for business to carry on the trade. “Over the longer term it is very clear which way you’ve got to go,” suggests Bennett. 

You can hear more about how businesses can use the SDGs to get on the ‘right side’ in ICAEW’s More than a number podcast, $12 trillion – profiting from the planet