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Profit with Purpose: Business models for sustainability
David Bent7 December 2010
What I’m going to tell you
1. We’ve moved beyond ‘responsibility’ and ‘ethics’ to enlightened self-interest, because...
2. Sustainability affects drivers of business value
3. You can make a difference in your company and in the world
WHAT ARE COMPANIES DOING IN PRACTICE?
GE’s
“Ecomagination is a business initiative to help meet customers’ demand for more energy-efficient products and to drive reliable growth for GE.”
Source: link
Revenue: $18b in 2009Lesson: on-strategy – leverage core capabilities in core markets
M&S’s Plan A
“Plan A is making a real difference to the environment and to our business. But now is the time for us to reach further and be even bolder by committing to a target to become the world’s most sustainable major retailer by 2015.”
Sir Stuart RoseLesson: it is a journey with quick wins and longer investments
Interface: Misson Zerofrom making carpets to selling floor-covering services
•founded Interface, a carpet company based on petroleum.
•CEO, Ray Anderson, had an epiphany that in the long-term his company was destroying nature
•vision for 2020: Mission Zero - eliminate any negative impact Interface has on the environment by 2020.
•rethought business: from making carpets to selling floor-covering services
Lesson: sustainability is about the future of your business
Unilever
“You have to decouple business growth from environmental impacts. That means a new business model.That’s why, at Unilever, we have set out a new vision for the company – the challenge of doubling our size whilst reducing our environmental footprint.”
Paul Polman, CEO, UnileverFeb 2010 - link
Lesson: use it for innovation, motivation and access to markets
Ariel – Turn to 30 campaign
• temperature of water rather than manufacture of washing powders & liquids
• 30 degrees ‘washers’ increased from 2% in 2002 to 17% in 2007
• 60,000t CO2e saved• A total of 1 million households have
turned to 30° resulting in an estimated 41% energy savings.
• 89% of consumers associate message with Ariel
Lesson: use what you’ve already got
Worldwise: pet care products
Full Circle is a groundbreaking sustainable product partnership created by Worldwise in collaboration with partners Walmart and Sam's Club. •Inputs: recyclable waste materials used within Walmart and Sam's Club locations nationwide•Outputs: select PoochPlanet and SmartyKat brand products that will improve life for you, your pet and the planet.
Lesson: opportunities across all sectors and categories
Some lessons from leaders
• On-strategy – leverage core capabilities in core markets
• It is a journey with quick wins and longer investments
• Sustainability is about the future of your business• Use it for innovation, motivation and access to
markets• Use what you’ve already got• Opportunities across all sectors and categories
WHAT DOES IT MEAN?
what an environmentalist sees
We will need to change how we live and work!
The challenge is enormous and urgent.
what an astute business person sees
We will need to change how we live and work!
The opportunity is enormous and coming.
shift: from ‘responsibility’ mindset...
Business
Societyimpact
Message to business: “you should act responsibly”Business response: “well, the business of my business is
business, but if I have to protect my reputation here’s some CSR-as-PR to placate you”
shift:...to a ‘sustainability’ mindset
Business
Societyimpact
Message to business: “you need to act sustainably for business reasons”
Business response: “well, seeing as the business of my business is business, I have to engage with this in a strategic way”
Society impact
What I’ve told you
1. We’ve moved beyond ‘responsibility’ and ‘ethics’ to enlightened self-interest, because...
2. Sustainability affects drivers of business value
3. You can make a difference in your company and in the world
“Profit with Purpose”linking back to the purpose of the RSA
“1754 – William Shipley … founds a new society, based on the idea of using 'premiums' to support
improvements in the liberal arts and sciences, and to stimulate enterprise for the common good.”
Big questions remain on “sustainable business models”
• Forum’s working definition:
“the rationale of how an organisation creates, delivers and captures value in a genuinely
sustainable manner”
• How can you innovate and create sustainable business models?
• How can you find your business case?• How can you increase the win-win – where the
business case overlaps with the ‘societal case’?• …and more
The task of our generation
Previous generations have overcome enormous challenges
We get to put world society on a sustainable footing
thank you
David Bent | [email protected] 020 7324 3662forumforthefuture.org | registered charity no. 1040519
Climate changegood news…
“It is possible to restrict warming to 2C or less during the 21st century with at least 50% probability…
Informing Choices, 2009 UK Met Office
emphasis added
Climate change …bad news
“It is possible to restrict warming to 2C or less during the 21st century with at least 50% probability…
…with emissions reductions of 5% per year but peak emissions would have to happen by about 2020”
Informing Choices, 2009 UK Met Office
emphasis added
Business people talk as if there is aspectrum of responsibility
PERIPHERYCORE
Can legitimate “business-as-usual”
But not enacting a competitive advantage
Can legitimate “business-as-usual”
But not enacting a competitive advantage
Yes, though may • create an
unsustainable future
• be the wrong strategy / tactic
Compliance allows profit to be made
Can have productivity benefits
Social responsibility of business: to make profit
Very largeLots, but uses resources from core activities that otherwise would generate returns
Wide, constrained by: • Resources &
capabilities (“path-dependency”)
• Competitive context
NoneChoice
PhilanthropyCSR activitiesStrategy & OperationsCompliance
Responsibility Spectrum
Resistance to “shoulds” triggered hereCan justify not responding
Difficult to justify not respondingAn exciting opportunity case
today’s rules won’t apply tomorrow
Sustainability will drive the strategic context for business over the coming decade– In some cases, already is– Fundamental services and resources from the natural
world will become more expensive– Rising expectations of business role mean new
regulation, new consumer behaviour, new supply chain norms and new investor pressure and more
Opportunity for bold action now– “what should my strategy be, given sustainability?”– NOT “what should my sustainability / CSR strategy be?”