Making business sense of sustainability at this time in the 21st century
Given the current socio-ecological developments, transforming companies and ecosystems for a truly sustainable economy is vital and unavoidable for both business and society.
We find evidence for a variety of strong signals such as increased public awareness of our severe ecological issues demonstrated by overshoots in Planetary Boundaries as well as shortfalls in our social foundations; shifting customer and shareholder preferences; new competitors from many unexpected places; unanticipated demands of legislators, regulators and other stakeholders; abrupt disruptions in supply and infrastructure caused by severe weather events; and massive human climate refugee migration on the horizon.
Business leaders can either stand off on the sidelines and watch this economic and socio-ecological “tsunami” approach, or they can learn new skills to adapt to and hopefully benefit from this situation.
My Key Thinking section is designed as an open source of inspiration for readers to advance their level of awareness of sustainability issues in their operating environment and to gain actionable business knowledge about how to address this evolving new business paradigm. It will be enhanced and continuously extended based on fresh evidence and unfolding new approaches and examples. The “word cloud” at the end of this section reflects a snapshot of topics I am dealing with in my daily work.
According to my honest assessment of the current situation, business leaders with strategic foresight must …
…future-proof their companies for the years of disruptions ahead. Business leaders around the world realize that their early sustainability efforts and pace of progress to-date may not be enough for what is required. Their strategic and operational space is narrowing, thus making it more and more difficult for them to maneuver at the strategic level. On the one hand, leaders increasingly realize that their current business practices have significant financial and human cost. The painful reality for most companies is that the financial numbers capture only a small portion of their real economic activity in terms of impact on our natural, human and social capital which needs to be managed as well. Companies enjoying economic success at the expense of environmentally or socially detrimental activities can expect a serious decline in business, as they will be targets for disruptions by more sustainable competitors, regulatory constraints, lack of talent looking for positive impact, and other stakeholder interventions. On the other hand, there are leaders who recognize the huge business opportunities for companies that pursue solutions. Understanding that their business is irrevocably nested in socio-ecologic layers, they pursue value creation beyond financial profit to include the planet and society as a whole. Either way, as sustainability best practices such as materiality assessments, integrated reporting, and addressing self-selected sustainable development goals are becoming more widely adopted in various industries, business leaders who are making bigger steps to future-proof their companies for the years of disruptions ahead are likely to accrue significant benefits.