Sustainability is NOT an ‘add-on’ to business – it’s the foundation of Capitalism 2.0

Brad ZarnettThis topic is explored in our our White Paper called,  “A Journey Towards Capitalism 2.0”.  Click here to download the paper.

Despite the worst recession since the 1930’s, sustainability has found its way into the consciousness of progressive boardrooms around the world.  Clearly companies see sustainability as part of a successful approach to business, even during, or perhaps especially during, difficult times.  But what does this really mean?  Are companies actively embracing sustainability as a defining aspect of their corporate strategy or are they just talking the talk but not really changing their fundamental business approach?  I would argue that we’re getting better but we’re still a long way from where we need to be.

Sustainability is a Loaded Word

The word sustainability still makes many business people cringe.  It’s a loaded word with a complex definition and it often creates rifts rather than harmony among people.  To some sustainability is about energy efficiency, to others it’s about carbon reduction and climate change, while for others it’s about factory working conditions.  People’s interpretation of the word and their motivations for embracing sustainability may vary, but what’s interesting is that the corporations that have found success by embracing sustainability have all done so by following a similar path.

It May Sound Easy But…

First, they clearly define what sustainability means to their organization.  Then, they harness their existing corporate culture to drive behaviour with strategic goals, well defined metrics and a clear vision for the future.  This sounds easier than it actually is but the simple reality is that when done correctly, it works.  When a company fully integrates a sustainable vision into its corporate strategy, employees have a meaningful framework within which they can interpret the new goals of the company and make sense of their role in the organization.  They feel a sense of purpose and become energized to close the gap between the current state of the organization and their envisioned collective future.  For these companies, sustainability is a defining driver of innovation, employee engagement and greater profitability.

A Missed Opportunity

But unfortunately this is not a winning recipe for widespread change – it’s just too difficult for most companies to get it right.  They’re still busy struggling with definitions, culture, strategy and figuring out where – and why – sustainability fits into their organizational chart.  And it is precisely this confusion that paralyzes sustainability’s potential as a corporate driver of risk reduction and seized opportunities.  How can companies define a sustainable vision when they still haven’t figured out what sustainability is all about? Without a clear department or a mandate to operate strategically, it gets incorporated as an ‘add-on’ to business as usual.  In fact, depending on the level of awareness, support and culture development in the organization, sustainability can evolve to be seen as a barrier to ‘business as usual’ and thus be further isolated from the important strategy decisions of the day.

pathway

Towards Capitalism 2.0

Going forward we need to redesign the existing capitalist model so that we aren’t asking companies to act more sustainably within a broken system but rather we must elevate and tweak the current system so that business is conducted in a new, more sustainable, way.  As Matthew Kiernan would say, we need to be more “strategically aware” in a way that maximizes profits, engages employees and is more innovative while reducing environmental and social harm.  In this way, we’re not asking people to learn about something new that they don’t understand – we’re using familiar language while tweaking the system with new metrics to help us better gauge success in the context of the modern world with its finite resources.

The time has come to change the conversation from how to be more sustainable within our broken system to how can we can re-create capitalism in a way that celebrates the concepts of sustainability, and ultimately increases wealth and happiness for the widest group of people.

This topic will be explored in our soon to be released Strategy Manual called,  “Capitalism 2.0: Strategies for the 21st Century Enterprise”.  Click here to stay informed of the official release – we look forward to sharing these ideas with you

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Brad Zarnett is the Founder and Director of the Toronto Sustainability Speaker Series (TSSS) which is widely recognized as Canada’s premiere forum for dialogue and problem solving among sustainability professionals. Each year over 1000 sustainability change agents attend TSSS events to exchange ideas, to network and to be inspired by leading companies that have integrated sustainability into their business practices.

  • Diana

    If corporate boardrooms could just wrap their thought process around one simple statement created by the United Nation in 1987, I think the tone of the subject would be understood on a personal level as well as a corporate level.

    “Sustainability is the ability of the current generation to meet its needs without compromising the ability of future generations to meet theirs.” United Nations 1987

  • Hi Diana, that would be nice but I think its too vague for most companies – the definition needs to be company specific so that it matches with their reality and existing culture

  • Andy Svcs

    Fully agree Brad…but it means that companies will need to be pro-active in this. In our current business model so many companies are used to outsourcing their issues and paying a sum of money for the problem to be resolved. This is really a company culture thing and being committed to another way of working. Who will be the leader to push this through in a time where performance is measured and dealt with on very short term KPIs. The paralysis you talk about is very real and I think it will be the privately owned companies that will set the example for change in the coming years. 

    • Hi Andy, as I said above, I don’t see how real change takes place without government taking a leadership role. In terms of your comment about outsourcing – I guess that’s why the good consultants are so busy 🙂

  • Nina Petersson

    In order to be able to change the existing system we need to ask ourselves: What do we need the financial industry for? What is its purpose in society? How can we make use of it in a better way to promote sustainability for us all? As it is now the whole system is based on “no limits” and individual profit. We need to redefine the financial industry’s mission and purpose so it will be possible to reallocate capital to longterm sustainable investments and businesses that serve the needs of communities and societies and the planet as a whole. The signals coming from the financial industry now is ” it doesn’t matter, pump it” 

    • Hi Nina, I agree completely but I don’t think the private sector can tackle this on their own.  Gov’t needs to play an active role in setting standards that reward and punish companies that cause environmental and social harm.  The “marketplace” is mostly ineffective at doing this – climate change is here and it’s only going to get worse. 

  • Ede Warner

    My new startup venture, E-Cubed Consulting (Ethical Engagement through Education) suggests that we need to create a sense of Corporate Patriotism defined as an understanding of the relationship between “nationalism” and long term business growth and development. 

    I start by taking a second term that makes business cringe, activism, and focusing on the failure of today’s activism versus that of yesterday.  Dr. King’s focus on building a “beloved community” where inclusion of all sides was important both in protest and decision making is an excellent starting point for business as well.

    An understanding that corporations should consider themselves “nationalist” or part of a larger beloved community means that Patriotism is accepting corporate social repsonsibilty as a co-purpose that stands alongside profit generation.

    The key to changing the world is changing our language and to stop fearing generic labels like sustainability, activism, patriotism, and even nationalism.  Putting these terms in a proper context, i.e., studying those who effectively used the terms and how they were used, is the key to learning how to transform our condition today.

    The loss of study about the Civil Rights Movement as the greatest act of persuasion of our time, and how it managed multiple purposes simultaneously is yet another failure of the education system and the reason we lack ethical engagement in our institutions today.  But that can change if we choose to think differently about “running” from language differences instead deciding to understand them.