With the ink barely dry on the world’s first universal climate agreement adopted in Paris last December, many wonder what business will do to advance a stronger, cleaner global economy. Fortunately, more and more companies are going well beyond incremental, tinkering solutions to tackling climate change and instead, accelerating the transition to a low carbon economy.
These are transformational companies – a new breed of business that recognizes that global forces such as escalating climate change, rising inequality, growing resource scarcity and changing customer expectations affect the context in which it can succeed and thrive. To build its social license to grow, the transformational company future-proofs its operations and supply chains by tackling social problems through its core business model. They “do good” as part of their profit-making strategy. They adopt bold, visionary goals even where the solutions don’t yet exist and unleash capital, innovation and human ingenuity to get ahead of the curve and set the world on a positive course.
They adopt bold, visionary goals….unleash capital, innovation and human ingenuity to get ahead of the curve and set the world on a positive course.
While some companies assume ‘business as usual’ growth will continue indefinitely, transformational companies anticipate how global trends will affect their operating environment. They adjust their business practices to decouple growth from resource consumption and ecological degradation and link their growth to social benefit creation. In this way they become a force for good in society and create a business context in which they can thrive.
One example is IKEA Canada. The parent company has adopted a sustainable purpose, “to enable millions of people to live a more sustainable life at home.” As of this past fall, IKEA became the first retailer in Canada to convert its entire lighting range to LED, a significant move from LED as a niche product line. This transformational climate action initiative is but one of the many ways IKEA demonstrates its commitment to making the most sustainable products possible. The company sources sustainable cotton and wood and uses recyclable and recycled materials for its home furnishings, including packaging. Through its products and social marketing the company encourages its customers to save and generate energy, use less water and reduce waste – helping to further accelerate the low-carbon shift.
As a sustainability leader, IKEA is committed to becoming energy independent through renewable energy investments and to go even further to become a net positive generator of renewable energy. Last year, through a combination of wind energy from its newly operational 46 mega-watt wind farm in Alberta, solar power panels on store roofs, geothermal heating systems and more energy efficient stores, the company’s Canadian operations produced more than twice the energy they consumed.
Transformational companies also lobby governments to set legislative agendas…
Transformational companies also lobby governments to set legislative agendas that enable the transition to a sustainable society. IKEA was an official sponsor of the COP21 Paris talks where the Group’s President and CEO, Peter Agnefjäll, urged leaders to commit to bold measures to tackle climate change.
Interface, the world’s largest manufacturer of modular carpets, is equally pursuing a bold, visionary low-carbon agenda. Part of its promise to eliminate any negative impact the company has on the environment, includes an ambitious target of net zero CO2 emissions by 2020. Their transformational efforts include:
- finding alternatives to virgin petroleum-based raw materials to end dependence on oil
- closing the loop on its operations by only using rapidly renewable and recycled materials in all of its products (half way there)
- running all seven factories on 100% renewable energy (four so far)
Since 2003 all carpets sold in the Americas are climate neutral, where the GHG emissions for the carpet’s entire life cycle – not just in manufacturing – is balanced through third party verified carbon offset projects.
Yet another example is Unilever. This global consumer goods company has set ambitious carbon goals, going beyond doing no harm to doing good. With the goal of being carbon positive by 2030, they plan to eliminate fossil fuels from their business and generate more renewable energy than they consume. The surplus will be made available to the markets and communities in which they operate. In collaboration with others in their industry, Unilever has committed to achieving zero net deforestation associated with four commodities – palm oil, soy, paper and board, and beef – by 2020.
They pursue business strategies that accept sustainability as a prerequisite – rather than a limit – to growth.
So, in the aftermath of a global climate deal in which 195 countries committed to ambitious climate targets, what do we see? At the frontier of business, leading companies are transforming their businesses and their external operating context to secure their futures and the future of society. They pursue business strategies that accept sustainability as a prerequisite – rather than a limit – to growth. These far-sighted companies realize that to create value for shareholders they have to generate value for society, too – and adopt transformational measures to be sustainable over the long term.
A new breed of business is showing the way. Now’s the time for others to make their mark.
This article was originally published on Coro Strandberg’s website