From the archive - published in Sustainable Business magazine, March 2014: We talk about sustainability becoming embedded in everything we do, as part of our corporate DNA. It is certainly true that sustainability has come a long way over the last decade – and with each step, we’re getting closer to the heart of business strategy and decision-making – but we’re not there yet. Perhaps it is time to change our story?
1. It is often said that the biggest barrier to
change comes from within ourselves, and
how we look at the world: that genuine
transformation can only really occur, if
we go within ourselves and challenge
how we see things, our worldview. This
can mean changing our story.
This insight might also resonate with us
in the sustainable business movement, at
this time. Perhaps our biggest problem,
in the push towards genuine business
sustainability, is how we frame the
challenge and how this might align, or
not, with our story of business itself.
What we really need is the biggest
overhaul in business thinking, ever – a
new, holistic story of sustainable business
success – not based on minor tweaks or
incremental changes, but a new paradigm;
onethatintegratessustainabilityprinciples
at its very core. This will mean a complete
re-designofbusiness,tomeetthechallenges
of our time, and to ensure shared and
sustainable prosperity.
Sustainable Business Business models 1/8
Sustainable business? Time to change our story…
We talk about sustainability becoming embedded in everything we do, as part of our corporate DNA. It is certainly true that
sustainability has come a long way over the past decade – and with each step, we’re getting closer to the heart of business,
but we’re not there yet. Michael Townsend asks, is it time to change our story?
2. Sustainable Business Business models 2/8
The wrong story?
When you boil it down, our convention-
al narrative for business is fairly straight-
forward. It relies, almost exclusively, on
the narrow pursuit of short-term growth
and profit; selling as many goods and
services as we possibly can, maximising
the price commanded by virtue of lever-
aging our customers (usually branding
seems to work well, here), and minimis-
ing resource costs (through consolidated
sourcing, negotiating hard with our sup-
pliers, and by extending payment terms
for as long as we can). Oh, and fending
off our competitors – by fair means, or
foul. And all this activity, regardless of
whether it leads to a sustainable outcome
or not, is justified on the basis of our sin-
gular responsibility to our shareholders.
For years, the popular narrative has been
driven by reference to Milton Friedman’s
rather restricted view of business and
responsibility – that business is solely
about making profits for the benefit of
shareholders, and that the ends justified
the means. Furthermore, this view of
business is often backed up with reference
to evolution, natural selection, and the
laws of competition – as if these offer us
fundamental and indisputable truths.
What we need is the
biggest overhaul in
businessthinking,ever.
3. Sustainable Business Business models 3/8
When we bring our sustainability
narrative into the frame, there is a huge
clash. The problem is that so much about
the sustainability agenda raises serious
and fundamental challenges to our
current notions of business, including
our expectations of continuous growth
and consumption, along with our singular
focus on making profit.
Our response to these inconvenient
truths is not always robust, and we
can often end up diluting the agenda –
focusing on the easy stuff – or simply
accentuating the positive. We should not
be too surprised, therefore, by the recent
MIT Sloan Management Review/BCG
survey that demonstrates a very real
disconnect between thought and action –
with only 10% of companies tackling key
sustainability issues that, without proper
attention,canthwartthecompany’sability
to thrive – or even survive. Could it be,
that what we are trying to do simply goes
against the grain?
Clearly, we need to do something to
resolve this clash of ideals and develop a
compelling new narrative for sustainable
business and economy. But in developing
the right story, it is essential that we find
the right framing.
If we simply try and frame sustainability
within conventional business terms, not
only are we missing the point, we are
also likely to cause ourselves incalculable
stress and most likely deliver very little
real impact.
As we know, our established business
case tools do not adequately incorporate
sustainability factors and metrics, and
this makes sustainability projects and
strategies difficult to model. Without a
truly integrated business case, there is no
meaningful budget for investment and
– surprise, surprise – nothing changes.
But, even with the careful injection of
Environmental, Social and Governance
(ESG) metrics, the fundamental problem
is that our business case and tools are
configured for the wrong story.
So, let’s start to explore what our new
storyofsustainablebusinesssuccessmight
look like.
We need to fundamentally challenge existing business
models including the singular focus on making profit
4. Changing the story
We need to start with our aims and pur-
pose. Conventionally, we tend to devel-
op a narrow view of business aims, often
focused on becoming the biggest and
most profitable, all in support of maxim-
ising shareholder returns. But, the notion
of shareholder primacy is being chal-
lenged and – according to the findings of
the international Sustainable Companies
Project – this misguided focus is the key
barrier to business sustainability.
In our new story, perhaps we should no
longer see the firm as the centre of the
universe, seeking to maximise its own
interests, but rather as living cell in a wider
network of interconnected and inter-
dependent organs, striving to deliver a
truly positive impact for the whole body.
This positioning creates a playing field for
progressive companies, redefining their
aims and purpose.
LookatthegrowthoftheB-Corporation
Movement – there are currently 976
Certified B-Corps across 32 countries –
which provides a vehicle for businesses to
incorporate a range of goals in addition
to the profit motive. Ben and Jerry’s, for
example, not only aims to make the best
product it can, but has also formalised
the goal of creating positive social change
– specifically to advance new models of
economic justice, that are both sustainable
and replicable.
We also need to be looking beyond
the ends of our noses. The reality is that
now, more than ever, we need to be adept
at managing both short and long-term
perspectives concurrently, if we are to be
genuinely and sustainably successful. This
is not easy, but Unilever’s bold approach
to breaking the tyranny of quarterly
reporting shows what can be done. Paul
Polman’s emphasis on customers first,
rather than focusing primarily on the
Sustainable Business Business models 4/8 Businesses should be re-positioned as living cells in a wider
network of interconnected and interdependent organs
5. short-term demands of shareholders, is
a bold and refreshing move; one that
will drive investors towards longer-term
perspectives. If this approach spreads,
it changes everything.
Those businesses that will prosper,
willbethosethatcreatewhatUmair
Haquecalls‘thickvalue’–meaning
sustainable and meaningful value
– in meeting the real needs of
people, communities and the
environment in universally
affordable and sustainable
ways. The opposite of this is of
course ‘thin value’, which Haque
describes as a mirage; something
that ultimately evaporates.
Sainsbury’s approach to New
Fashioned Values appears to be taking
a step in the right direction. The retailer
seems to be making a genuine attempt to
keep pace with its customers, recognising
the difficult economic times that have led
totherediscoveryofthriftinourshopping
and cooking habits, which also align with
a desire for quality, sustainability and
great value.
In fact, the whole retail model has many
challenges.Shoppinghasbecomethestory
of consumers and consumption; it is the
very antithesis of our new sustainable
business narrative. Consumption is all
about our insatiable desire for more
and more stuff.
Jules Peck urges us to draw a most
insightful distinction between
consumers and citizens. The
‘perfect consumer’ has a higher
than average environmental
footprint and is more closed
than others to pro-social and
environmental behaviour-
changemessaging.The‘perfect
citizen’, on the other hand, has
a much lower environmental
footprint, and is far more open
to pro-social and environmental
behaviour-change messaging. The
key point is that we need to develop
products, services and brands that
help take people on an authentic journey
towards citizen-centric lifestyles and to
maximise the ecological efficiency of a
well-being economy.
But, fundamentally, we also need to
wean ourselves off the triple-drugs
of growth, profit maximization, and
consumption. This is not easy, and while
circular economy principles will help, we
also need to engage with more mindful
Sustainable Business Business models 5/8
Society needs to
make the move
from a consumer-
based society to
a more ‘citizen-
centric lifestyle
6. Sustainable Business Business models 6/8
consumption. Patagonia, the Californian
outdoor clothing company, is perhaps one
of the best known examples of a company
that is really engaging with a mindful
approach – not just by pushing the re-use,
repair and recycling business model – but
by taking the seemingly counterintuitive
approach to encouraging customers to
buy less. This point has to be at the heart
of our future story.
While business will likely always involve
earning money, we need to become more
mindful about how we earn our money,
how much we accumulate and what we
do with it. There is a huge responsibility
that goes with the stewardship of money.
Money is power. As with any form of
power, it can be used for great good, but
it can be also be used for great harm.
We all know that money was originally
intended as a means of exchange, but in
many cases it has now become the end
goal. We need to break our addiction to the
singularpursuitofaccumulatingmoney,for
its own sake, to form a wider view – what
David Korten calls real, living wealth.
This will mean businesses taking a values-
basedapproach,puttingmoneyandbusiness
back in the service of people and planet, to
support social and environmental balance,
investing in how we meet the challenges of
our time in creative and affordable ways
– with more money flowing through the
real economy. This signals a move away
from false models of business that focus on
consumption, short-termism, gimmickry
and greed, and a shift towards a ‘higher
purpose’ for business in which money and
profit are means, not ends.
Unilever’s Sustainable Living Plan offers
some ambitious leadership from the
corporateworld–aimingtohelpmorethan
1billionpeopletoimprovetheirhealthand
well-being, and to enhance the livelihoods
of at least 500,000 smallholder farmers and
75,000 small-scale distributors across their
value chain – all by the year 2020.
Sustainable banks, such as Triodos Bank
– along with other members of the Global
Alliance for Banking on Values – are a big
part of our move to a story based on living
wealth. For Triodos, its very raison d’être
is to help create a society that protects and
promotesthequalityoflifeofallitsmembers,
and to enable individuals, organisations and
businesses to use their money in ways that
benefit people and the environment, and
which promote sustainable development.
All investments are, of course, focused on
these positive outcomes.
We need to break our addiction to the
singular pursuit of making profit
7. Sustainable Business Business models 7/8
It is also important to think through
what to do with our money, when
we’ve made it. Judy Wicks – community
entrepreneur and co-founder of the
Business Alliance for Local Living
Economies (BALLE) in the US – talks
aboutmakinga‘livingreturn’,whereone
makes a modest financial return from
supporting and enabling the creation of
a more sustainable local economy and a
healthier community.
Wicks made the decision to take all her
money out of the stock market and put it
into Philadelphia’s Reinvestment Fund –
throughwhichshegetsastraightfinancial
return of between 4.5 and 5.5 percent –
on the money she invests in providing
community benefits – for example, the
financing of wind turbines to produce
electricity for the community.
How we share our wealth is also an
important factor. We might want to
add a greater emphasis on collective
ownership models to our story, which
are experiencing a great resurgence in
interest, since the financial crisis.
Ownership drives everything; it
provides the power and authority to
make decisions in the long-term interest
of all stakeholders (including the planet);
Collective thinking and
ownership models can keep
money closer to home, thus
supportingthelocaleconomy
8. Sustainable Business Business models 8/8
it affects our ability to deliver sustainable
business strategies; it also provides the
power to distribute wealth. Owner-
employees gain real empowerment,
along with a share in the rewards, which
can also have a greater impact in local
communities.
Collectiveownershipbusinesses–according
to a new report by K2A – generate a
quantifiable benefit of an additional £40 for
local suppliers, customers and employees
for every £100 in sales. This is termed ‘sticky
money’,asitstaysclosetohome,supporting
the local economy.
In finding a new story, a big part of the
exercise is also about rediscovering and
reclaiming some of our forgotten truths
aboutbusiness,economyandhumannature.
Underpinning the whole narrative is
the need to move from self-interest to
cooperation. Our emphasis on individual
self-interest – often backed-up by
reference to Darwin and survival of the
fittest – is now being challenged, by
reference to what Darwin actually said;
it wasn’t all about natural selection, he
also recognised that co-operation was a
key factor in the evolution of our own
species and of others.
And as Joel Magnusson points out,
human beings are in fact wired for
co-operation, as well as competitive
behaviour,especiallyinthefaceofdanger.
David Korten also reminds us that Adam
Smith, the often-cited ‘father’ of the free
market, actually believed ‘that people
have a natural and appropriate concern
for the well-being of others and a duty
not to do them harm.’
Perhaps it is time to embrace the more
positive and collaborative aspects of
human nature, in focusing our businesses
on the challenges of our time?
Our stories are important. They help us
share a picture of a better future. They can
be inspiring – liberating even – and help us
realise that we don’t have to be constrained
by our current dysfunctional stories of
business and commerce.
Our new story can include a refocusing
of business towards higher purpose,
on creating ‘thick value’ for citizens,
optimising growth and consumption,
earning a living return, based on shared
ownership and living wealth.
Our new story for business could
provide the power to free-up people and
organisations, to make the real shift that is
needed – to deliver real innovation in our
businessesthatwillcontributetowardsand
frame our longer-term sustainable success.
But, the future is unwritten. This sketch
is just the start of an ongoing process. No
singlebusinesshasthewholestorymapped
out yet. There are fragments out there, but
we just need to pull them together into an
accessible and compelling narrative.
As David Korten shares, in his excellent
new A New Story for a New Economy
essay; “It remains for those of us engaged
in such conversations to connect and
to collaborate on a national and global
scale. We must bring the elements of the
emergingNewStoryoutfromtheshadows
and engage an open and respectful public
dialogue.”
Michael Townsend is the founder and
CEO of earthshine.
In finding a new story, a
big part of the exercise is
also about rediscovering
and reclaiming some
of our forgotten truths
about business, economy
and human nature..