Leading companies today are starting to think of sustainability as a tool for growing profitability, using frameworks such as the UN Sustainable Development Goals as a guide to future market opportunities. In this article, we outline three imperatives for leaders who want to thrive in tomorrow’s markets: think exponential, think open and think circular.
“How much will it cost?”
Even if these are not the first words out of a senior executive’s mouth when approached about a new sustainability initiative, it’s generally the first thought that crosses his/her mind.
It’s an understandable response. Companies have long recognised the intangible benefits of sustainability activities – on brand or talent acquisition and retention, for example. These benefits do, in most instances, enhance profitability, but the relationship is indirect. The notion of sustainability contributing directly to a company’s bottom line remains foreign to most people in business, including – perhaps most especially – sustainability officers.
Not any more. Accenture estimates the value of implementing a circular economy to be $4.5 trillion globally.1 Analysis by the We Mean Business coalition has found that implementing the Paris Agreement will unlock at least $13.5 trillion of economic activity in the energy sector alone by 2030.2 And at Davos this year, the Business & Sustainable Development Commission launched its Better Business, Better World report, which identifies at least $12 trillion a year (by 2030) of market opportunities linked to implementing the UN Sustainable Development Goals. This, by the way, is a conservative estimate. According to the Commission, the real market value could be as much as 2-3 times higher.
None of these numbers should be taken too literally, clearly, but they provide useful broad-brush indications of the scale of economic opportunities linked to sustainability that business leaders interested in long-term value cannot ignore. As a recent white paper by The Generation Foundation put it:
“These opportunities do not come at the expense of profits, but have often been the basis for identifying new business initiatives. This underscores what we have observed more generally to be true with great companies: sustainability is a tool for growing revenue and profitability while strengthening their competitive position.” 3
This powerful trajectory in our economies calls for a radical new function – and mindset – for corporate sustainability teams. It is now clear that it is time to stop thinking simply in terms of the business case for action and to start thinking about new business models, new forms of value creation. The inescapable conclusion: sustainability need not be a cost centre any longer; rather it must find a place at the heart of a company’s approach to generating profits.
About the Authors
John Elkington is Chairman & Chief Pollinator at Volans (www.volans.com). Also co-founder of Environmental Data Services (ENDS) back in 1978 and SustainAbility 30 years ago in 1987. He has written 19 books – most recently The Breakthrough Challenge: 10 Ways to Connect Today’s Profits With Tomorrow’s Bottom Line with Jochen Zeitz.
Richard Roberts is Project Breakthrough Lead at Volans. His research and writing covers the role of new technologies, business models and mindsets as enablers of sustainable growth.
1. Waste to Wealth: Creating Advantage in a Circular Economy, Accenture, 2015.
2. The Paris Agreement: What it Means for Business, We Mean Business, 2016.
3. The Transformation of Growth: How Sustainable Capitalism can drive a new Economic Order, Generation Foundation, 2017.
4. Rethinking Transportation, RethinkX, 2017.