Doing good – cost and compliance and charity OR a world of opportunity?
Approx. time to read: 7 minutes
When you start looking at today’s global social and environmental challenges through the lens of strategic opportunity then a wealth of business potential opens up.
“How does environment + community = our opportunity?”
Too good to leave to government and charity!
Back in the 1960s, economists told business operators that their job was to “just look after their shareholders” – that concerns about the well-being of communities and ecosystem were not theirs to action.
There are some problems that come with that thinking, however:
1. Businesses that strategically, consistently and authentically include environmental and social benefits in their planning show benefits on their bottom line.
Less environmental impact comes from innovation towards smarter, cleaner, more efficient processes using renewable resources delivering more sustainable products and services.
More community benefits means a happier, more engaged workforce, a broader, more prosperous customer base and a more peaceful community.
2. Business creates prosperity by solving problems at a profit.
So leaving wicked social and environmental problems to other people to solve also means leaving them a LOT of potential opportunity.
Canny, nimble, small and mid-size businesses can often be far more responsive to opportunities and needs than bigger organisations.
3. If you don’t design functionality IN, then it’s extremely likely that you’ve designed it OUT – and retrofitting will be costly.
Extracting resources from your host communities and ecosystems while ignoring your impact and their needs until after you’ve built your business is like ignoring the need for cooking, bathing and washing as you build your house.
When you DO realise you need the extra functionality, it’s likely to cost you a LOT to retrofit. Begin with the end in mind – then you won’t accidentally design sustainability out.
4. Globally, business revenues are up to 5 times those of governments and Not For Profits combined.
It’s absurd to suggest that under-resourced governments and charities can somehow reverse the high-cost damage done by extractive, destructive industry processes.
5. The world’s inventors and entrepreneurs never stopped making better products and services because “there isn’t a need”.
They’ve been working on smarter, cleaner, safer ideas before anyone even knew there were problems (the first solar panel was installed in New York in 1884)
The solutions that are already commercial are downright awesome, and the innovations coming to market (accelerated by the information revolution) are breathtaking.
6. The world’s investors are increasingly demanding social and environmental responsibility from big businesses.That demand IS flowIing down the investment chain.
Mainstream investors like Blackrock are demanding corporate responsibility from big business. And a growing number of venture capitalists are deciding that there are far more interesting startups to invest in than yet another Internet platform.
7. Business doesn’t exist OUTSIDE anything – without functioning communities and functioning ecosystems, there can be no business.
Today, the idea that business should just get on with making money while governments and charities fix the problems they caused is obsolete.
Knowing your impact and exploring for ways to make it become positive instead of negative is just practical common sense in the third decade of the 21st century.
“Good” used to be a limited niche – but now it’s a growing trend
The Body Shop and Patagonia are just two household names who have pioneered the trend to “business for good” as a core of their brand – with environmental sustainability and social restoration delivering long term profits.
Many other businesses have been quietly innovating this multi-dimensional approach to business success – without necessarily telling the world. (Try the “Good is the New Cool” books for case studies covering the likes of Adidas and Barbie.)
Regenerative business leaders like carpet manufacturer Interface are 25 years down the track, with millions of dollars on their bottom lines to show for it. In the first 12 years of their program, Interface added $393,000,000 to their bottom line as they “climbed Mount Sustainability” on their journey to becoming the world’s first restorative business.
Economists expect that Circular Economy innovations will generate global returns in economic benefits of up to $4.5 trillion dollars during the next decade.
Independent modelling by Project Drawdown has identified $80–115 trillion of economic savings – just from the existing commercial solutions to climate change (which also deliver on 15 of the 17 UN Sustainable Development Goals).
The financial case for climate solutions is crystal clear, as savings significantly outweigh costs.
Overall, net operational savings exceed net implementation costs four to five times over:
an initial cost of $22.5–28.4 trillion versus $95.1–145.5 trillion saved.
If we consider the monetary value of co-benefits (e.g., healthcare savings from reduced air pollution) and avoided climate damages (e.g., agricultural losses), the financial case becomes even stronger….
Drawdown 2020 Review
Opportunity is where you make it – and the design principles for making business better have been developing since the 1990s.
The core strategy shift – from extractive to regenerative design
Thought leaders have been developing and explaining smarter economic designs for “doing well BY doing good” for decades. Some of the key shifts that we’ll discuss as we move through these INSIGHTS include:
• Circular Economy
• Doughnut Economics
• Cradle to Cradle Product Innovation
• Shared Value Economics
• Biomimicry
• Systems Thinking
• Natural Capitalism
What they share is a shift away from business strategies which accept that “extract and exploit” is justifiable – or even more profitable over time – than regenerative strategies.
Instead, these new business strategies design IN environmental regeneration and community restoration.
Deep Green Profit businesses invest in innovation to solve problems at a profit
As Harvard economist Michael Porter puts it:
“business creates wealth when it meets needs at a profit”
Business growth and adaptation to a changing world takes investment in learning; investment in strategic planning; and investment in business innovation.
Solving “wicked” problems is a business opportunity.
What do entrepreneurial thinkers do? They change the default, habitual thinking about something.
Whether you’re a tech startup saving building owners money through Smart Building Solutions or a local florist processing your green waste and paper into valuable fertiliser in a worm farm, there’s a smorgasbord of opportunities.
It’s a process that starts with of scanning for opportunities – looking for challenges and for solutions that need scaling.ness strategies design IN environmental regeneration and community restoration.
Where can you look to find opportunities?
It’s all very well to say “look for opportunity” – but where do you start?
To get a sense of the broad range of opportunities, scan Project Drawdown’s modelling of the 80+ commercial climate solutions already scaling globally. Their list is updated regularly, and identifies a wealth of cascading benefits and savings across 7 industry sectors. So exploring it makes a great starting point.
However, the Drawdown team only modelled commercial solutions already scaling that had peer-reviewed data sets available to support them. This means that each Drawdown solution is just an indicator of a whole range of opportunities.
Another way of understanding the scale of the challenges (tr. opportunities) is Kate Raworth’s Doughnut Economics diagram. Her work includes a great visual of the global opportunity space.
It puts what’s needed to create a safe, just, prosperous future for all – both the ecological ceilings and the social foundations – into one picture.
Part 3 of the Doughnut Economics Action Lab’s 4-part video Introduction to Doughnut Economics discusses How to do Business in the Doughnut.
(You don’t have to tackle everything – after all, there are roughly 8 billion people and 50 million SMEs in the world. However, if you don’t look for your opportunity, someone else probably will.)
Where could your opportunities lie?
This article is the first in a series of “Deep Green Profit Insights” Over the next few weeks I’ll take you deeper into what’s happening on the ground today. Subscribe here so you don’t miss them.
In the mean time – as the human brain is a question-answering machine – you can already start asking questions about your business. Questions like:
- What are our direct environmental and social impacts? Do we actually know?
- What happens downstream from our operations? Or upstream?
- What inputs do we currently depend on that extract and exploit without regenerating?
- What are the social and environmental trends developing in our industry?
- What do we need to learn more about?
- What are the key environmental and social issues in the region where we operate?
Use your curiousity to start exploring for ideas – but resist jumping into “everybody knows” actions in the short term.
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About the Author
Leigh is a supply chain analyst turned sustainable business writer, with over 30 years of business experience. Leigh blogs and podcasts on the commercial climate solutions scaling in the marketplace and the business opportunities they offer – particularly to SMEs.
Climate solutions have been called “the biggest business opportunity in human history” – and SME businesses need to know how to find their opportunities.
Leigh is the leader of the Better Business for Good Company Regenerative Business Expert Panel.