While politicians and diplomats shuffle their PowerPoint decks and agree to agree another day, civilian and military authorities, non-governmental organizations and businesses are tackling climate change and resource scarcity head-on, conducting risk assessments, formulating adaptation plans, and addressing both the sustainability of their internal operations and the sustainability of the goods and services they place in the world.
While business may be seen as a late comer to the sustainability table, its presence is crucial. After all, corporations routinely outnumber countries in rosters of the world’s largest economic entities,1 and they can act with an agility many visionary public servants can only dream of.
But why are businesses acting now? Because climate risk has taken a seat alongside resource scarcity and the economic crisis in boardrooms across the globe. This board-level awareness is being driven by: 1) triangular pressure from regulators, consumers and investors2, 2) the economic wallop from yet another year of disruptive and terribly costly extreme weather events, and 3) a growing awareness on the part of executives that sustainability is actually good, very good, for the bottom line, and essential to long-term business resilience.3
The Yin & Yang of Sustainability: Resource Productivity + Innovation
So how can businesses meet these challenges and achieve a healthy triple bottom line of people, planet and profit? In addition to incorporating risk management and sustainability into their own operations, businesses can promote resource productivity and innovation in the goods and services they produce, distribute or sell. Resource productivity means extending the consumer mantra of “Reduce, Reuse, and Recycle” in earnest across the entire product life cycle and extended value chain, for example, reducing energy and water consumption during product manufacturing or use, reducing packaging and shortening supply lines, reducing reliance on scarce or environmentally harmful materials, reusing parts and components, efficiently repairing or refurbishing goods, and increasing the use of recyclable or biodegradable materials.4
On the innovation side, this means imagining entirely new generations of products and services that sport net-positive sustainability footprints, adapt to (or aid consumers in adapting to) the unavoidable effects of climate change, and, depending on the industry, it may even mean participating in efforts such as geo-engineering that seek to moderate global warming or mitigate its impact.
“What is good for General Motors is good for……the planet”5
Achievements on these fronts are not only good for the earth, they are great for the bottom line too. Gains in resource productivity bring obvious business rewards such as lower costs, greater compliance, increased efficiency, reduced exposure to risks, and enhanced customer and investor goodwill. Breakthroughs in innovation likewise bring seminal benefits including competitive differentiation and access to new customers and markets.
Bringing It Home to EXALEAD
As an EXALEAD employee, I have seen our customers reap the bottom line benefits of improved resource productivity and process innovation. Given the seriousness of the challenges before us, I take pride in these customer achievements even when a client’s primary objective may be more efficiency or cost reduction than sustainability per se.
2) For an example of the increasing importance of climate change and sustainability in the boardroom, see the newly released CDP Global 500 Climate Change Report 2012. This survey of the climate risk and adaptation strategies of the world’s 500 largest public corporations was undertaken on behalf of 655 institutional investors who control over US$78 trillion in assets.
3) For more on the bottom-line appeal of sustainability, see: “Gartner Says Improving Sustainability Will Become a Top Five Priority for 60 Percent of Major Western European and North American CEOs by 2015” http://www.gartner.com/it/page.jsp?id=1749115
4) McKinsey has produced an interesting infographic on the topic of the penetration of the ‘reduce, reuse, recycle’ paradigm across “supply circles.” http://www.mckinsey.com/features/circular_economy
5) My own (mis)appropriation of the famous statement General Motors CEO Charles Wilson made in the U.S. in 1952:”What is good for General Motors is good for the country.”