Andrew Cook - sustainability holds the key to long-term profitable growth
15:42 20 March 2012
Harvard Business School and London Business School recently investigated the impact of sustainability on corporate behaviour and performance.
Using a matched sample of 180 companies, the study provided evidence that high sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.
Organisations are having to confront an ever-growing list of key issues that cover the three pillars of sustainability - social, environmental and economic. There is an increasing recognition that these cannot be compartmentalised.
It’s time to re-invent business strategy. In the last two years, companies have been transforming - and sustainability is at the core of this transformation.
The first point to note is that sustainable businesses anticipate the future and act to create stronger, richer markets for business to sell into. This ambition is transformed into action through a focus on behaviour change.
02 and Nokia’s partnership has helped to reduce paper weight by 23pc, avoided the manufacture of surplus charging units and cut carbon emissions as well as increasing delivery rates to 98pc.
These enviable achievements were possible simply by giving customers the option of receiving their new mobile phone without a charger. Furthermore, new boxes were designed to be posted through a standard letterbox, so customers no longer have to wait at home for a delivery or need to travel to a sorting office to collect a missed delivery, further reducing fuel emissions.
The second secret of sustainable business is that long-term success is based on the actions of employees, customers and most significantly senior executives. Companies will support customers who wish to act to recycle more, reduce food waste, save energy or eat well. This is the new world of sustainable marketing –linking real social change with measurable commercial benefit. This ethos can be highlighted in the evolution of brands.
If we use Persil as an example, we see that early brands were marketed on functional needs: ‘Persil - gets whites whiter’. More recent marketing strategies focused on functional and emotional needs: Persil – ‘tough but gentle’ / ‘dirt is good’.
So where do we go from here? Is sustainability the next step in the evolution of brands, where there is a need for brands of the future to be marketed on functional, emotional, environmental and societal needs? Today, Persil says ‘Better things now come in small packages’, and closer to home - Anglian Water’s ’Love Every Drop’.
This focus on action leads naturally on to the third secret of sustainable business. Sustainable success is based on freedom to innovate within a strategic framework. SONY Playstation recently partnered with Pli Design, a company that specialises in manufacturing eco-friendly furniture, to give old PS 2 consoles a second life as chairs. The ribs of each chair are made from around eight and a half recycled PS2s. The aim is to recycle around 7.2 tons of plastic to create 3,000 chairs.
Each of us has the ability to use our influence for positive change, to help the private sector achieve long-term success, the public sector achieve public policy results and the third sector achieve their social goals.
A sustainable business model is a commercial opportunity. The alternative is a business risk. So, if your current model is based purely on compliance and your approach to business is based solely on short-term financial targets, it may be wise to look again. A word of warning though – a smash-and-grab approach that is under-resourced and rushed-through may do more harm than good.
Andrew Cook is managing director of Ethicomm