|Author Name:||Katrin Scholz-Barth|
|Date:||Apr 21 2021|
Think: Awake a different mindset for new business models and operation.
Act: Innovate inspired by nature.
Lead: Dare to create the future.
To be Sustainability Intelligent we have to be Sustainability Literate
Demystifying sustainability: Sustainability in business terms simply means the protection of natural capital - to build stable, healthy economic systems that work at the same principles as complex natural systems, to both sustain and regenerate itself. This requires the recognition of natural capital and resources as invaluable assets that are the underpinnings for our survival, for human and planetary health and for a flourishing global economy and sustained wealth creation. The reliance on and continued burning of fossil fuels undermine the very possibility of sustained wealth creation and reliable returns on investment, a reality that will especially affect the Middle East without serious pivoting toward available renewable resources.
With some basic understanding of strategic sustainability, the opportunities and perceptions toward this ‘new’ natural capital asset class can change business models. We are at a tipping point and a creative, open-minded business approach toward sustainability presents the biggest investment opportunity in our history.
The blockchain and crypto currency are abstract and somewhat intangible, just as the internet. It is fair to say that the majority of people do not understand how the blockchain, crypto currency or the internet work. And yet, despite the foggy knowledge there is wide acceptance that there is value in the abstract and intangible and therefore worthy of investment to cash in on mighty returns and benefits. To get there, everyone had to acquire a basic financial, technological and digital literacy.
The same is true for sustainability. Not everyone understands the amazing ways in which nature works and secures our basic needs like clean air to breathe and water to drink. However, as discussed in the Leadership through Crisis blog, about 55% of the annual global GDP, that is US$47 Trillion (2019), depend on healthy biodiversity and functional ecosystems for value creation. The immeasurable value and return-on-investment (ROI) in sustainability and natural capital lays in our very survival. That’s so obvious! Or perhaps this is not that obvious?
It wasn’t obvious during the Roman Empire. Today there is reasonable evidence that the Roman Empire collapsed because of lead poisoning. The emperors went crazy because of lead in the aqueduct water pipes. Elevated lead levels in blood and brain caused such disorder that the empire went into total chaos and collapse. The technological advances of discovering metals that could be formed into pipes, weapons and jewelry more easily than stone, is what ultimately killed them.
At that time, nobody understood the toxicity of heavy metals including lead, mercury, cadmium, arsenic, in every-day objects such as water pipes, and their impact on human health.
Two thousand years later, and the reliance on technological advances blindfolds us again, in a different way, and prevents us from recognizing or accepting the very evidence that spells our demise.
Climate change is the Earth’s system’s response to the uncharacteristically rapid increase of carbon emissions in the atmosphere that get released when burning fossil fuels. These gases are trapped in the stratospheric layer of the atmosphere, reflect sunlight and cause the increase of atmospheric temperatures, referred to as the “greenhouse gas effect” or global warming, which in turn has an impact on human and planetary health as well as biodiversity.
Understanding these basic connections is essential knowledge to address sustainability from a business perspective for executives to:
The question is, are we smart enough to recognize strategic sustainability as a tool to cash in on natural capital’s short-term and long-term benefits and values?
Before getting intelligent about sustainability, we need to become literate in sustainability. The UN defines "Sustainability Literacy" as “the knowledge, skills and mindsets that allow individuals to become deeply committed to building a sustainable future and assisting in making informed and effective decisions to this end.”
Turning the abstract term of Sustainability into practical, hands-on and tangible business actions, below are 5 Keywords and phrases to boost Sustainability Literacy and Intelligence:
1. Regenerative Capitalism
The current model of Capitalism has steered the global economy into a climate crisis that brought the very existence of the human species to the verge of collapse. In order to save ourselves and to solve the world’s wicket challenges a new form of capitalism, regenerative capitalism, is needed to combine ecology, economy and equity and build stable, healthy systems to both sustain and regenerate itself. The outcome are purpose-driven businesses that benefit from making purpose and profits compatible and complimentary, that design out waste and eliminate and reduce carbon emissions, to navigate the ongoing market shift, disrupted by increasingly unpredictable events, toward a balanced social, economic and ecological health, a regenerative future.
How to get there: B-Corp. A public-benefit corporation, or B-Corp, is a purpose-driven company that operates in the best interest of the corporation, measured as “positive impact on society, workers, the community and the environment in addition to [generating] profit as its legally defined goals” is a new model of for-profit businesses that optimize rather than maximize profits in pursuit of regenerative economies. A few B-Corp examples include Patagonia, Unilever’s Ben & Jerry’s Ice Cream, Allbirds, Eileen Fisher and Triodos Bank. While Etsy and Warby Parker are not B-Corp certified, their purpose is deeply rooted in corporate social responsibility and is woven into the entire company culture and operation.
2. Economic Value and Environmental Awareness are Mutually Linked in a Circular Economy.
Implementing sustainability at the strategic level is a proactive measure to inspire profitability, influence product designs, services, and operations, as opposed to a more costly, timely, and painful re-active approach of bringing a business into compliance. Making economic sense of sustainability is more logical than it is confusing, turning a take-make-waste industrial system into a zero-waste circular one.
How to get there: Starting at the core with resource efficiency and discovering new materials and processes fit for a circular economy allows for creativity and imagination in pro-active anticipation for competitively positioning a company for a positive future and sustained value creation. What’s required are bold actions for fundamental systemic changes in business approach and strategy – to change everything and fast. Watch the free full-length documentary movie Closing the Loop for successful examples in different industries.
3. Systems Thinking and Game Theory for Competitive Advantage and Climate Solutions
Just like business acumen, financial literacy, and leadership skills executives will need to obtain systems thinking, the ability to apply the lessons of living systems to economic systems to recognize and understand the interaction of complex natural systems and processes, and their interdependencies. System’s thinking will increasingly be expected of an executive’s ability to run a future-fit company and holistically manage the delicate balance of profit and purpose in an interconnected web of systems, to assess how a business impacts the environment and how the environment impacts the business, financially. Logical Intelligence (IQ) and emotional intelligence (EQ) are by now also accepted basic requirements for business executives.
How to get there: Use game theory to assess future competitiveness by simulating pollution levels generated by a business/industry on a systems level to force strategic choices and decision making that illustrate implications of climate change on other issues, like trade, policies, communities and behaviors, based on real data, to generate optimal outcomes.
4. Carbon Neutrality – Strategic Sustainability is a matter of Business Survival
An agile, future-fit company must be able to respond to fast-changing external forces and pivot based on customer demands and developing policies. Increasingly, consumers become aware of their purchasing power and more confident about directing their resources toward impact investments to drive natural, social and financial returns. Consumer-driven investments support new product design that accelerate the energy transition and eliminate toxins and fossil fuels and thereby reduce the carbon footprint in manufacturing, in the built environment, infrastructure, transportation and other sectors.
Companies in the Middle East have yet to understand the value of a Chief Sustainability Officer and why this is a strategic role at the C-Suite level. Closely aligned with the Chief Financial Officer, the CSO is able to identify strategic solutions that integrate natural capital to stay lean and competitive.
How to get there: Utilize natural systems thinking to decarbonize a business with innovations informed by sustainability. In “Biomimicry. Innovation inspired by Nature” author Janine Benyus, a biologist by training, shares insights into regenerative agriculture practices to feed ourselves while farming like a prairie, an energy transition to harness renewable sunlight, and business practices in closed-loops and much more. Examples include Google Maps new feature that will default to directing traffic toward the fasted and least carbon-footprint routes.
Innovation will guide the design of products and services, technologies and processes to turn risks into opportunities, aiming for net-zero carbon or negative-carbon operations to become future-fit and survive unforeseen shocks and events where sustainability is an outcome for sustained wealth creation, not a solution.
5. Environmental Social Governance (ESG)
Environmental Social Governance (ESG) has become the investor’s term for corporate social responsibility (CSR). What differentiates ESG from CSR is that decarbonization is driven by core business and purpose, meaning that measurable return on investment has replaced philanthropic giveaways and public relations initiatives like beach cleaning. ESG in purpose driven companies focuses on product design and the technical aspects of sustainability to design out waste in a circular economy that will not require downstream cleanup.
Whether or not a startup or established business intends to disclose ESG performance is irrelevant. No company is too small to design future-fit business models to drive social, financial and natural returns. However, it requires sustainability intelligence. Being familiar with and understanding ESG reporting will soon be as important as reading a balance sheet. Every executive will need to distinguish between assets and liabilities to utilize carbon neutrality and/or carbon sequestering business trends as powerful marketplace differentiators.
How to get there: The International Finance Reporting Standards (IFRS) Foundation together with the International Organization of Securities Commissions (IOSCO) will be introducing new ESG standards at the upcoming 2021 UN Framework Convention on Climate Change, COP26 in Glasgow, Scotland, to make ESG reporting and sustainability disclosure globally consistent, comparable, and reliable. Being well versed in these new metrics will be a matter of being in business or falling by the wayside.
Sustainability intelligence is becoming vital business knowledge which requires literacy, skills and training for doing and staying in business.
Executives literate in sustainability will be well equipped to integrate new models and practices for successful for-profit future-fit businesses. Being cognizant of emerging trends and capitalizing on new data sets will enable executive to identify new business opportunities and revenue streams.
The new asset class of natural capital offers science-based and AI-driven technological solutions to infinitely contribute to meeting the Sustainable Development Goals and prove that two thousand years of learning, innovation and development has made humankind smart and sustainability intelligent enough to secure its own survival. As an eternal optimist I believe that the reliance on technological advances will guide us in recognizing and accepting the value of natural capital before we wipe out our own species.
A helpful tool for greater comprehension on the topic is The Handbook of Sustainability Literacy, compiled by “leading sustainability educators [who] are joined by literary critics, perma-culturalists, ecologists, artists, journalists, engineers, mathematicians and philosophers [who outline] the skills people need to survive and thrive in the challenging conditions of the 21st century.”
The next blog will focus on ‘Going Carbon Neutral’, discussing how a company can decarbonize to move toward carbon neutrality, which will offer directions for setting a greenhouse gas (GHG) emissions baseline, take actions to reduce emissions to reach the ambitious goal.
Joanne Goveas- Rotman School of Management
Sep 16 2016
“Be curious, be lazy, be often,” says Michael Bungay Stanier, one of the world’s top three leadership coaches.
Amy Jones- Henley Business School
Sep 27 2019
Companies like Microsoft and Siemens spoke and ran workshops to help delegates understand how the workforce could be impacted by flexibility and technology. Here’s what we learned from the various speakers and sessions.