Business Imperative: Sustainability the Key to a Secure Future

Last Friday, I attended a live webinar sponsored by the 2Degrees Network, featuring two speakers who are based in the UK. David Bent is the Head of Business Strategies at not-for-profit Forum for the Future. James Robey is the Head of Corporate Sustainability at Capgemini. Together, they discussed why business leaders must see sustainability as an opportunity to ensure a secure future, despite the recession. 

Indeed, the current recession is the result of unsustainable development in economic, material, and environmental terms. David Bent surprised me when he characterized the the current postwar trend of economic and population growth as a global overshoot.

Overshoot is a situation when a system gathers so much momentum in one direction that it temporarily exceeds certain limits, and that this eventually will be met with a corrective force or forces that drives it back into an equilibrium. Overshoot is Wyle E. Coyote breaking through a guardrail while pursuing the Roadrunner, puzzling for a moment about what just happened, gaping at the abyss below his feet, and then taking the plunge.

Bent stated his point and moved on with his presentation.

I was surprised, because this concept has been ignored by mainstream business leaders and economists. The concept of overshoot smacks hard against the prevailing philosophy that our economic growth can be sustained in perpetuity, without limit.

Overshoot implies that there are certain physical and ecological limits to civilization's growth which lie beyond our control. However, most neoclassical economists including Julian Simon have strenuously attacked any effort to make such a suggestion, relying on the faith that human ingenuity will always develop an answer and deploy it in time to save the day.

Bent's unapologetic use of the term captured my attention. By accepting the liklihood of limits to growth, one can better appeciate this definition:

Sustainability: living within our means

At the Forum for the Future, Bent and his team are trying to anticipate our future based on various assumptions. His hope is that organizational strategists in the public and private realms, regardless of ideological bias, will use these scenarios to help their organizations develop appropriate precautions and contingencies-- with little or no regulatory prompting from governments.

Some of the questions addressed by the scenarios include: 

• Will the response to overshoot be globally-coordinated or nationalistic? 
  
• Will elites around the world recognize and support global institutions? 
  
• How will the financial markets be regulated? 
  

He has developed four primary scenarios: 

1. Alpha scenario: things will go global; consistent market regulation; Finance is run as more of a business utility than a casino (my emphasis!); primary mfg of consumer goods in China: finishing, use and re-use done within local markets 
   
2. Beta (continuation of path that we are on): nationalistic responses, protectionism, barriers 
   
3. Delta1: patched-up globalization; disasters inside China; distributed (renewable) energy generation empowers the developing world 
   
4. Delta2: me and mine, individualism reigns, powered by online services: atomized social networks; collapse of trust in large orgs (private and public); regulatory nightmare 

Their advice to organizations: 

• Prepare for radical change: rehearse multiple scenarios 
  
• Don't obsess on consumer demand: expectations for corporate responsibility will rebound once the economy improves 
  
• Identify direct cost savings
  
• Use innovation to protect market share (more customer value)
  
• Motivate your people
  
• Capture long term advantage (strong balance sheet) 
  

My question: The Interface Corporation under Ray Anderson's leadership is frequently cited as a leader in transforming its business along sustainability principles. Sadly, it's financial performance has failed to convince mainstream business analysts. Any ideas why?

A: Interface's sustainability goals are radical, not incremental. They are shifting from selling goods to selling services, and this warrants them to reeducate their customers about changing their buying habits. This all takes a lot of trial-and-error, a lot of time to perfect.

My question: Organizations naturally respond to the need to "do" CSR, by expanding their bureaucracy (i.e., adding new roles to their organizations), instead of integrating new incentives and practices into existing structure. What can be done to avoid this?

A: Apply some of the lessons learned during the TQM revolution in the '70s and '80s. Many companies started by forming special quality management groups but soon found out that you cannot create quality, no matter how hard you test for it. Quality products come from quality processes, from companies that train and encourage all employees to employ quality in their work. Sustainability needs to be treated the same way.