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The Future of Sustainability: The BIG Three Trends

Chris Laszlo and Nadya Zhexembayeva*

From Michael Porter to Vogue magazine, it seems that the world has become obsessed with social and ecological issues. With topics ranging from CO2 emissions, water rights, and deforestation to child labor, peace, and social equity, the needs of society and the environment present a perfect storm for the average manager: complex, disorienting, and maddeningly inscrutable. Which issues merit consideration? How does one understand the vast landscape of seemingly disconnected concerns?

Looking deeper into the economic, social, health and ecological pressures that fall under the sustainability umbrella, it might be helpful to think about them in terms of the three big, distinct, but interconnected trends: declining resources, radical transparency, and increasing expectations. Here are the pieces of this new puzzle.

DECLINING RESOURCES

Take haru Jinguji has been watching the steady decline of bluefin tuna (thunnusthynnus) in Japanese waters for years. His long-line fishing boat competes with net-fishing folk who also catch small fish. For Takeharu, the issue of tuna and its entire food chain is vital to his livelihood. Commenting on the loss, he says,”…the total number of fish has been decreasing a lot. So the biggest problem for me is that my income has been reduced.” His observations reflect a stark new reality: bluefin tuna have been heavily overfished in all but the Antarctic waters, with stocks at less than 10% of what they once were.

Bluefin tuna is only the tip of the iceberg. Recent years have seen renewed concerns about the rapid decline of many natural resources, voiced by international bodies like the World Wildlife Fund. Its Living Planet Report warns that “the possibility of financial recession pales in comparison to the looming ecological credit crunch.” While the level of decline in certain resources such a soil remains hotly debated, other data is less contested. Even a brief scan across recent studies suggests a strong and clear trend at the level of the planet itself:

  • Clean water supplies are seeing significant mismatches with demand, especially in Asia, Africa, and Europe. An estimated 1.1 billion people lack access to safe drinking water, while 2.6 billion people lack adequate sanitation, and 1.8 million people die every year from diarrheal diseases, including 90% of children under five who are struck by water-borne disease.
  • Global forest coverage has experienced an average decline of 0.2% annually, with about1.3 million km2 lost between 1990 and 2005.
  • Food security is emerging as a central issue of the new millennia, with food quantities and price volatility reflecting the uncertain state of the world’s food supply. But even if enough food is produced to feed everyone, it appears that the nutritional value of crops has been on the decline. A recent study shows an average decline of 6% in protein, 16% in calcium, 9% in phosphorus, 15% in iron, 38% in riboflavin, and 20% in vitamin C from 1950 to 1999 across 43 garden variety crops.

We can continue this list indefinitely at a risk of losing you to frustration or apathy, the way much of the environmental movement has done before us. We can also add to the list the loss of many “social” resources that add market pressure, whether it is to our security, health, education or social equity. Our purpose is, however, rather different – to make the invisible trends visible, so that we can innovate ourselves into a new future. And the declining resources are only the beginning.

RADICAL TRANSPARENCY

While the resource crunch is reaching historic proportions, its impact is being amplified by a second big trend that itself is re-shaping the world – radical transparency. Fueled by the unprecedented growth of the civil sector and enabled by rapid developments in the field of information technology, transparency has become the dynamic, immediate, and substantive force of modern life. So what is happening, exactly, to bring about radical transparency and how is it relevant for business?

First: The power of numbers

Among the many important developments that are making business increasingly transparent, the rise of civil society must be considered primus inter pares. From humble beginnings in Cicero’s societas civilisto the global power of influence in the present day, the number of voluntary social and non-profit organizations dedicated to societal and environmental concerns has surpassed the one million mark. For the sake of simplicity, let us imagine that each of these organizations unites the efforts of only ten people – whether volunteers or employees. That means that at this very moment, at least ten million full-time activists (!) are putting sustainability at the center of their lives.

Second: The magic of low-cost communication

As the sheer number of NGOs grow, so does the number and sophistication of their tools. Increasingly affordable global communications technologies coupled with immensely popular social media solutions have created a level of connectivity never imagined or seen before.

Third: The culture of connectivity

While the decreasing cost of communication and collaboration creates an important technical infrastructure, the emerging culture of connectivity guides what we are able to do with it. Whether it is Blackberry, Twitter, Facebook, Friendster (popular in Southeast Asia) or any other medium, there is no denying that we have come to love – and expect ongoing connection with – the people in our virtual spaces. As we explore this new hyper-connected world in which businesses, too, must operate, the work of Howard Rheingold serves as a useful reference. In 2002, Rheingold published an examination of the new techno-cultural wave that now allows all of us to be connected to anyone, anywhere, anytime. His book, Smart Mobs: the Next Social Revolution, makes a striking point about the marriage of two technologies – cell phones and the internet – which has produced an entirely new form of media. What Smart Mobs illustrates so well is the emergence of a new change agent – the common man. In an age where sending an SMS toone’s entire address book takes only a few clicks, and viral videos have more impact than carefully orchestrated commercials, it is the connected collective that brings sustainability into every household – and every market. If anyone doubts the risks of trying to hide poor performance, just ask Toyota about its 2010 gas pedal debacle, or United Airlines about their baggage handling carelessness.

INCREASING EXPECTATIONS

If the resource crunch calls into question the security of entire value chains, while transparency opens up every corporate decision and action to instant global scrutiny, this third trend deals with the very essence of values and demands citizens have about life. Customers, employees, investors, and regulators increasingly expect sound social and environmental performance in every aspect of human life.

The customer rising

As early as 2006, a National Consumers League and Fleishman-Hillard survey of U.S. consumers reported the social responsibility of a company as being the number one determining factor of brand loyalty (35% of respondents), well ahead of product price and availability (each receiving 20% of respondents’ votes). Four years later, it also became clear that concern about the environment was not limited to consumers from developed economies – the 2010 World Economic Forum report suggested that such concern was as strong in the developing world, “and in some areas stronger as they [people in the developing world] are often more directly affected [by], for example, water pollution.”

The employee engaging

While declining resources and radical transparency continue to fuel consumer pressures on businesses from the outside-in, another wave of expectations is pressuring companies from the inside-out. This wave comes from the employees. The exact relationship between company commitment to social and environmental excellence and employee engagement and performance has long been debated. Recently, however, this relationship was measured in a scholarly manner, proving that when employees perceive their company to be a good corporate citizen, their engagement, along with creative involvement and deep, high-quality relationship with the company, goes up. Bob Stiller, Chairman of the Board of GreenMountain Coffee Roasters, describes this connection between business sustainability and employee engagement: “I’ve learned that people are motivated and more willing to go the extra mile to make the company successful when there’s a higher good associated with it. It’s no longer just a job. Work becomes meaningful and this makes us more competitive. Everyone realizes we can’t do good unless we’re profitable. The two go hand in hand.”

The investor calling

From a small fringe in the 1970s to the present day amounts of trillions of dollars in total assets under management, the rise of Socially Responsible Investment (SRI) is nothing less than remarkable. A broad-based approach to investing that includes screening, shareholder advocacy, and community investing, SRI is perhaps most known for the rapid growth of funds that exclude so-called “sin-stocks” such as tobacco, armaments, and gambling. In some countries, SRI now encompasses 11%of total assets under management – a hefty chunk of the investment market.

Yet it is the other 89% of mainstream investment that is the real news of the day. The amount of attention coming from the “normal” investor is what companies are suddenly attuning themselves to heed. The involvement of the mainstream investment community in the field of climate change illustrates this new reality. A highly contested, tension-causing topic, climate change is hardly one to incite “save-the-world” action and Kumbaya singing from the gray pinstripe universe of finance. Yet, it is the investment community represented by the Ceres’ Investor Network on Climate Risk (INCR) that proudly reported a record of 95 climate change-related shareholder resolutions filed by March 2010, a whopping 40% increase over the year-earlier proxy period. INCR’s UK counterpart, the Carbon Disclosure Project, acts on behalf of 475 investors representing total assets of $55 trillion – and uses its power to force the world’s largest publically-traded companies to disclose their emissions. In 2009, 409 out of 500 largest companies responded to Carbon Disclosure Project’s request, up from 383 in the previous year.

The regulator acting

In 2008, China launched a surprise crackdown on plastic shopping bags, banning outright the production of some designs and forbidding stores from handing out free bags. This was only a year after San Francisco became the first U.S. city to ban plastic bags in supermarkets. Also in 2008, Calgary became the first city in Canada to make illegal trans fats from restaurants and fast food chains, while the Brazilian state of Mato Grosso became the first Latin American state to pass a WEEE bill, focused specifically on electronic waste prevention. In 2009, the U.S. National Association of Insurance Commissioners made climate change risk disclosure mandatory for all insurance companies with annual policies over $500 million. In 2010, the UK launched its first mandatory carbon trading scheme, initially called the Carbon Reduction Commitment, and later renamed the CRC Energy Efficiency Scheme. Also in a single month in 2010, South Africa passed 47 amendments and extensions to its sustainability legislation and regulation, ranging from chemical management to atmospheric emissions to fertilizers and everything in between. The data speaks for itself here, but let us try to make the point even more explicit: whether it is an act of leadership or a delayed reaction to pressures from NGOs and activist voters, governments are taking social and environmental issues to heart, adding new laws and regulations to the pressures shaping the business environment. The question is: will your company ride the wave of legislative changes to get ahead of the curve, or will it wait until the waters drag it under?

THREAT OR OPPORTUNITY? 

Fit them together, and it is remarkable to see how the three trends of declining resources, radical transparency, and increasing expectations are redefining the way the world works. The linear throw-away economy in which products and services follow a one-way trajectory of extraction-use-trash can no longer be supported by the Earth’s natural resource-carrying capacity. Consumers, employees, investors and society at large are beginning to demand socially-and environmentally-savvy solutions and practices. Radical transparency, fueled by the growth of the non-profit sector and supported by evolving technologies, makes both trends ever more visible to the public eye. For some,these trends present an immense threat to fight against. For some, it is a reason to lose hope. For others, it is the opportunity of a lifetime. The question is: what will it be for you?

_________________________________________________________________________

*Dr. Chris Laszlo is an international author and managing partner of Sustainable Value Partners (USA). He is also C:F Advisory Board member and C:F Judge.

 Dr. Nadya Zhexembayeva is Chair of Sustainable Development at IEDC-Bled School of Management (Slovenia) and C:F Vice President, Knowledge and Development.

This article is adapted from their forthcoming book, Embedded Sustainability (Greenleaf Publishing, UK and Stanford University Press, USA, 2011).

 

 

 

 

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Dan Croitoru

Dan Croitoru

Great article. The resources are declining fast and we might not be able to change our mindset and habits towards a more sustainable way of living. The good news is that we tend to focus more and more on this matter and to become aware of the dangers we are facing. The pressure is building up from all sides and I love the last question: will it be threat or opportunity? Looking forward to read the book!

26th August, 2010 @ 3:57 PM CEST

Jatin Kataria

Jatin Kataria | Action team | CF Chapters

Its awesome... article with full of facts and information.. Chris & Nadya, thanks to give wide view of world ..

3 trends are just fab.. specially radical transparency..
nice facts and fig in declining resources and increasing expectations..

for me there is always opportunity ... if threat is there then treat is opportunity to mitigate the risk involved... :)



18th September, 2010 @ 12:33 PM CEST

Saad Khan

Saad Khan | Action team | CF Chapters

superbly articulated piece of writing. I would also like to add that these days corporate sustainability activities actually give rise to sustainability related innovations in not only those organizations but in the society as well. So i guess that can be added to the list as also. For this reason i think policies play a vital role as sustainable innovations firstly need support, implementation and protection at a local level and then at a global level to improve standards and competitiveness. Any how what has been described in the article is as true as it sounds. Thank you Chris and Nadya for the great insight.

18th September, 2010 @ 8:40 PM CEST

Nadya Zhexembayeva (Management)

Nadya Zhexembayeva (Management)

Thank you my dears!

(I am back after a crazy travel-full summer, but promise to be much more present!)

Now, a question for you: if the BIG three trends are the objective reality that has a potential to serve as a great business (social, political, etc) opportunity, how do we get our managers to recognize it as such?

In the past 2.5 weeks I facilitated sustainability courses for three different groups of managers. For them, all of this is completely invisible. Some found it to be eye-openning, others thought of it as mere fashionable element of education. How do we get the message to the masses - 'normal' mid-level managers, 'normal' public sector workers, 'normal' public?

22nd September, 2010 @ 6:28 PM CEST

Dharmesh Bhadja

Dharmesh Bhadja | Action team

The best assay which makes me confident and give the valuable guideline... now I am ready to GO AHEAD with keeping this in mind. Yes it’s the challenge and I have the faith on me, on god and on youths to work indefatigably for our beautiful planet’s sustainable development. “I’ve learned that people are motivated and more willing to go the extra mile to make the company successful when there’s a higher good associated with it. It’s no longer just a job. Work becomes meaningful and this makes us more competitive. Everyone realizes we can’t do well unless we’re profitable. The two go hand in hand.” – The good and applicable advice, sir.

thanks to Nadya and Chris

Now I am thinking to include ‘the green motivation’ in my next future strategies of my company.

28th October, 2010 @ 7:29 PM CEST

TITILAYO IJAGBEMI

TITILAYO IJAGBEMI | Action team

We should always make this our watch word and our doing word "Green lifestyle= Green Planet"

24th October, 2011 @ 2:33 PM CEST

Joel Mordi

Joel Mordi

I wish the whole world get this message.....i will write on this on my blog socialtechy.com...go green...reduce reuse recycle

22nd August, 2012 @ 3:33 PM CEST

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