Climate: How companies can turn change into competitive advantages
At least since the worldwide demonstrations at the end of September, it has been clear: society has started to move on the issue of climate protection
The term "purpose" and discussions about the meaning of entrepreneurial action are finding their way into German boardrooms. Sustainability in the form of climate protection, resource conservation, fair working conditions or combating corruption are such meaningful goals. Today, 9 percent of the almost 300 companies surveyed by Bain say they are making serious efforts to develop a sustainable business model; in five years, this figure will be 26 percent. Around 90 percent also say they have to adapt their core business in order to operate sustainably. And 38 percent are aware that they have to radically change their company's core business in order to be part of a sustainable economic system. Many companies are only at the beginning of their journey, at the end of which there will be a new type of business. Greenwashing was yesterday. Tomorrow, sustainability will be a central priority on every board agenda.
The use of appropriate materials, energy savings and the appointment of managers who are responsible for sustainability are just as state of the art in modernly managed companies as ambitious green goals as part of the company vision and brand message, cooperation with NGOs and the use of sustainable technologies. The next step is to learn completely new ways of seeing and acting.
Internalize future-back thinking
The triumph of the iPhone or the introduction of the MS-DOS operating system – these developments seem logical in the rearview mirror. The learning curve that results from this is what is known as future-back thinking. This management approach sets a big goal in mind and asks what needs to be done to achieve it. If a company wants to establish a sustainable business model in five years, this requires a clear idea of the target state. The future-back approach unleashes enormous transformative forces and can sweep an entire organization along with it. Tesla, for example, is driven by a mission, despite all current difficulties. Without this intrinsic motivation, the company would certainly not have become the scourge of the world's premium car manufacturers.
Many companies rely on sustainable processes and products primarily for reputational reasons. Nobody wants to be pilloried as an environmental offender. If sustainable concepts can reduce costs, management is happy to support the efforts. But that is too short-sighted. The biggest obstacle to more sustainable goods is the customer, who does not want to pay a higher price for them. New products must not only be sustainable, but also extremely attractive, affordable and innovative - and thus irresistible to customers and without alternatives. Procter & Gamble's cold water detergent is one such product. It has reduced energy consumption during washing by 90 percent. Adidas, on the other hand, has sold over a million pairs of a sports shoe made from plastic collected in the ocean. However, sustainability as the only product promise is not enough. Banks are developing financial products that link returns with environmental and social goals.
Driving system change through partnerships
No company changes the world alone. It doesn't help much if a department store treats its employees well and disposes of waste in an exemplary manner, but the products it sells are made by children in Asia. Interactions in the economy are no longer linear, but in widely branched networks that define value creation processes. This gives rise to responsibilities that do not end at the front door. In order to completely renew corporate ecosystems, other forms of cooperation are necessary. Partners, but also customers, must be involved. Around 64 percent of managers consider this change to be very important, not least in order to achieve economies of scale in the future. Cooperation with NGOs, regulatory authorities, legislators and competitors is therefore also becoming increasingly important.
Technology is the decisive lever for change. Apple uses robots to recycle the iPhone. Google uses artificial intelligence to reduce energy consumption in cooling its data centers by 40 percent. German power plant operators now produce green electricity. Logistics companies use pedelecs to deliver to inner cities. Electric, hydrogen and hybrid drives will replace petrol and diesel engines. Start-ups are developing vegan meat substitutes. Factory lighting is being converted to LED light. Many companies are working to drastically reduce their carbon dioxide emissions and become CO2-neutral. Everything depends on future technologies, the development of which is still in its early stages. Those who will win will be those who ensure a quantum leap in their industry.
Redefining value creation and core business
Against this background, slow progress is not enough, especially in traditional industries. Only with truly revolutionary steps can companies become sustainable. Pioneers therefore go beyond financial indicators when measuring success and include ecological and social aspects in their investment decisions. They seek a compromise between profitability and environmental, social and governance goals. BASF measures the social and ecological benefits of every investment in addition to the economic benefits. ING tied the interest rate for a billion-euro loan to the electronics company Philips to the achievement of environmental, social and governance goals.
The desire among global management to subject business models to a sustainability review and to draw serious conclusions from this has never been greater. Against this background, a shift towards sustainable business is no longer fiction.