Sustainable: Your business, customers and IKEA

A 10 minute brief on a clear and present danger for your business.

Sustainable long ago broke out of corporate social responsibility (CSR). It has served time with communications and content marketing teams. In 2017 it is demanding release into your business. You must mentor and integrate it.

Key Takeaways

  1. End-users are demanding that you doand demonstrate – sustainable business. If you don’t, expect them to shame you – or walk away.
  2. Sustainable business must be part of your corporate DNA, not a CSR cost or issue.
  3. The new business ‘black’  has a ‘triple bottom line’. One judged by action, innovation and agility.
  4. Beyond 2017 a sustainable focus will ever more important… just as business leaders will be called on to deal with more short-term crises.
  5. Industry 4.0 will bring an exponential rate of change that is as disruptive as the automation and self-learning computing that it will usher in. Expect as many threats as opportunities.

Lets get started

Isn’t “sustainable” suspiciously liberal, fluffy and, well..less pressing?

No.

I agree that it does relate to tomorrow’s world. But it is directly relevant for your customers and therefore to your business – today.

Always start with THE definition

“Sustainable [insert your activity] is [insert your activity] that meets the needs of the present without compromising the ability of future generations to meet their own needs”

I was a boy listening to Guns and Roses as Gro Bruntland’s UN Commission came up with that. She set in motion a new paradigm, a new mindset if you will, honed in Rio (1992) and Paris (2015) and other bucketlist places. Thirty years (a generation) later a new  ‘bottom line’ has emerged in business. More on that later.

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You have a more pressing crisis to handle?

Really? I understand how you feel. Others have felt the same way. Even at the UN and perhaps, IKEA.

The important safety work done by two UN specialized agencies is today overshadowed by their abdication of responsibility for (un)sustainable shipping (IMO) and aviation (ICAO).

“IKEA drivers living in trucks for months” is a BBC news item alleges breaches of employment and transport regulations by its UK distribution contractor. Yet became a become a ‘top 5’ global new story (read crisis for IKEA) within 8 hours.Repeating a google search on the headline returned an additional 100,000 items online as the scope of the story spread to other European countries.

IKEA was “saddened by the testimonies” (of its drivers). Its customers will be saddened by procurement and logistics practices that break laws and deny workers dignity. This sustainable business practice turned crisis will continue to run. A particulary irony is that Bring, IKEA’s UK logistics contractor is ultimately 100% owned by an organization that sets employment and transport laws – the Norwegian government.

So,  ignore sustainable business and it will become your crisis. And, yes, sustainable business includes the parts of your supply chain that you outsource.  And be ready to respond to shaming by your stakeholders.

Other definitions reflect strength of political will

When Bruntland’s definition gets twisted it is usually to reflect compromise. But increasingly it’s to reflect strenthening of stakeholder pressure. For example:

  1. The Trump Administration’s EPA. (sustainable = ? – but its gonna be great)
  2. The Paris climate agreement: positioned as tough by so many, commits states to restrict emissions to modify global warming to within +2°C warmer / worse . (sustainable = less unsustainable, acknowledging “still a way to go”).
  3. IKEA, the world’s largest furniture retailer, has sustainability and affordability at the core its brand. And it includes a high degree of transparency. Its 2017  ‘democratic design’ is both a philosophy, in-store campaign and best practice from which we can all learn.(sustainable = sustainable with transparency for direct operations)
  4. The Swedish EPA: their interpretation is expressed as its generational goal, below.  (sustainable = sustainable <30 years plus a clean desk policy, and an ‘åäö ‘ wrapped present for all our neighbors)

“To hand over to the next generation a society in which the major environmental problems in Sweden have been solved, without increasing environmental and health problems outside Sweden’s borders.” – Swedish EPA, 2017

 

Corporate sustainability: what is the new black?

 To be in the black in 2017, businesses need to consider red (its societal/social impacts), green (its environmental impact) and blue (its economics).  This is the sustainable business ‘triple bottom line’.  Whether you’re an AB, GmbH, Inc., Ltd, Plc, or Pvt sustainability means paying attention to these three pillars of business. Businesses as diverse as BAE Systems and Facebook are doing it. Telia and Vodafone are trying. Amazon remains, well, very trying.

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At first glance the pillars seem independent, but in the long run none can exist without the other. In 2015 the UN moved the sustainability paradigm forward from a “profit, people and planet” focus with its Sustainable Development Goals (SDG or the goals). SDGs provide a 17 area framework, advice and resources and an invitation for corporates to engage and showcase.

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Source: UN Sustainability Goals, retrieved  March 2017

Are corporates playing ball?  How?

An optimist’s check of top US Fortune 500 companies finds acknowledgement, intent and increasing transparency toward SDGs.  The pessimist finds little systematic quantifiable goals, targets or metrics to track progress. PWC (Sept, 2016) reported similar findings for European headquartered companies: 66% supported with intent, only 13% with specific targets and tracking.

Even a realist must ackknowledge a generation of progress and a support industry that can now:

  1. Guide, audit and stamp approval (e.g. ISO14000, LEED) your corporate processes and facilities.
  2. Certify your sustainable products
  3. Guide investments in sustainable businesses; and
  4. Track trends, assist and benchmark reporting activities.

Sustainability ratings are published based on transparency, a basket of measures and industry specific issues that now cover over 14000 businesses around the world.

Our customers demand it

The process toward greater corporate sustainability is no brainchild of Branson, Buffett or Musk. Sustainable capital investing, for example, has seen 135% year on year growth. When Morgan Stanley surveyed  400 investment managers it was clear: customers asked for it. So, this is very much a bottom up, end-user led demand. Fueled by a flattening world of access to information and the power of social media.

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Source: author, based on Morgan Stanley, 2016

Marketers have been quick to realize that consumers increasingly want to engage with brands perceived as sustainable and that take a stand on what is fair. B2C brands in particular, are realizing that the cost of doing bad increasingly exceeds the cost of doing good. Feeling less of the direct pressure, B2B businesses have now to catch up.

What of the future?

While the past does not predict the future, but it does serve as a frame of reference. As war raged in 1945, 44 countries laid the foundations of economic sustainability. More recently as development and then environmental conflicts emerged, again cooperation for sustainability widened.

Revolution Year Information
1 1784 Steam, water, mechanical production equipment
2 1870 Division of labor, electricity, mass production
3 1969 Electronics, IT, automated production
4 ? Cyber-physical systems

   Source: author, based on World Economic forum, 2016

Fast forward to 2017 and we are on the starting blocks for a technology-driven race. Industry 4.0 will see cyber-physical systems (widely deployed automation coupled with self-learning computing) deployed at an exponential pace. It is a revolution from which there will be conflict, winners and losers.

Sustainable – 100 year perspective

Within

5 years

· Industry 4.0 – the adoption of cyber systems at exponential scale. · Increased pressure for agility and innovation in businesses

·Security – a more unstable internet due to compromised IoT devices. · Emerging online and the threat of identity theft conflicts

Now ·  Sustainable – 266 million online search results for sustainable, a Google trending news item
2 years ago ·  UN Sustainable Development Goals (SDGs) launched
25 years ago ·   Sustainability enters mainstream institution thinking following the Rio Summit
30 years ago ·   “Our Common Future”, the report of the UN’s Bruntland Commission
73 years ago ·  In 1944,  44 nations agreed a financial system to promote growth, minimize imbalances, and foster stability. Sustainable international economics saw the setting up the IMF, World Bank and benchmarking of currencies against the US dollar
93 years ago · First recorded use of sustainable in 1924

Source: author, 2017

The World Economic Forum, argued that technological innovation will lead to long-term gains in efficiency and productivity of supply. As a consequence, Transport costs will fall, logistics and supply chains will become more effective. As the costs decrease, new markets will open to drive economic growth.

Others counter that automation will remove jobs across whole economies. If this happens, the gap, inequalities and tension between the “haves” and “have nots” will grow. It is, of course, possible that new roles will emerge, which results in an increase in safe and rewarding jobs.

Even an optimist has to acknowledge the unknown and risk:

“There has never been a time of greater promise, or one of greater potential peril.” Klaus Schwab, Chair World Economic Forum, 2016

 In summary, new inequalities and insecurities are going to emerge. History shows us that sustainable actions are, and will be, important. Its just whether they will prevent, or be a response to, crisis.

 

Author: Neil Johnson, CEO and Consultant, BotniaBlue

 

BotniaBlue is a start-up that supports your business to  connect confidently.

Our content, marketing communications and training services have an international business perspective.  We track ‘what’s turning our world upside down’, and through blogs share clarity and actionable insights for those that will drive better business. http://www.botniablue.com

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