Discovered an interesting report from the World Economic Forum published earlier this year discussing the need for new business models that are constructed on a platform of sustainable consumption. The report offers a “Business Case for Sustainability” that provides “a cogent argument for sustainability as an issue that should be incorporated into the strategy and operations of business, not just as a matter of stakeholder responsibility but as a matter of business survival and value creation.”
Key elements of the business case include:
- Managing resource risks: Sustainability matters to business because it reduces exposure to volatile and rising resource prices, to the risk of increased scarcity of resources and to the risk that these (carbon, water, waste) are radically re-priced in the near future. Embracing models of sustainable consumption across the value chain will provide stronger resilience against external shocks.
- Shaping the regulatory environment: Principles of sustainability are increasingly being incorporated into the regulatory environment. If businesses wish to flourish in this environment, they must make themselves active participants in its construction.
- Engaging consumers as citizens: The biggest drivers of corporate sustainability investments are consumer concerns, employee interest and government legislation.8 For business, driving sustainable consumption can be an effective long-term strategy for deepening authentic engagement with consumers and employees.
- Engaging consumers as customers: Consumers increasingly want to be treated as customers, demanding not only more sustainable products and services, but also greater transparency over sourcing and content of existing ones. At the same time, the speed, spread and changing patterns of use of the media are forcing businesses to adopt pre-emptive strategies to manage their reputational risk on sustainability issues. Engaging proactively with the sustainable consumption is one way of managing these challenges in depth.
- Driving innovation: Businesses are the chief engines of value creation and innovation in society. The challenge of sustainable consumption presents an opportunity to enhance both, particularly when new partnerships and collaborations are opened along the value chain.
- Capturing opportunity: In the end, sustainable consumption matters to business because there will be winners and losers in the new economy, and those that move most swiftly are likely to reap the greatest benefits. Embracing sustainable consumption now offers a pathway to future markets and profitability.
What is made clear in the report is that continuing along a path of incremental adoption of today’s sustainability efforts will be insufficient as they are based on improvements to our existing model of consumption. That model is, itself, unsustainable. The graphic below illustrates the required shift from the traditional value chain to a closed loop value chain that incorporates reuse of consumed materials into the overall business model.
“The new normal for the global economy is one in which consumption is decoupled from negative environmental and social impacts, driven by a combination of innovation, evolving consumer values and more accurate product costs. In the end, it is not a world defined so much by scarcity and sacrifice, as a world defined by innovation and a new abundance.”
The “new normal” is an economy in which:
- Consumers are the driving force
- Consumption is about loops, not lines
- Collaboration is a key
- Core business practices are sustainable
- Public policy frameworks support sustainable consumption
Reports such as this support an emerging recognition, by early adopters at least, that those companies that are proactive in embracing sustainability will find themselves at a distinct operational, cost and branding advantage in the near future.