Moved by the linkage between an effective sustainable approach to business and financial value creation, corporates include sustainability-focused contents in their reporting and communication materials. Examples of these contents are their environmental, social and governance proposition and their impact on the Sustainable Development Goals.
However, when I read this corporate sustainability narrative, I often have the impression that it is not connected to the company’s strategic intent. Why? My view is that a seamless integration of strategy and sustainability is the culmination of a “sustainability discovery” in which most businesses are immersed at this moment.
A sustainability discovery usually starts with the adoption of a Corporate Social Responsibility framework. CSR was formally coined in the 1950s and it has been instrumental to enhance the businesses’ public value creation. CSR resources and ecosystems have raised awareness of the sustainability challenge, funded valuable civic and environmental initiatives and channeled the stakeholders’ will to contribute to society. However, a traditional CSR approach seems insufficient to unlock the potential of sustainability as a value catalyst for the business.
Many companies, inspired by societal demands and global institutional initiatives, are going beyond CSR, including “sustainability ingredients” in their strategies. They are capitalizing on new environmentally friendly opportunities to accelerate their growth or improve their efficiency. Examples of this are the development of renewable energy businesses or the adoption of circular economy frameworks. This is a very positive step forward, but it is not the final stage of the journey.
The ultimate challenge is to develop and put into practice “total business models”, in which the contribution to sustainability is so embedded into the operations that it is not possible to separate one from the other. More business activity, more good. Stakeholders of total business models have full traceability of their impact in society, no matter how far they are from execution. The sense of doing work that is connected to a broader set of meaning is unbeatable. I have had the privilege of experiencing it.
As it is happening with many other business trends, the covid-19 pandemic accelerated the adoption of total business models. Many companies, like urban service providers, became aware of the intrinsic social impact of their core business. Other companies, like manufacturers that temporarily reoriented their activity to provide sanitary equipment, now have a flavor of how a total approach to sustainability looks and feels.
There are very few examples of well-established companies with total business models. Why? The replacement of traditional paradigms requires a transformational approach and unconventional levers:
- Visionary, purpose-driven and resilient leadership. Total approaches face huge opposition and regulatory challenges.
- New business models defined in collaboration with the stakeholders. Civil society plays a key role here.
- Modular implementation road maps (vs. rigid paths) articulated through collaborative innovation.
- Transversal strategy and sustainability capability that nurtures operations and culture.
Sustainability is a unique opportunity to combine a game-changing competitive advantage and a material impact in intergenerational wellbeing. Stakeholders, investors and society are willing to embrace this transformational convergence. I cannot think of a more exciting and rewarding aspiration for a business.