The sustainable train is far from at a standstill
What do audits, recession, behavior theory and China have in common? We believe they all have had a strong positive impact on the sustainable innovation landscape in the past year.
A CSR twist on ‘what gets measured gets done’
Businesses are starting to measure the negative environmental and social impacts associated with the sourcing, production, transport, use and disposal of their products and services. Once measured, the impacts of these risks get integrated into company financial valuations. And as a result, businesses are engaging more deeply with suppliers, customers and communities, recognizing that such engagement can provide valuable insights and serve as laboratories for innovation.
The Recession has fostered rather than hindered corporate sustainable sensibilities.
A recent survey by Accenture reported that 76% of the 766 CEO’s interviewed felt that recession had resulted in sustainability becoming increasingly integral to organisational objectives. These CEO’s know that the less energy and water they use, the more they can economise their primary resources and reduce their waste, the more successful they will be. That is why companies like KKR launched the Green Portfolio programme to improve fleet efficiency, reduce energy use, promote recycling and other green business practices. The program is only two years old but the results speak for themselves: eight companies within KKR’s portfolio have already reduced their operating costs by $160 million.
There is growing R&D collaboration to address sustainable issues.
Green Touch, a global consortium including Bell Labs, China Mobile, MIT and Swisscom, have pledged to invent and deliver radical new technology to make communications networks 1000 times more energy efficient than they are today. This roughly equates to powering the world’s communications networks, including the Internet, for three years using the same amount of energy that it currently takes to run them for a single day.
H&M and Walmart recently agreed to put Clean by Design, a programme developed by the National Resource Defense Council , into action to dramatically cut water, energy, and chemical use in textile dyeing and finishing so that the colour of the hazardous chemicals floating in Chinese waterways will no longer preview the latest colour trends in fashion.
Businesses and public services alike are using behavior theory to nudge users to waste less.
Opower partners with public utilities in the US to report energy use. Their latest strategy has reduced peak energy consumption by 2-3% simply by sending bills to households that compare their energy consumption to that of their neighbors.
The Starbucks BetaCup challenge offered $20,000 for the best design idea to eliminate paper cup waste. The winning entry, chosen by a jury of designers, engineers and entrepreneurs, was surprisingly simple: a chalkboard. Customers who bring in a reusable mug can put a mark on the board, and every tenth guest receives a free beverage. “There are plenty of great reusable mugs out there,” the entry says. “But what people really need is an incentive to make the behavior change — a free cup of coffee and a bit of peer pressure.”
The Wall Street Journal has more examples of “using guilt to nudge”.
China is on the move.
There is certainly a lot of justified criticism of Chinese Environmental policy. But not enough is said about some of the exciting things going on in that country. According to Gretchen Daily of Stanford University, China is investing $100 billion over 10 years in “eco-compensation,” including innovative policy and finance mechanisms that reward conservation and restoration. The country is also creating ecosystem function conservation areas that will make up 18 percent of its land area. The Pew Charitable trust recently calculated that investment in renewable energy has reached $35 billion in China (vs $19 billion in the US!).
Companies are starting to see revenue benefits from sustainable innovation.
Revenues from GE’s Ecomagination products reached $18 billion last year from the sale of more than 90 products, up 6 % from $17 billion in revenue in 2008. GE increased its spending in clean tech R&D by 27%, investing $1.4 billion in 2008. Key projects include sustainably designed hospitals and hybrid locomotives.
Social Innovation programmes are saving lives while revealing long term business opportunities.
Danone Grameen, a co-enterprise founded with Mohamed Yunus, Nobel Peace prize winner, produces 23000 yogurts a day sold for 10 cents a piece in Bogra Bangladesh. Enriched with micronutrients, Shokti yogurts provide 30% of a child’s daily nutritional requirements. Danone is not making a profit. Yet they plan to have 10 such social innovation projects up and running over the next 2 years. They see the costs as well worth the investment because the future business potential is so immense.
All the above is evidence that the sustainable train is far from at a standstill. Slowly, the dots are beginning to connect. New paradigms are being developed that integrate the value of social entrepreneurship, virtuous eco-cycles and open source innovation. A growing sense of connectedness and interdependence is emerging that bodes well for business and for society. We are eager to contribute to this sustainable innovation experiment. Despite what the naysayers might suggest, this is no fad. It most certainly represents the way forward for the next decade and beyond.
Leslie Pascaud was keynote speaker at the Brands and Branding for Good Conference, held in South Africa recently. For more information click below.