“There are several Microsofts waiting to come forth in the clean energy business, and we'll all wish we'd have invested in them in the late 1990s when they were still tiny”, says John Palmisano.
The quote can be found in a dusty digital journal from 2000, entitled “The State of Environment and Business” - it’s a relic of sorts representing the strides we’ve made, or haven’t, in making sustainability profitable.
It’s no secret that in 2023, businesses faced multiple challenges, from supply chain disruption to the heady inflationary costs of the global economy - has this halted the innovation needed for executing impactful sustainability initiatives?
And have we learnt anything about the relationship between profit and the environment 23 years later?
Is going green taking longer than anticipated?
Yes and no - depending on who you ask.
Perhaps those with a deep understanding of business ecosystems, particularly in relation to traditional energy production methods, global supply chains, and stakeholder resistance, may find themselves unsurprised by the incremental progress we've made in transitioning to more sustainable practices.
To those on the sustainable front line, founders of the Friends of the Earth, delegates of the first United Nations Climate Change Conference circa 1995, or signers of the Kyoto Protocol in 1997, change may seem slow.
But, those people can also take faith in the heightened mood for change in the last few years:
1/7 of the world’s primary energy is now sourced from renewable technologies (as of December 2020, 41.4% of electricity produced in the UK was renewable).
The International Energy Agency (IEA) has reported that global renewable capacity additions are expected to increase by 107 GW to more than 440 GW in 2023, the largest rise the world has ever seen.
Global new investment in renewable energy skyrocketed to $358 billion in the first six months of 2023.
China more than doubled solar capacity in 2023, and wind power capacity rose by 66% from a year earlier, the IEA estimated.
The European Union (EU) has made pledges, too, aiming to be the world’s first climate-neutral continent by 2050, as laid out in its European Green Deal.
The UK’s Environmental Improvement Plan 2023 contains this statement: “We have a goal to raise at least £500 million per year of private finance into nature’s recovery by 2027 and more than £1 billion by 2030”.
The business environment
The environment is not exclusively an issue for business, but organisations wield unruly influence over global environmental impact. In 2018, data emerged that just 100 companies produced 71% of global carbon emissions - this is just one way environmental impact is quantified.
Of course, the first step towards change is acknowledging the impact, and the second step should be determining the core fundamentals for green business change.
In Shades of Green: Business, Regulation, and Environment, published in 2003, its authors (Gunningham, Kagan, and Thornton) talk about which business pressures are responsible for change.
“The external pressures that push enterprises toward improved environmental performance can be divided into three broad categories: economic, legal, and social.” (page 2)
Businesses in perfect harmony with the environment are described not only as having a lack of negative impact but the presence of a positive impact too; all of the above need to be in a state of synergy.
Social has easily been the most aggressive pressure over the last few decades - with legal and economic reluctantly dragging behind.
A modern proposition…
Fast forward 21 years, and we still haven’t been able to find that harmony. Instead, we’ve found that businesses, especially large enterprises, can be slow to adjust and adapt.
In a recent Forbes article, writer Kate Vitasek says,
“Corporate sustainability efforts create a safe and just space for humanity by finding a balance in achieving a solid social foundation, without collapsing our ecological ceiling.
It’s a hard balance to attain, and one where many organizations continue to fall short in a transaction-focused economy.”
In essence, environmental business policy is difficult to nurture when we predominantly cater to profit and growth above “ecological ceilings”.
The modern truth is that environmental (as well as social and governance) are often the first policies and roles put on the business chopping block when finances are squeezed. And they’re certainly been squeezed in the last few years.
But if change is slow, then it must also be certain.
Exciting strides have been made in the renewable energy sector. Research from Ember, an energy research firm, shows that 2022 was the first time wind and solar electricity production out-performed gas and coal.
Producing renewable energy is a huge step in helping transform businesses at the core of their operations.
However, each sector will find that “sustainability” means something slightly different. For e-commerce businesses, it might mean offering shipping options that avoid a carbon footprint, and for a banking firm, it might mean choosing suppliers with a commitment to carbon neutrality.
Business sustainability strategies
There’s a huge argument for businesses to embed more sustainability strategies within their long-term plans. For stakeholders who believe looking after the natural world is an ethical and justified reason for change, it seems like an obvious business imperative.
But others need a better commercial use case, especially within a market that threatens business survival.
Luckily, there is a lot of evidence to support the idea that long-term business survival is linked to environmental responsibility. For instance, companies can differentiate themselves in the market, attract eco-conscious consumers, and enhance brand reputation.
In a 2023 survey from McKinsey and Company, 66% of all respondents and 75% of millennial respondents said that they consider sustainability when they make a purchase.
And it’s perhaps unsurprising that we’ve seen the biggest commitment to sustainability from historically innovative, tech-savvy, and new-age companies.
Companies championing sustainability
Google: Claiming they’ve been carbon neutral since 2007, one example of their sustainability efforts is how they recycle alloys during the manufacturing process.
IBM: The IBM SkillsBuild program offers free, interdisciplinary training in green technologies, aiming to bridge the sustainability skills gap in the workforce.
Adobe: For every 1 million pages users digitally sign daily via Adobe Acrobat Sign, this saves more than 27 million gallons of water, 1.5 million pounds of waste, and 23.4 million pounds of CO2 emissions.
Patagonia: Championing regeneration rather than sustainability, one of the company’s initiatives, Patagonia Provisions, aims not only to produce high-quality food products but also to embrace agricultural practices that restore soil health, enhance biodiversity, and sequester carbon.
Ultimately, integrating sustainability into business practices not only drives efficiency and resilience but also aligns with evolving consumer preferences and regulatory requirements, positioning companies for sustained success in a changing world.
Thinking ahead…
For the moment, it’s clear that there is no perfect answer to ensuring corporate strategies align with an environment-first ethos. And we should all be sceptical towards any organisation that claims to have all the answers.
The reality is that most businesses will not threaten the natural cycle of profitability.
However, there is cause for encouragement in companies actively dedicated to refining their strategies. Those willing to acknowledge when something hasn't worked as expected or isn't currently viable due to economic conditions demonstrate an authenticity that goes beyond lack of action or mere greenwashing.
