Profit with Purpose: Business models for sustainability

David Bent7 December 2010

What I’m going to tell you

1. We’ve moved beyond ‘responsibility’ and ‘ethics’ to enlightened self-interest, because...

2. Sustainability affects drivers of business value

3. You can make a difference in your company and in the world

WHAT ARE COMPANIES DOING IN PRACTICE?

GE’s

“Ecomagination is a business initiative to help meet customers’ demand for more energy-efficient products and to drive reliable growth for GE.”

Source: link

Revenue: $18b in 2009Lesson: on-strategy – leverage core capabilities in core markets

M&S’s Plan A

“Plan A is making a real difference to the environment and to our business. But now is the time for us to reach further and be even bolder by committing to a target to become the world’s most sustainable major retailer by 2015.”

Sir Stuart RoseLesson: it is a journey with quick wins and longer investments

Interface: Misson Zerofrom making carpets to selling floor-covering services

•founded Interface, a carpet company based on petroleum.

•CEO, Ray Anderson, had an epiphany that in the long-term his company was destroying nature

•vision for 2020: Mission Zero - eliminate any negative impact Interface has on the environment by 2020.

•rethought business: from making carpets to selling floor-covering services

Lesson: sustainability is about the future of your business

Unilever

“You have to decouple business growth from environmental impacts. That means a new business model.That’s why, at Unilever, we have set out a new vision for the company – the challenge of doubling our size whilst reducing our environmental footprint.”

Paul Polman, CEO, UnileverFeb 2010 - link

Lesson: use it for innovation, motivation and access to markets

Ariel – Turn to 30 campaign

• temperature of water rather than manufacture of washing powders & liquids

• 30 degrees ‘washers’ increased from 2% in 2002 to 17% in 2007

• 60,000t CO2e saved• A total of 1 million households have

turned to 30° resulting in an estimated 41% energy savings.

• 89% of consumers associate message with Ariel

Lesson: use what you’ve already got

Worldwise: pet care products

Full Circle is a groundbreaking sustainable product partnership created by Worldwise in collaboration with partners Walmart and Sam's Club. •Inputs: recyclable waste materials used within Walmart and Sam's Club locations nationwide•Outputs: select PoochPlanet and SmartyKat brand products that will improve life for you, your pet and the planet.

Lesson: opportunities across all sectors and categories

Some lessons from leaders

• On-strategy – leverage core capabilities in core markets

• It is a journey with quick wins and longer investments

• Sustainability is about the future of your business• Use it for innovation, motivation and access to

markets• Use what you’ve already got• Opportunities across all sectors and categories

WHAT DOES IT MEAN?

what an environmentalist sees

We will need to change how we live and work!

The challenge is enormous and urgent.

what an astute business person sees

We will need to change how we live and work!

The opportunity is enormous and coming.

shift: from ‘responsibility’ mindset...

Business

Societyimpact

Message to business: “you should act responsibly”Business response: “well, the business of my business is

business, but if I have to protect my reputation here’s some CSR-as-PR to placate you”

shift:...to a ‘sustainability’ mindset

Business

Societyimpact

Message to business: “you need to act sustainably for business reasons”

Business response: “well, seeing as the business of my business is business, I have to engage with this in a strategic way”

Society impact

What I’ve told you

1. We’ve moved beyond ‘responsibility’ and ‘ethics’ to enlightened self-interest, because...

2. Sustainability affects drivers of business value

3. You can make a difference in your company and in the world

“Profit with Purpose”linking back to the purpose of the RSA

“1754 – William Shipley … founds a new society, based on the idea of using 'premiums' to support

improvements in the liberal arts and sciences, and to stimulate enterprise for the common good.”

Big questions remain on “sustainable business models”

• Forum’s working definition:

“the rationale of how an organisation creates, delivers and captures value in a genuinely

sustainable manner”

• How can you innovate and create sustainable business models?

• How can you find your business case?• How can you increase the win-win – where the

business case overlaps with the ‘societal case’?• …and more

The task of our generation

Previous generations have overcome enormous challenges

We get to put world society on a sustainable footing

thank you

David Bent | d.bent@forumforthefuture.org 020 7324 3662forumforthefuture.org | registered charity no. 1040519

Climate changegood news…

“It is possible to restrict warming to 2C or less during the 21st century with at least 50% probability…

Informing Choices, 2009 UK Met Office

emphasis added

Climate change …bad news

“It is possible to restrict warming to 2C or less during the 21st century with at least 50% probability…

…with emissions reductions of 5% per year but peak emissions would have to happen by about 2020”

Informing Choices, 2009 UK Met Office

emphasis added

Business people talk as if there is aspectrum of responsibility

PERIPHERYCORE

Can legitimate “business-as-usual”

But not enacting a competitive advantage

Can legitimate “business-as-usual”

But not enacting a competitive advantage

Yes, though may • create an

unsustainable future

• be the wrong strategy / tactic

Compliance allows profit to be made

Can have productivity benefits

Social responsibility of business: to make profit

Very largeLots, but uses resources from core activities that otherwise would generate returns

Wide, constrained by: • Resources &

capabilities (“path-dependency”)

• Competitive context

NoneChoice

PhilanthropyCSR activitiesStrategy & OperationsCompliance

Responsibility Spectrum

Resistance to “shoulds” triggered hereCan justify not responding

Difficult to justify not respondingAn exciting opportunity case

today’s rules won’t apply tomorrow

Sustainability will drive the strategic context for business over the coming decade– In some cases, already is– Fundamental services and resources from the natural

world will become more expensive– Rising expectations of business role mean new

regulation, new consumer behaviour, new supply chain norms and new investor pressure and more

Opportunity for bold action now– “what should my strategy be, given sustainability?”– NOT “what should my sustainability / CSR strategy be?”