by Chris Sherwin
What’s the business case for sustainable innovation? That’s the question I’ve been asked most in my years working on sustainability and the main reason clients cite for not innovating around social and environmental responsibility. Well now we have the answer; the business case is $12 trillion.
That’s the number reported by the Business Sustainable Development Commission’s recent Better Business Better World Report. This defines the size-of-the-prize for businesses helping hit the United Nations Sustainable Development Goals (SDG’s) by 2030 – the all encompassing framework to deliver a fairer, greener, more resilient economy. Importantly, the report notes, “Solutions are urgently needed. We see the next 15 years as critical, with change starting now and accelerating over the period. Business as usual is not an option”. In other words, innovation will be crucial to sustainable development.
Sustainable Business as Usual
I’ve long been convinced that sustainability can be a major source of innovation, growth and competitive advantage – what I consider the 21st Century’s defining innovation challenges and opportunities. Historically though, companies have not always agreed.
When I started working on the field, companies almost exclusively viewed and managed sustainability as risk and reputational, cost-reduction, or a communications and PR strategy – a corrective, incremental approach aimed chiefly to clean-up the negative impacts of doing business. These past form of sustainable business were integrated through departments like corporate communications or public affairs, production or supply chain, marketing and sales, and in most cases sustainability rarely made it to innovation or RD functions.
Yet sustainability and the SDG’s require us to dramatically transform our management and mind-sets, described elegantly as a shift in emphasis from ‘your business, to our world’, and requiring us to redirect innovation skills to humanities long-term challenges.
Innovating for Global Goals
The 17 SDG’s (Global Goals as they are also known) and 169 specific targets that underpin these now present innovators with a ready-made set of world-changing briefs; a once in a lifetime opportunity to rethink many aspects of the ay we live and do business today. We can better understand this plethora of opportunities by unpacking innovation across just one goal: #12.3 aimed ‘to halve per capita food waste at retail and consumer level and reduce food losses along production and supply chains, including post-harvest by 2030’
Food Waste Unpacked
It is estimated that the US wastes 30-40% of all its food, costing $161 billion in value; while UK households alone throw away 7.3 million tons of food, or £13 billion from their own pockets. At the same time, we have long-term concerns over future food security and 385 million children live in extreme poverty going to bed hungry every night.
However depressing these inefficiencies and sobering these facts, wasted food is sparking a new wave of innovation along the supply chain. There are many examples of innovative problem-solving.
Coolbot provides a simple and inexpensive solution for developing world farmers to store produce for longer, helping reduce food losses early-on. Winnow offers a solution for the hospitality and catering industry to save food, upping margins by 3-8% by reducing kitchen waste. In the UK Fairsquared provide a digital platform for food manufacturers to trade surplus food that never makes it way to shelves, while Company Shop is the bricks and mortar version of this. Opentaste lets consumers order directly from farms eliminating wasteful steps in food supply.
In packaging, 15% of this pasta box is made from waste ingredients from the product’s manufacture whilst Insignia use smart packaging labels to the reduce wastage of cooked meats. Innovative new products are emerging too, like Salt Straw’s delicious ice cream from surplus produce, and Toast Ale using excess bread in its beer brewing process.
Much long-term work has been done by charities and social enterprises – like the UK’s Fareshare or US’ City Harvest – innovating to collect surplus or wastes food then redistribute it to the poor and needy in cities. A modern and more grass-roots twist on this are Community Fridges, allowing local restaurants and shops to directly donate food to those in need.
These examples cross the for-/non-profit, technical/business model, packaging/distribution/product innovation spectrum, and present an inspiring new wave of entrepreneurship and ingenuity on just one of the United Nations sustainable development sub-goals. So just imagine what could be achieved across the others, like Clean Water and Sanitation (#6), Life Under Water (#12), Zero Hunger (#2), Affordable and Clean Energy (#7), etc.
Sustainable Innovation Scorecard
All that said, how is the private sector doing to turn sustainability into an innovation agenda? The picture is mixed in my view. One recent report explored revenue growth from sustainable products and services developed by leading global manufacturers like GE, Caterpillar, BASF, Philips, amongst others. This showed promising results with revenues from green portfolios growing at six-times the speed of normal portfolio sales. Similarly, another survey of US Corporations presented an impressive $8bn in sales from their sustainable products, also reporting better customer loyalty and 5-25% cost savings along the way. This all looks great.
Sustainability experts report a different picture. Whilst they suggest Industry, Innovation and Infrastructure as the most advanced Global Goal (#9) in 2016, they also voted non-governmental organisations (NGO’s) as the most advanced SDG’s innovators, with the private sector ranked third-from bottom (only national and the US government scored lower). Many survey respondents will be voting from the very companies they ranked so low. This suggests that business is not yet turning all its innovation expertise to sustainability challenges.
When I started working on sustainable innovation 20 years ago, our business case was quite shaky, anecdotal at best. Too often we turned to an ethical or moral case, which is why the ‘business case’ question came through so strongly. But now we have the case for sustainable innovation and the business case is an impressive $12 trillion, so what now could hold us back?
Todays innovators may not be looking to sustainability for their next big thing, but they probably should. Sustainable innovation is no longer trade-offs between economics or ethics, between being green or making green, and increasingly tomorrows innovators will fuse profit with purpose to do well by doing good.
image credit: biocycle.net