The Future of business: Innovation for ESG
Future-focussed business leaders understand that the environmental, social and institutional challenges, are the framework within which businesses will compete in the future - for business survival and for human survival. We therefore propose that business leaders build corporate vision and purpose that
1. aim at solving the 3 meta-challenges (ESG)
2. are aligned with the UN's Sustainable Development Goals
3. are measured via the 21 KPI's of the Worlds Top 100 most sustainable companies.
"How do we innovate for the future?"
"We didn't quite expect this! We really got to a bold vision for the future of this brand. I personally want to thank you for getting us here! " Said a high-spirited Head of Marketing and Brand after we'd finished giving our final presentation.
Not too long ago, we were commissioned by a leading german premium and luxury kitchen appliance manufacturer to help them devise a new customer-driven innovation process. We used Visioneering - our own foresight approach - with which we immersed them in both "optimistic" and "pessimistic" scenarios, describing the market and potential business models of premium and luxury in the future. Applying forecasting, backcasting and design-thinking, we delivered foresight on the future of food, of food production & agriculture, the future of the kitchen and cooking. We plausibly envisioned the future of their business 20 years down the line.
What our clients were so excited about: we helped them form a vision and plot a path into the future that they previously were highly uncertain about and could not see. We had helped them re-consider their value proposition into one that was more customer-centric compared to the technological-yet-incremental and efficiency-focussed projections they had used before: for the first time, they were able to imagine their offering being a service rather than a physical product. And rather than envisioning to build "a better machine", they could now see their brands relevance in a dematerialized way: where it would become a quality standard for food or equivalent to exceptional cooking experiences. Within a few days, we had helped them articulate their own longterm-vision and align it with their company's purpose. They were inspired!
From "How will we compete?" to "How will we survive?"
That was in 2014. Much has changed in the world since then: it seems that life has been digitally accelerated, that the world is more polarised, more violent and - in environmental terms - has gotten significantly "hotter".
If the innovation challenges that we worked on back then can be summarised as "How do we compete?", businesses now turn to us asking "How do we survive?". And it seems that Corona has amplified many of the existential economic and social challenges that have developed over the last decade. So much is currently being published about them daily, summarized by "Environment Society and Governance" (ESG): the 3 meta-challenges currently permeating life and shaping the world's future:
accelerated environmental degradation: the warming and pollution of our atmosphere and our oceans
increasing economic inequality: the persisting divergence in wealth between the global south and north, and the growing economic divide within the societies of "developed" nations
institutional collapse: the increasing de-constitutionalisation and dysfunctionality of national governments in western democracies
From an existential, humanitarian perspective, the above 3 can actually be summarise into a single, gigantic challenge:
Humans as a species must (quickly!) learn and implement behaviour that will result in sustainable life on this planet.
There is a growing consensus among the business community that profit-maximisation as a company's ultimate-and-only-purpose will not resolve these challenges. Larry Fink, CEO of Black Rock, the worlds largest financial asset management company, was very outspoken in his now famous 2018 letter to the CEO's of the companies his firm held shares in : "Society is demanding that companies both public and private, serve a social purpose. To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society…"
Mark Benioff, CEO from Salesforce put it even more bluntly: "The business of business is to improve the state of the world.” Even Pope Francis -in a 70 page letter last week - stated that “...the marketplace by itself cannot resolve every problem, however much we are asked to believe this dogma of neoliberal faith.”
Challenge = Opportunity
It doesn't really matter if you plan to start-up a new business today - right here, in the midst of a global pandemic - or whether you want to reposition your established company onto a path of sustainable growth: in both cases you should consider its "purpose" in the light of the 3 aforementioned challenges. Not just to follow a current trend, but to secure longterm viability and survival. Setting out on this path today is one of the most promising actions you can take to help future-proof any business because everyone of those challenges is equivalent to huge future opportunity. For a start, here are some big-basic questions along the 3 meta-challenges that can inspire you on the journey to a sustainable business-vision and purpose:
The good news is that every year there are thousands of new businesses and startups around the world with a purpose and business model centered around sustainability. However, this also means that if your company has no active position or strategy on sustainability beyond “we follow the regulations", you should be worried: this might not be enough when competing for relevance in the future.
What inititatives are you proactively running that make your company a truly circular business? What new opportunities for becoming sustainable have opened up through the COVID-19 crisis? What can your business learn from benchmarking the most successful sustainability-innovators around the world?
An immediate threat to peace within our societies and among nations and global human survival is poverty. In 2020, nearly 1 Billion people were living in extreme poverty (living on less than 1,9 USD/day). What is your business doing to help lift the next million people out of poverty? Are you considering of investing more into the free education of youth - in the worlds poorest regions or at home? Is your company involved in the under-developed communities where it does business?
Every business today should pro-actively assert, whether it sees society as a lucrative supply of "users" or rather as a community of active stakeholders. Because: sustainability is not only about the environment, its increasingly about society as well. Are you developing products and services that strengthen or erode social sustainability ( democracy, equality, human rights, government etc. )? Does your business yield returns that proactively strengthen the communites you live from? What are you proactively doing to prevent further distrust and degradation in the very institutions that uphold everyday civil life within a democratic society? Beyond "moving fast and breaking things", "massively scaling-up" your platform what are you doing to protect the constitutional rights of your community?
The 17 SDG's and the 21 KPI's that define the Business Of The Future
The 17 Sustainable Development Goals (SDG’s) the United Nations first published in 2015, are currently the most tangible, granular description of what we must do as a a species to survive in the longterm. Because these SDG's are currently the most objective, academically and scientifically established paths towards a sustainable human existence, they can serve as a blueprint for leaders of companies and organisations to (re-) set their respective businesses vision and purpose:
17-SDG's published with permission of UN: https://www.un.org/sustainabledevelopment/ The content of this publication has not been validated by the United Nations and does not reflect the views of the United Nations or its officials or Member States.
When investigating better ways to measure corporate sustainability, we came across Corporate Knights (CK) , a Canadian media, research and financial information firm known for publishing the world's "Global 100 Most Sustainable Corporations". It ranks the world's largest public firms based on 21 ("CK-21") KPI’s, comparing their overall level of sustainability. It is a widely published and very comparable index for corporate sustainability and can be regarded as the translation of the UN's 17 SDG's into business operations. The Global 100 "...seeks to mainstream sustainability in the business community to demonstrate that large, successful companies in a range of industries can be fiscally responsible, financially successful and focused on sustainability".
These are the 21 KPI's they factor-into each ranking:
Greenhouse Gas Productivity
Particulate Matter Productivity
Percentage Tax Paid
CEO vs. Average Employee Pay
Pension Fund Status
Supplier Sustainability Score
Women in Executive Management
Women on Boards
Sustainability Pay Link
If the UN’s 17 SDG's describe global sustainability goals from the humanitarian side, then the "CK-21" are perhaps the most complete and most tangible KPI’s for achieving operational business sustainability. Together they can form both vision and metric for any future business.
Why not make solving the 3 meta challenges part of your corporate vision and purpose? Why not base your business model on 17 SDG's? Why not turn the 21 KPI's into you corporate score-card and aim for making it into the “Sustainable Top-100"?
Referring to the beginning of this article:
Why not build or re-build your business-vision and purpose around environmental and social sustainability?
Let’s start a discussion about your future today - we look forward to your thoughts!