There are a number of themes emerging that the Lavery Pennell team expect to shape sustainability in 2014. These are presented below, along with their implications for companies and the strategy and sustainability teams within them.
1. Continuing Progress along the Five Stages of Grief
In 1969, Dr Elizabeth Kubler-Ross identified the emotional stages that people go through when faced with impending death. These stages have subsequently been applied to other fields where extreme outcomes can occur – and we would argue that they apply to sustainability.
The five stages identified by Dr Kubler-Ross are denial, anger, bargaining, depression and finally acceptance (when useful action occurs).
We have seen a lot of climate- and sustainability-denial in recent years, including companies ignoring emerging disruptive business models such as shared consumption and remanufacturing. Anger has also erupted in a range of ways, including aggressive climate denial and personal attacks (such as those in Australia of Professor Tim Flannery, distinguished scientist and former Australian of the Year). Bargaining has been occurring as companies justify lack of action on the basis that economic conditions are tough – implying that they will be more sustainable when the economy recovers. Depression is also evident, especially around climate change and more broadly around loss of habitats, species, resources, jobs and open spaces.
Happily, instances of acceptance also exist; consider the transformation of leading companies such as Interface, Unilever, and Marks and Spencer into more profitable and responsible companies.
What is clear is that every individual and company is moving along this journey at different speeds. We all must understand this and provide others with the time and support they need to move through each stage – be they colleagues, CEOs or management teams.
2. Natural Events Reminding us of the Need to Change
The Earth is unsympathetic to the human grieving process and continues to remind us, in the form of discrete catastrophic events (such as extreme weather), that fundamental changes are occurring. Our limited change to our trajectory guarantees that these will continue to occur and these should serve to remind us that action is necessary; the sooner we accept the need for change the better.
3. Win-win Solutions Exist
There is increasing recognition that profitable sustainability can occur – which resolves the perceived tension between making money and addressing the community and environment, although it does not always overcome inertia.
Key profitable sustainability opportunities include:
- Non-labour resource efficiency (including energy efficiency, transport efficiency, packaging optimisation and waste reduction)
- Remanufacturing, recycling and reuse
- Supply chain collaboration including optimisation across steps in the value chain
- New business models including, for example, collaborative consumption
- Cleantech investment
We expect these to be taken up by substantially more companies in 2014, including the re-emergence of cleantech investment as the economy recovers and the need for new cleaner technologies to solve sustainability issues is better appreciated.
Click through to read more about Profitable Sustainability.
4. Consumption Patterns Changing
Airbnb, Zipcar and BlaBlaCar have demonstrated that we are changing how we consume, thanks to better value propositions that save money, reduce environmental impacts and improve social connectivity.
This growing desire for services instead of things is expected to ramp up in 2014, resulting in increasing concern within corporations about how they sell their products. For example, how will car manufacturers sell vehicles when the largest buyers are just a few companies like Zipcar with massive buying power? Questions like this challenge current distribution models and suggest the need for alternative business models.
Clearly this type of radical disruption, created through better consumer value propositions and innovative business models, is a major threat for incumbent corporations.
5. Better Business Cases
All of the above profitable sustainability opportunities require rigorous fact-based business cases that present the economics in the language of the CFO (with IRR’s, NPV’s, payback periods, cash flow, etc) as well as technology requirements, change management programs and risk mitigation.
Such rigour will be necessary to present a case for change that can convince senior executives to do things differently despite being heavily invested in the status quo.
We see a world that is changing quickly and we expect 2014 will bring greater change more rapidly than ever.