By David Pencheon- Director of the Sustainable Development Unit of the NHS, Zoe Le Grand- Senior Sustainability Advisor at Forum for the Future and Gemma Adams- Principal Sustainability Advisor at Forum for the Future
In 1960, Theodore Levitt argued, that for a company to stay in business, it needs to know what business it is really in. He used the example of the railroads in the USA, which at that time were in decline. He argued that the reason for the decline was not because people no longer needed transport, but because other modes of transport such as the car, had risen. His point was that if you want to stay in business, you need to focus on customer needs not on your assumption of the products needed to meet those needs. Railroads in the USA went out of business because they thought they were in the business of running railroads. If they understood they were in business of meeting people needs to move and communicate, things might have been different.
The car horns are blaring, the taxi’s stop-starting, and the air is suffused with the delicate scent of diesel. All of which means we’re back in Mumbai, live blogging from a rush hour jam. (If you can’t pound away on your laptop in Indian traffic, you’ll get precious little done in a day’s work.)
Forum Director Stephanie Draper and I have been exploring some exciting possibilities for extending our work with corporates here, including partnering with one of the country’s leading business schools to deliver sustainability training – something which, time and again, we’ve been told is seriously lacking in India.
Peter Thompson, of Forum Network member Chi Group, shares his plans to develop a sustainable commercial orchard.
“It's good food and not fine words that keeps me alive.”
Moliere’s quote rings true today, especially in the context of sustainability. Food and farming, of all the primary industries, clearly encompasses all the issues we must overcome to create a sustainable future. In few other sectors can one have such a clear vision of the direct relationship between human activities and the environment. Food may sustain us, but is its production pushing our planet to the brink?
Are consumers rational? Not, it seems, when working out the actual cost of their purchases over the whole lifetime. Consumers buy cheap and then pay later.
I was doing some work recently with Ingersoll Rand, one of the world’s leading air-conditioner companies. Air-conditioning is an energy-hungry beast. It accounts for nearly half of domestic electricity consumption in some US cities, and is a fast-growing drain on energy in the developing world.
Some 85% of US homes have an aircon unit. Yet the majority of these do not meet current Federal minimum standards. Consumers mostly plump for the cheapest option at the point of sale. This is bound to be less energy efficient. And I’d wager that it’s much more likely to break down. So, what seems like a bargain unit when they buy it, means that the consumer pays through the nose on energy and servicing costs for years to come.
You go to the cash machine and decide to look at your balance. Oh dear. Overdrawn again. You make a mental note. Must stop spending. More than that, must try to pay back the debt and save up so you don’t end up overdrawn again.
Research by Rockstrom et al indicates that, as a planet, we’re already in our environmental overdraft. Biodiversity is being depleted at such a rate that the earth can’t replenish it. The amount of carbon emissions are more than the atmosphere can sustain without the climate changing. If we want to continue to survive and thrive on this planet we need to start to repay our environmental debts. Furthermore, we need to invest in the environment so we can begin to rebuild natural capital.
I was recently asked by someone at a foundation whether I knew of any good food charities to fund. I know plenty. But the first thing that occurred to me was: ‘don’t fund food charities!’
Before this gets taken the wrong way, let me backtrack. Many charities working in the food space are brilliant, and well deserving of funding. But there is something that foundations looking to support sustainable food often neglect – sustainable businesses working in this space. I’m not really sure why. Perhaps the thinking is that these are businesses and should therefore fund themselves through own core activities, or be able to pull funding from other sources. But the simple fact is, fledgling sustainable businesses often fall through the cracks because they are neither not-for-profits able to get charitable disbursements, nor fully mature, ‘fundable’ business models able to access more mainstream business financing sources.
Success for anyone involved in sustainability in 2013 will require a smart response to a rapidly changing business context. Nothing new there then, we all know the world is changing quickly. The tricky bit though, is that there are some trends we can be fairly certain about, and some, well, that are quite uncertain.
Quite a long list including increased frequency of extreme weather events, fuelled by our changing climate, continued volatility in world commodity markets, the odd resource crunch, a widening gap in social equity between the have and have-nots, in both developed and developing markets and ballooning costs (on all fronts) of dealing with worsening chronic disease burden (again in both developed and developing markets).
Happy New Year? Given the amount of bad news that has been surfacing around the world over the last couple of weeks, I would love to rewind a little. Go back to the simple joyous jumping up and down of my niece and nephews on Christmas morning, or swapping grandiose recipes for turkey curry with friends after too much mulled wine. Impossible of course, and not a very practical solution. Not really in keeping with working at Forum either - many of you will know that we are a very positive, forward thinking bunch…most of the time!
So I’ve been casting an eye over what we’ve got coming up in the Network and I think we have the perfect antidote to any negativity or underlying Scrooge-like symptoms that might threaten your return to the fray. Through our work we are constantly being exposed to examples of brilliant leadership and great innovations that give you hope, and we are bringing some of these to you over the next couple of months.
“All the old companies need to fit into the new economy.” That’s what I heard from Zipcar founder Robin Chase, upon returning from Christmas break, to discover that rental car giant Avis had acquired the car-sharing upstart. Only as I began to process what this might mean for my favourite way to move a sofa-bed around London, Mike Barry at Marks & Spencer tweeted that ‘old economy businesses’ are buying into the new economy, citing Avis as the latest taker.
After hearing these two, my fears of a Zipcar-as-walking-dead scenario subsided. I started to wonder what the Zipcar’s views are on the qualities an ‘old guard’ business can bring to a partnership with seemingly incompatible new economy ventures.
There has been a lot of comment on the way Starbucks and other companies have managed their tax affairs. The debate has focused on particular techniques companies have used and we can hope that those methods will be less prevalent in future. However I haven’t seen any comment on one aspect of company financing and tax which might eventually cause a problem for sustainability campaigners.
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