First published on BusinessGreen and republished, with permission, here.

Businesses must leverage their spheres of control, influence, and concern for maximum positive impact, writes Forum's Principal Change Designer, Charlie Thorneycroft.

Businesses face two limiting beliefs when it comes to driving long-term prosperity: that they can't influence their operating context and that they must focus solely on getting their own house in order before trying to make a difference. To unlock their full potential, companies need to recognise the interconnections between their internal operations and external context.

Right now, many jurisdictions expect companies to disclose not only the risks that social and environmental challenges pose to their business, but also their contribution to solving these challenges. Several jurisdictions, including the EU and the US, have implemented mandatory disclosure requirements. The UK's Transition Plan Taskforce (TPT) Disclosure Framework is expected to become mandatory for all listed and carbon-intensive companies and financial institutions. This framework requires companies to assess the strategic levers they have available to influence economy-wide decarbonisation. But the guidance accompanying the framework is brief on advising companies how to do this.

So, what can businesses do to ensure they are looking beyond short-term fixes? How can companies identify all the levers they have available to influence the wider business transition? And what would this look like in practice?

Shifting towards a systemic mindset

Many companies are familiar with the concept of their "sphere of control," "sphere of influence," and "sphere of concern."

The "sphere of control" comprises areas where a company has complete control and can make direct decisions. The "sphere of influence" encompasses areas where the company can still have an impact through its relationships, partnerships, and advocacy. And the "sphere of concern" includes areas beyond direct control and influence, which still affect the company's business operations and the wider society, such as climate change, income inequality, and social justice issues.

But there are two common misunderstandings about this model which limit its potential. The first is that these spheres should be addressed sequentially, meaning that a company must first solve issues within its sphere of control before leveraging its sphere of influence. The second misunderstanding is that the sphere of concern is entirely beyond influence, and so a company shouldn't try to address it.

In the context of carbon emissions, this might take the form of a company setting clear, short-term targets for their Scope 1 and 2 emissions but using only a narrow definition of their Scope 3 emissions, for example by excluding the consumer use phase which they might view as their sphere of concern. Once this is in place, they might then decide to advocate for a global carbon price through platforms such as the World Economic Forum.

In reality, these spheres are interconnected and overlapping. Any action in one sphere can simultaneously affect the others. A company's actions in its sphere of control can have ripple effects in the other spheres, and vice versa.

To act on this framing, companies need a systemic mindset that recognises how they act is as important as what they do. They must shift their thinking away from a narrow focus on reducing problems to seeing the broader potential and finding creative ways to realise solutions.

One company that has demonstrated this shift is Interface, with their NetEffect project. They created fully recycled and recyclable carpet tile products, and as competitors began to imitate their innovations, Interface focused on how to maintain differentiation and sustainability leadership. By weaving a social and environmental story into their products, they established a community-based supply chain for collecting discarded fishing nets that are harmful to marine life, while also creating new sources of income for some of the world's poorest coastal communities. This demonstrates the connection between a company's sphere of control - what it chooses to make its products from - its sphere of influence - from whom and how it procures those materials - and its sphere of concern - the resilience of the communities from which it sources its materials.

Finding the innovation gap 

To drive change effectively, companies need to do two things: find their innovation gap and unlock their leverage points.

First, companies should identify the gap between what is currently possible and what is needed to address sustainability challenges. By calling on their resourcefulness, they can create market-shaping, disruptive innovations that close the gap and help them win in the marketplace. For example, Diageo established an open innovation programme to develop groundbreaking new technologies that would close key innovation gaps around their most material impacts. The result? Diageo is developing a new-to-world, net zero glass bottle manufacturing facility, which will greatly reduce the carbon footprint of its drinks business and drive innovation in glass manufacturing technologies.

Second, companies should analyse their operating context to find leverage points that unlock cascading change. These are places to intervene in a system where a relatively small action can make a big impact, shifting the way the system works. For example, at Forum for the Future, we worked with Unilever to recommend specific advocacy asks that could help them make the greatest progress towards their Unilever Compass. By leveraging their sphere of influence, Unilever hopes to meet the targets within its sphere of control and create ripple effects that reach its sphere of concern.

Business in a just and regenerative future

It's time for businesses to let go of limiting beliefs and embrace their role as key actors in creating a just and regenerative future. Through understanding and simultaneously leveraging their spheres of control, influence, and concern, by focusing on finding the innovation gap and unlocking leverage points, companies can create market-shaping innovations that drive impact at scale.