Business Strategies: Sustainability Megatrends

As sustainable business strategies get revised for 2013, it is time to take an informed look at the sustainability megatrends highlighted in 2012.

The clear message of 2012 is that sustainability mega forces are accelerating in strength, which makes it a corporate strategy challenge and opportunity. One of the best reports on these megatrends describes a world in 2030 that is radically different from today: greater individual empowerment, shift in power to a multipolar world, much greater urbanization and migrations, and a demand-supply gap for food, water and energy that creates a dangerous nexus.

2012 also saw some excellent analysis of how industries are being exposed to these forces differentially. The year saw the popularization of the “zero-impact growth” concept and its application to companies, with Unilever, PUMA, Nestle, Nike, Natura and Ricoh leading the pack.

The top five factors that drove corporate sustainability initiatives in 2012 were energy cost cutting, changes in customer demand, brand risks, higher shareholder expectations, and competitive threats. Another interesting fact: 40% of shareholder resolutions that became proxy ballots were sustainability-related.

Since organization structures follow strategies considerably, the sustainability function increasingly depends on business unit strategies and sponsorship. In many F1000 firms, there is hesitation to even create a corporate sustainability function. Timberland’s experience is part of a broader wave of sustainability becoming more decentralized in its organization.

The lessons for corporate sustainability champions are:

1. Increase awareness in your company of the sustainability megatrends driving business and your industry in particular.

2. Pay close attention to the types of sustainability initiatives that are gaining traction. They are moving beyond cost reductions to markets and risks.

3. The way the sustainability function is organized is itself undergoing tremendous changes. For many companies, it is going the way of quality by becoming more a business unit responsibility.