Sustainable Business Strategies: Investors

Investors are one of the biggest, “below the radar”, drivers of sustainable business for the future, and are making slow and steady progress in sustainable and responsible investments.

The lessons for corporate sustainability champions are:

  1. While it may not seem that investors care about sustainability, their interest is steadily growing and will become very visible in a few years.
  2. The cost savings for companies from sustainability and rising expectations of limited partners are driving the interest in these investments.
  3. This trend will accelerate when the metrics for monitoring investments improve, which seems to be taking place now.  Nearly half of all shareholder resolutions typically have to do with sustainability.

Sustainable Business Strategies: Risk Management

2012 was the year in which risk management strategies to cope with sustainability mega forces became more sophisticated.

risk management

The lessons for corporate sustainability champions are:

  • Risk management for climate change and other environmental threats must become part of enterprise risk management.  If it isn’t, then you’re really in the minority.
    You need to make it a priority within your company.
  • Focus on business resilience, not just to extreme weather events that disrupt supply chains and operations, but also to the threat of resource constraints.

Sustainable Business Strategies: Natural Capital

Natural Capital2012 was the year in which natural capital (also called biodiversity and ecosystems services) began to get on business’ radar. This is a theme that has real staying power.  

Advice for the Corporate Sustainability Champion:

  •  Stay up-to-date with this important, rapidly developing area of sustainability. It appeals to business executives because it is easier to grasp conceptually.
  • Show why natural capital matters to your company. The way to do so is through a pilot evaluation of its materiality to business.
  • Join the coalitions that are beginning to form in this area, such as the TEEB for Business Coalition and the EP&L Consortium.

Sustainable Business Strategies: Energy Strategies

InnovationSustainable energy strategies need to recognize three key themes: the resurgence of natural gas in the mix of fossil-fuel energies, the mixed picture with regard to clean energy technologies, and the slowing down of energy efficiency gains.

Advice for the Corporate Sustainability Champion:

1. Keep a close eye on the rapidly changing fossil-fuel energy mix. The glut in natural gas availability is a mixed blessing since it could lead to complacency.

2. For the long-term, renewable energy sources are still the surer bet in terms of predictability and price, despite their slowing growth in the last year

Top Sustainable Business Strategies from 2012

In case you missed it, this blog on Sustainable Business Strategies for 2012 was published on Triple Pundit on January 4th.

Sustainable Future
As you go about developing or revising your sustainable business strategies, it is worth reviewing last year’s key developments in important areas of business strategy.

They will only grow in importance this year.

Rather than focus on particular stories ably summarized elsewhere, here are key strategic themes and the underlying research that you can use as practical guidance.

Sustainable Business Strategies: Food and Water

Food and water, along with energy, comprise a resource nexus that will impact sustainable business strategies for all firms, given their central role in the economy.

Feeding the future world when water is constrained will be a daunting challenge . Food production will need to increase by 70% by 2050 in order to feed the projected global population of 9 billion.  Extreme weather will exacerbate the production of food and increase food prices disproportionately affecting developing countries where 70% of the household budget goes to food (the US figure is 13%).  Rising food prices have pushed 44 million people into poverty globally just in the past two years.  One tragedy is that smallholder farmers comprise 50% of the undernourished, even as they grow food themselves. Unfortunately, the prices of staple foods could double by 2030.

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.

Corporate SoS: Business and Climate Change Impacts

Business risks from climate change impacts are getting more recognition, as risk analysis gets better and impacts of natural disasters show up larger on the business radar.

2013 will be the year in which the business risks of climate change impacts get understood much more clearly. This is a CEO-level issue because it affects corporate strategy and performance.

As a result, I expect widespread incorporation of risk management strategies for climate change into enterprise-level strategic planning, at least among the Global 500 corporations.

Corporate SoS: Integrated Reporting & Standards

Integrated reporting and sustainability standards landed on the corporate radar of global sustainability leaders in 2012.

The goal of integrated reporting is a more accurate and complete picture of the company’s performance, governance and strategy, and its future prospects.

To achieve this goal, integrated reporting tries to pull together financial information about the commercial, social and environmental context of the company in the same report.

The big problem with current reporting is that this information tends to be scattered across financial disclosures and corporate sustainability reports. Even if found together, the social and environmental aspects are not monetized.

Corporate SOS: Business Value of Sustainability

In 2012, there was a sea change in the evidence for sustainability’s business value, especially when it comes to the market value of the company.

Key Sea Change Takeaway: Sustainable companies perform better than other companies over the long-term. This is true whether you measure stock market or traditional P&L performance.

Clearly, the business case for a particular sustainability project depends very much on the project and the company. In particular, it’s easier to quantify the business value for many efficiency or waste reduction projects.