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.

Succeeding on Sustainability (SoS): Innovation is Key

Innovation is the key to business success in corporate sustainability programs.

A recent report on corporate sustainability practices worldwide found that the most common theme among successful sustainability programs is innovation. This has been central to InnovaStrat’s approach for several years.

The kind of sustainable innovation we are talking about is not just research and development. While this is significant, what matters even more is sustainability-driven innovation around business practices. The report concluded that this kind of innovation is most important.

Sustainability Champion: Finding the Business Value

Yesterday, I talked about the different reactions that business functions have to sustainability and the need to get these groups on the same page. There are two key elements in a shared viewpoint that lead to business value from sustainability.

First, the shared viewpoint needs to reinforce the core strategic strength, capability, or competence of the corporation. This involves a shift from the mindset that sustainability is just for society or the environment’s sake, to one that advances the core value proposition of the company. When you start looking at sustainability through this lens of core strengths, you begin to speak the language of business. You can then tailor this language to the dialect of each distinct business group in the company and inspire every employee in the company.

Sustainability Champion: Common Ground on the C-Level

As a sustainability champion, one of the very first challenges you will face in making sustainability central to your business is: “how should my organization think of sustainability?”

For a field that has been around for about a decade, it’s amazing how many different views there are on what it really means. Nearly every business function has its own perspective on it. One function thinks it’s all about carbon emissions and climate change. Another, that it’s all about energy efficiency and renewable energy.

Accelerating Sustainability in Business

Call me optimistic, but the sea change in corporate sustainability seems to be gaining momentum.

Hurricane Sandy is the prime example of an event that drew attention to the perils of climate change.
But there are other, less obvious events of 2012 that are driving this sea change.

The Rio+20 conference in June this year, despite its modest achievements at the government level, had many important developments. For the first time, it became obvious that the real driver of a more sustainable world is going to be business. The spotlight is now on corporations to drive the sea change, which is great for business.