Horsemeat, corporate tax avoidance, and the financial crisis are stablemate scandals. Different breeds, yes. Reared by different factors, sure. But ultimately they trace their systemic failings back to the same cause: a corporate culture that in spite of everything is still secretly married to the economics of Adam Smith and Milton Friedman. The belief that commercial success necessarily means some kind of trade off between the interests of shareholders and society.
Yet the game has changed. Friedman’s argument that businesses have “one and only one social responsibility” – to maximise profit for shareholders – now seems not so much wrong as built for another time. Today, businesses that pursue commercial interests without giving due consideration to the communities they’re involved with are not competitively advantaged; they’re embroiled in controversy, exposed to supplychain shocks, caught out by regulatory changes, and are well on their way to becoming socially irrelevant to customers.
All this is helping to move the debate on from businesses being merely “less bad, less rubbish, less evil”, in the words of Kingfisher CEO, Ian Cheshire, to helping companies to become net positive contributors to society.
Net positive shifts the sustainable business mindset from simply reducing impacts to restoring nature and strengthening society. Brands such as BT, Coca Cola, Kingfisher, IKEA and Rio Tinto are seeking to go one step further than simply doing well by doing good. They are pioneering a new breed of sustainability strategy that doesn’t just create shared value for society, but means they give back more than they take.
The power of net positive is the clarity and boldness of the vision, encouraging companies to look more outwardly, far beyond the horizon of their own immediate impacts: Kingfisher and IKEA aim to create more forest than they use in product; Coca Cola aims to return as much water to nature as it uses in its products and their production; BT wants to help consumers cut carbon by at least three times the full carbon impact of its business by offering greener products.
The test will be how this works in practice. Questions include: can a company credibly call itself net positive if it only tackles one area of impact? Should net positive strategies complement or replace existing sustainability targets? How do you measure net positive in relation to social focus areas?
These and other considerations formed the basis of a recent conference hosted by WWF’s Dax Lovegrove and Green Mondays, the forum for FTSE sustainability professionals. The event crowdsourced input from 200 senior inhouse experts on how net positive could empower the next generation of business models. Contributions in the form of blogs, 13 roundtable debates, a high level panel discussion, and an online survey fed into the mix, and were analysed and assimilated into a special reportco-authored by Green Mondays and the sustainability team at atFishburn Hedges Group.
So how can businesses go about becoming net positive? Here’s what the crowd advised:
Companies should pursue a net positive approach only where the competitive advantage is unequivocal. This means selecting an issue that is material for the business – such as a resilient supply of timber for Kingfisher or the availability of water for soft drinks maker Coca Cola. Brands should weigh the severity of the social issue against the ability and perceived responsibility of the company to tackle it. In doing this, they should distinguish issues that the company should do something to address, from issues on which they have the opportunity to lead.
Net positive strategies are by definition more ambitious than typical approaches to sustainability since they seek to add greater value to society than their operations subtract. The advice from CEOs is don’t be afraid to aim high. Define the mission. You can always rely on the “networks of enthusiasm”, in Ian Cheshire’s words, to deliver it.
The idea underlying net positive – of giving back more than you take – should be more than a mathematical metaphor. It should be measurable. What can’t be measured can’t be managed. So make sure metrics feed into the early stage strategic development. Ways of quantifying return on investment is a key part of this to ensure commitments are financially sustainable through a robust business case.
Ambitious plans cut two ways: they can inspire and they can terrify. In seeking to inspire consumers, investors and stakeholders, ensure the narrative for doing what you’re doing makes sense, and where appropriate is tailored to suit the audience. For example, consumers care more about the societal outcomes whereas investors will want to know the cost versus benefit. A rock solid rationale is equally important to bring on board those crucial to delivering the strategy, namely your employees and suppliers. Involve them from the start and evolve the planned execution together.
Net positive more readily lends itself to tangibles such as natural capital, waste, carbon, and energy, which are easier to measure than so-called ‘softer’ social issues. However, a complementary approach is a powerful opportunity to engage consumers in reducing end-use impacts by effecting behaviour change. Kingfisher’s ambition to equip society with better DIY skills is a good example: better DIY know-how helps people to repair and recycle stuff they’d otherwise throw-away, whilst also nurturing the next generation of Kingfisher customers.
This article was originally published on Guardian Sustainable Businesss