Differentiated leadership on sustainability and its role in business transformation
James Muir, CEO of Crunch & Flourish explores sustainability and how business can take the lead on whole-of-system solutions.
Many organisations now think deeply about sustainability, develop decent strategies and put them into practice. Collectively, they’ve brought about significant shifts in transparency and authenticity on the topic. How is the big picture though, are we on a more sustainable trajectory?
It depends on your perspective. Many indicators of human progress are heading in the right direction. On the flip side, most indicators of planetary health are not. Society decided to convert environmental resources for the betterment of our species. This is an entirely rational decision. Or it was. Until in a moment of collective realisation, we understood just how far we’d gone.
The next question is what are our capabilities to deal with the issues? Have we developed a really effective set of principles, tools, techniques etc? Sad to say, we have not or they are difficult to discern. My take on this is that society is approaching sustainability in more or less the same way as we did when I first started out as an environmental professional in 1997.
Where next on sustainability?
Newsflash. Very few people think about sustainability when spending their money. Many people think about specific issues like plastic, child labour and free-range but few think about the umbrella term. Sustainability is often used to describe an organisation’s approach to people, planet and profit or the tongue twister version of economic, environmental and social issues. Professionals in the field tend to spend a little too much time debating the intricacies of sustainability, corporate responsibility, ethical behaviour, social responsibility etc. The point is most people expect business to behave themselves and give back to society - stay within the law, think beyond financial performance, act in a way that goes beyond good HR practice. Along these lines, a shout out to RetailX for their B-Corp journey.
One of my favourite quotes on where next for sustainability is from Steve Howard, IKEA Chief Sustainability Officer in 2016:
“If we look on a global basis, in the west, we have probably hit peak stuff. We talk about peak oil. I’d say we’ve hit peak red meat, peak sugar, peak stuff, peak home furnishings….”
Here we have a major retailer acknowledging that we live in a resource-constrained world and that this has profound implications for its business.
Along the same thread, the August World Resources Institute in 2017 stated that:
“It is necessary to insist not that people make do with less goods or that some people cannot have goods but rather that companies innovate new business models that deliver shareholder value and that shape and meet consumers’ needs in a different way.”
What I really like about this is the emphasis on innovation and the need to think differently. On sustainability issues, businesses tend to become consumed with a particular issue in their own context such as packaging and then behave in a similar way as the competition. The World Resource Institute is encouraging us to think about innovation more deeply - for example, innovative products and innovative systems as well as improvements to packaging itself. The Institute goes further - it is also challenging business to innovate in a way that creates differentiation and in turn, create market advantage and business transformation.
So how do we develop a differentiated approach to sustainability? There are many ways - the one described below is the approach we adopted and learned from at Crunch & Flourish.
The Way of the Startup
In October 2018, Crunch & Flourish interviewed thirty-two professionals aged 25-to-35 to inform the design of our first service. We asked about the last time they were really frustrated by an environmental issue when buying something. The most common responses were:
Plastic products 8%
Cosmetics ingredients 5%
We expected packaging to be important for consumers but not to this extent. We then thought it would be a passing phase but as we’ve tested our various prototypes, we’ve come to realise that packaging is a very strong and persistent concern. Colmar Brunton found that 72% of Kiwis said the build-up of plastic was their number one concern. Globally, 230 million people took in Plastic Free July in 2019, up from 120m in 2018 and 9m in 2016. We expected climate change to feature particularly for this demographic but in 25+ hours of interviews, carbon was only mentioned three times.
We asked a series of other questions including “which of the things that you buy has a significant impact on the environment?”. The top five answers were:
Personal care 13%
Cleaning products 13%
Before the interviews, we thought fashion was a likely sweet spot for our fledgling business. Turns out many of our interviewees said they’d changed already - avoiding fast fashion, buying more pre-loved clothes (in-store, online, via dedicated apps) and caring more for their clothes.
We also asked what was stopping our interviewees from buying products with a smaller environmental footprint. The three most common responses related to:
This was gold for us. Convenience could be addressed through shopping online and over time, greater tech in-store. Radically improved information was challenging but achievable - particularly for packaging. Price was interesting - our view is that for many categories, less expensive products have a smaller environmental footprint, i.e. there is a potential mismatch between consumer perception and reality.
Such interviews are not enough but they do provide insights and challenge assumptions. For Crunch & Flourish, they provided a foundation to design our prototype service and then to enter the build / test / learn cycle not just with shoppers, but with the whole system for packaging from brands and suppliers through retailers to those organisations in material collection, sorting and recovery.
Take the lead on whole-of-system solutions
And there’s the rub with sustainability issues - they are not isolated but whole-of-system issues. Business used to say it’s not our role to lead. It’s something for the government, a Working Group, industry consensus, voluntary agreements etc. Such approaches have been tried repeatedly over the last four decades and the big picture, have not delivered. We all know this - and so do our customers and shareholders. Now is the time for business leadership on critical issues for which information is imperfect and incomplete. Such differentiated leadership on sustainability is fundamental to business transformation as well as personal development and the stories we tell our children.
Society has tried hard on sustainability for 40+ years but environmental degradation continues. We need - and customers want - fresh thinking on sustainability. There is a leadership opportunity for business to develop differentiated whole-of-system solutions.
James Muir is CEO of Crunch & Flourish. Crunch & Flourish helps shoppers make buying decisions aligned with their environmental concerns. Its first service is the Packaging Star, a digital overlay for online shoppers. The higher the Packaging Star, the more likely the packaging is to close the loop and in turn, keep packaging in the economy and out of the environment.