Last Thursday I attended a very interesting debate hosted by The Guardian and GSK on ‘what motivates the private sector to do social good?’  The panel consisted of a great mix of speakers with the CEO of Business in the Community Stephen Howard, COO of CPD Frances Way, President of R&D at GSK Patrick Vallance, Co-Founder and MD of JustGiving Anne-Marie Huby and the Co-Founder of BuffaloGrid Daniel Becerra. The audience was also a great mix of small and large companies as well as many, diverse NGOs.
 
It was timed to coincide with the launch of the Sustainable Development Goals (SDGs) and on top of the panel debate, each of the five tables in the audience were assigned a fictional company and asked to identify how we would convince our boards that we should actively work to support SDG 10 – reducing inequality within and among countries.
 
There will be a write up in the Business section of The Guardian on the 13th of October so look out for a full synopsis then, but a few points that really resonated with me during the debate are summarised below:

• Quarterly pressures: there was a lot of debate around how ‘doing good’ sits with the quarterly financial targets and pressures of publically listed companies, with people in the room suggesting that even Paul Polman at Unilever can’t get a away with too many poor quarters in the short term.  How do we get investors to start taking a longer term view? Frances Way suggested that we need to engage the asset owners more, rather than the asset managers – if you are a pension fund the value of that fund in 30 years’ time is crucial.
• All business models should be inherently good to thrive in the long run: Stephen Howard argued that businesses exist first and foremost to solve a problem. They need profit the same way humans need oxygen – it is critical but not the purpose of their existence.
• Changing customer behaviour: Howard also argued that the real difference companies can make is to change how their customers behave through their products and services – something I wrote about last year.
• Regulation is good, but only if implemented well and with the right parameters (with the Social Value Act held up as good example of a missed opportunity). There was broad agreement that good regulation will help those at the forefront of innovation, something Gavin Warner of Unilever confirmed earlier this year at the Re-Thinking Progress conference.
• NGOs are great at spotting opportunities and innovation but not always at doing ‘scale’. Anne-Marie Huby made a strong case for corporate-NGO partnerships with this really insightful statement.
• Choice editing: there was a question from a Sainsbury’s employee in the audience about whether they should be doing more choice editing as they already do with bananas for example (they only sell fair-trade).  There was broad agreement that retailers should be doing this as customers often want to do right but simply don’t have the time to read every label.
• You can communicate to half a billion of the poorest people in the world by text message. Daniel Becerra highlighted that of the 1.2bn poorest people in the world who have no access to electricity, 600m have a mobile phone.  This is potentially a very powerful tool to get mass health and other important messages out quickly and widely.
• Flat organisation structures drive innovation: Becerra also highlighted that the flat organisational structure and empowerment of staff at BuffaloGrid has been a catalyst for creativity and innovation, a belief I have long held.

​by Jesper Ekelund​

Whether you work in sustainability or simply take an interest, it can be hard to envisage what a more sustainable world might actually look like. We know what we want to avoid, but looking decades into the future and imagining an alternate reality can be a challenge for even the most imaginative amongst us. It can be even harder to describe what technologies, actions and events might get us to this point.

Jonathon Porritt's latest book 'The World we Made' takes on this challenge. The seasoned environmentalist and founder of Forum for the Future writes from the perspective of Alex McKay, a teacher in 2050 looking back on recent decades and reflecting on the changes he has seen. With the help of a research team of students, he describes the social, technological, ecological and financial events and trends that shape the years 2020-50. The world in 2050 is by no means one without problems, but it is by and large more stable and more content. 

Porritt uses an entertaining mix of sketches, photos and mocked up covers of magazines from the future to paint his picture. The result is an accessible 'future-history' book (if that wasn't already a word, I've just invented it.) 

Alex McKay's reality is quite different from our own, and it is far from being a utopia. There is still a gap between the rich and the poor, for example, but it is not as yawning as it once was. Empathy is far more central to society and competition co-exists with collaboration. As I suspect Porritt intends, you are left feeling heartened and excited by some developments (Malaria is beaten! Coral reefs recover! 90% renewable power!) and decidedly uncomfortable, nay freaked out by others. He describes how governments still haven't really got a handle on regulating biotech, and the threat of cyber-terrorism looms large. Personal genome sequencing is the norm leading to huge advances in preventative healthcare, but ethical concerns relating to brain enhancing 'implants' divide opinion. Personal 'home' robots, with processing power far superior to our own brains look after the elderly and provide companionship. The debate rages over what constitutes a human. 

There are deft, heart-warming little touches too- we learn that Detroit, once an industrial powerhouse and centre of the US car industry, sank first to industrial wasteland, then emerged gradually as a shining example of urban farming used as a case study worldwide. In fact, it seems we're now so good at urban food-growing- using everything from traditional allotments to vertical farms, that 40% of our food comes from our cities.

There is an attempt to describe how the international community finally got its act together on reducing carbon emissions, and you may not be surprised to learn that China leads, followed somewhat tardily by the US. I won't spoil the rest for you- but suffice to say coal is consigned to the history books and wind, solar and in the interim, natural gas play a huge part.

Alex McKay's research students are part of the generation still clearing up after their grandparents' excesses, but it is their parents who first begin to put civil pressure on governments. The book describes pivotal, and peaceful popular uprisings calling for a fairer and more sustainable world- the 'Enough!' demonstrations of 2018 and the intergenerational justice movement led by school children in the late 2020s. These events, Alex recalls, were pivotal moments. I read this section as the People's Climate March set off in New York and around the world. As the Guardian's Jo Confino observed, this was the first time socialists have marched alongside big business heads, alongside NGOs and ordinary citizens. It made me think that Alex McKay's experience of popular movements creating real change may not be so far off.

I suspect that some readers may be disappointed not to find more detail on technological solutions, but I don't think that's the purpose of this book. In any case, if you are hungry for more, there is a helpful bibliography at the back pointing to further resources. For me, it served as an accessible and thought-provoking window on a possible future- you may not find all the scenarios plausible, but it's a great way to prompt your own thinking and kick-start your imagination. 

Overall, the tone is upbeat- and goodness knows we need more of that- 'a world that works for the majority of people, if we play our cards right.' I'd love to see this book used in schools as in inspiring textbook. And I can certainly see 'The World We Made' making excellent fodder for vision and future planning workshops- whatever sector you work in. 

by Jenny Ekelund

Last week I had the pleasure of attending a talk on the Circular Economy by Jamie Butterworth (CEO of the Ellen MacArthur Foundation) and Peter Lacy (MD Strategy & Sustainability, Accenture APAC). The talks are part of a series of seminars organised by Oxford University's Smith School of Enterprise and the Environment to explore how we meet future sustainability challenges. Whilst it was very intellectually stimulating, the key for me was the practical insights and case studies on how we can re-frame innovation and growth challenges.

Many academics and practitioners alike have for many years been looking at how we can sustain our economic wellbeing without depleting our resources.  Some, like Tim Jackson, have suggested we can have ‘prosperity without growth’, or slow down growth significantly, but I don’t buy this – and nor does Peter Lacy, who said that this is simply not a conversation you can have in Asia (the area he covers) where billions of people want to lift themselves out of poverty. 

Instead, we need circular economy thinking (as opposed to our current ‘take, make, dispose economy’). Jamie summarises the circular economy as “a framework for an industrial economy that is restorative by intent. At an individual business level this provides the opportunity for businesses to begin to decouple economic growth from resource constraints and drives innovation and value creation”.  The short, eloquent clip by Dame Ellen MacArthur below also summarises the concept really well using her sailing experience as an analogy.

Peter outlined five business models for circular economy thinking and they make great lenses through which to innovate.  They’re not all new, but are very compelling. 

Products to services
“Every product is a service waiting to happen”. To my mind, this drives much of the rest of the circular economy thinking. The key is to get to the heart of the customer value proposition and look at how we can reframe it.  Are we selling cars or mobility? Gas or a warm house? Light bulbs or light?  For example, Philips has started selling lumens of light to municipalities for their street lighting, thus retaining ownership of the assets and reusing the resources at the end of the life-cycle.

More radically, how might you make shoes a service? Timberland have been trialling exactly this with the ‘Earthkeeper’ shoe for kids.  Kids of a certain age are notorious for going through many pairs of shoes a year, so instead of buying, say four pairs a year for $50 a go, Timberland will sell you the right to a shoe for your child for $100. Timberland retain ownership of the shoes and recovers many of the materials at the end of the life-cycle. It also has the great benefit of ‘closing the customer loop’ as customers are not exposed to the marketing mix and competitor products as they would every time they go back to a store to buy new shoes.

Sharing economy
We have talked about this trend on our blog before, but there is much scope for it to grow.  How can you use (digital) technology and social media to create ‘clearing houses’ to create a sharing effect, ultimately leading to a radical shift in heavy resource use? Great and prominent examples include Airbnb, ZipCar and Uber, highlighting how the sharing economy can drive growth with limited resource use; indeed, Airbnb now has a market cap to rival all major hotel groups.

Circular supplies
Looking at the supply chain and asking how we can make our inputs more circular, be that through R&D, supplier or even competitor collaboration. An obvious example is renewable energy in the manufacturing process and a more high tech one is around ‘green chemistry’ as demonstrated by Dutch chemical company DSM, who have developed some bio based substitutes designed closed loop from the start.

Resource recovery
Driven by service vs. product thinking, how do we design for disassembly and resource recovery from the start and ensure we maintain ownership of the raw materials? Much like Interface in the US, Dutch carpet supplier Desso are also pioneers in the sustainability field: they rent out carpets by the tile, replacing just the ones that are spent and reusing the materials for new carpet. This allows for lower costs for customers, predictable input costs, increased profits and radically reduces resource use. 

Product life extension
Linked to the above, how do we create products to maximise their life-cycle from the start? How do we design for remanufacture and refurbishment from the outset? For example, BMW now designs parts which in some cases up to 80% of the part can be refurbished and re-used – and put back into the market with the same warranty levels.

According to Peter, over 50% of 1000 global CEOs interviewed as part of a UN study, said they are introducing circular economy initiatives in the coming years.  Whilst it is early days, it is clearly moving from being a niche concept to a more mainstream reality with huge potential for innovators.

by Jesper Ekelund

IKEA was recently in the news regarding its famous meatballs. In 2015, they plan to offer lower carbon alternatives – chicken and vegetarian varieties . At the same time, they were also in the news for having their FSC (Forest Stewardship Council) certification in Karelia, Russia temporarily suspended because its subsidiary Swedwood was cutting down 600-year-old trees.  We’ll continue to hear more news about IKEA’s sustainability credentials from both supporters and detractors. It’s a global retail powerhouse, and it has taken a very public, proactive commitment to sustainable business.

In fact, each year it shares a very thorough Sustainability Report, which details its strategy, activities and results. In reading their latest report, one thing that stands out is its Sustainability Product Scorecard, which provides 11 criteria relating to how new products are designed and produced (see box).

That it has a Sustainability Product Scorecard is noteworthy in and of itself. However, delving beyond it, there are a number of best practices for marrying sustainability, innovation and growth.

Enabling customers to lead more sustainable lives

Picking up on the last point, enabling customers to live a more sustainable life at home opens up a number of opportunities to create new product categories and differentiate existing ones. For example, IKEA has teamed up with Hanergy to offer solar panel packages in its UK market and is in the process of updating its lighting range to LED light bulbs as standard. It has also developed products such as white goods, space saving solutions and food storage containers to help customers use less energy and water, and to reduce waste. Enabling customers to have an impact on sustainability not only opens up growth opportunities, it also communicates real reasons to believe that a company is committed to sustainability. It demonstrates a value chain perspective on sustainability rather than a supply chain viewpoint. A value chain takes into account the customer, and by doing so a company can expand its sustainability impact beyond the point of sale.

“We will do our best to use sustainability as a driver of innovation and transformational change - from factory and farm, to store, to customers’ homes and all the way to our products’ end of life - and strive towards having a positive impact on people and the planet.” 
(IKEA Group Sustainability for 2020)

Understanding the bigger picture on customers’ needs

It’s tempting to focus solely on the sustainability aspects of a product in the design phase. However, doing so at the expense of customers’ wider needs will most likely result in low take-up and miss the mark in the impact on their behaviours, and ultimately on the positive impact on the environment. Customers still have a wide set of needs regarding products, and except for the most diehard green advocates, they are unwilling to sacrifice them. IKEA recognises this, which is why it still addresses customers' needs for style and design, ease of purchase and use, and very importantly affordability. Affordability is one of the main needs that remains unaddressed, and creates an obstacle to helping customers take action – just look at households’ low take-up of renewable energy solutions in the UK, despite periodic incentives such feed-in-tariffs. For example, IKEA sold over 22m LED products, including 12.3m LED bulbs. In addition to designing LED lighting solutions that deliver on performance, IKEA took steps to make them affordable, and therefore accessible, to its customers.

Alignment and integration of sustainability strategy with corporate strategy

If sustainability efforts are isolated to one part of the business, such as product design or production, they’re unlikely to survive against other corporate priorities, particularly short-term sales and cost targets. In addition, the market and customers are increasingly sceptical about companies' sustainability credentials – they sense when sustainability is an add-on or PR attempt. A clear sustainability strategy that is seamless with corporate and brand strategies is essential to avoid a greenwashing tag, and to embed sustainability in the innovation process. IKEA’s approach reflects this understanding – the Sustainability Product Scorecard stems from the wider corporate, brand and sustainability strategies. In fact, IKEA has 11 guiding group strategies and sustainability is one of them, and it runs throughout all of the others.

Making a public commitment to sustainability, as IKEA has, will attract assessment and commentary from the public – from customers, non-customers, and other stakeholders. It will create reasons to believe for some audiences, while others will challenge a company’s real motivations and performance. Putting aside which audience you fall into regarding IKEA, their approach demonstrates valuable best practices on how to align commercial and sustainability objectives. It also demonstrates that these objectives are not inconsistent. Rather, sustainability can drive innovation and provide real opportunities for growth.

by Dennis Pannozzo

Watching Channel 4's recent 'Scandimania' series I learned a fact about Sweden that I had never been aware of:  Volvo invented the three point seat belt in 1959, but instead of filing for a regular patent, they filed for an open one, meaning it would be free for anyone to use. In fact, the company went further than this - they sent Nils Bohlin, the inventor, out on a global mission to convince competitors, consumers and governments alike that this technology had to be adopted to save lives.

There had been versions of seatbelts before this, but Bohlin's was the first three point model. Crucially, he realised the importance of consumer behaviour and adoption - customers want a 'no-brainer' solution.  So his design ensured it could be buckled quickly, with just one hand.

And it certainly worked - it is estimated that over 1 million lives have been saved to date and it is considered one of the most important safety inventions of all time.  The West German Patent office in 1985 voted it in the top eight patents it had handed out in its first 100 years.

This case raises many interesting questions: 

1. Why would a company spend significant money on R&D only to give the invention away and not earn any licencing fees? 
   
2. Was it completely altruistic or was it actually a long term strategic decision by Volvo?
   
3. Would Volvo make the same decision today in the cut throat market that is the 21st century automotive industry?

Having done some internet searches, I'm surprised how little debate there seems to be about Volvo's decision and the questions above. 

Volvo maintains that the reason it gave the technology away was that it was simply too important an invention to profit from - increased revenues just didn't stack up against the lives that could be saved.  Volvo realised that consumers would be slower to adopt the technology if it was an expensive optional extra in other cars.  I also wonder if the Swedish social welfare model and culture of equality contributed to the decision; had Volvo been in a more Anglo-Saxon country one wonders if the same attitude would have been taken.

On the other hand, was it actually a very shrewd business decision? If you asked 100 people to name the first word that comes to mind when you say 'Volvo', 80-90 would probably say 'safe' (unfortunately for Volvo, the rest would probably say 'boring' or 'box' despite neither really holding true any more!). But this is the point - Volvo's differentiator has always been safety and reliability in the first instance.   One of Volvo’s managing directors, Alan Dessell, is quoted as saying: “The decision to release the three-point seat belt patent was visionary and in line with Volvo’s guiding principle of safety.” Judging by the fanfare and PR around the 50th anniversary of the three-point seatbelt, perhaps Volvo realised that releasing the technology would help reinforce and build the brand for years to come. How would people have perceived them if they kept the technology to themselves and squandered the opportunity to save so many lives?

This leads us to the question: would they have done the same today?  I'd love to think so but fear they wouldn't. The car industry is much more cut-throat today than it was in the early 60s.  Volvo has perpetually lagged behind its main German competitors and a breakthrough invention like this could be a brilliant competition killer in the short term. That leaves an uncomfortable question - why, in the economic system we have, would any CEO sanction giving a major patent away?

I would suggest there are three very good reasons.  Firstly, trust in big corporations is at an all time low and a gesture like Volvo's could go some way to restoring confidence - after all, I can think of few more trusted brands than Volvo.  Secondly, there is long term brand and ultimately bottom line benefit to be had - especially in today's world of social media and marketing campaigns that can go viral.  Finally, as the backlash against short-termism and bonus cultures in big corporations continue, managers are likely to be given longer term targets. Decisions like this, which forfeit short term gain for longer term benefit, will work greatly in favour of managers willing to make them - wider societal benefit will increasingly become part of remuneration.

And a final thought: companies are made up of human beings.  Perhaps it was simply a case of the board looking at each other and saying - 'what if it was your kids and spouse in an accident without a 3-point belt?'

by Jesper Ekelund