sustainable business

The business case for sustainable development

The business case for sustainable development

If you want sustainability to move from being a nice-to-have, to being a must-have, at some point you will need to show that there’s a business case for it: that your organisation will meet its core mission better, faster, cheaper by paying good attention to sustainability than by ignoring it.  

What does the business case look like in your organisation?

What can I do, to calm the climate?

What can I do, to calm the climate?

If the IPCC’s Special Report on climate change made you want to do something – anything – to calm the climate, swiftly followed by a sinking feeling that you just don’t know what is both doable and meaningful, and you’d rather not think about it…. You can do something meaningful! Here’s a great way to find your contribution.

Change management for sustainable development - 'a coach in your pocket'

CMSD cover 2017.jpg

Are you an environment or sustainability specialist, working to help your organisation step up to its role in bringing about a sustainable future?  Want to make more of an impact? I want you to as well! Which is why I was so pleased when IEMA invited me to write a second edition of Change Management for Sustainable Development.

And when one of our peer readers said "it's like having a coach in your pocket", I was really happy, because that's exactly what I wanted it to be.

It's published today!

Huge thanks to all the wise, insightful and generous practitioners who shared their experiences with me.

There is a free download for IEMA members, and non-members can order an e-copy (£10) or a hard copy (£25 /£15 for members). https://www.iema.net/cmsd

What difference does the business model make?

Photo: Lego city,  Sonny Abesamis

Photo: Lego city, Sonny Abesamis

There's a lot of talk about the need for new business models, for sustainable development. What might make one business inherently more sustainable than another?  What kind of businesses are embracing their special role in bringing about a sustainable society?  Or helping us transition?

We in the sustainability movement sometimes struggle to understand the concept of a business model at all.  What is a business model?  How do you distinguish between one model and another?

What I've learnt and who I've learnt it from

This post is a bit of an exploration of what I think I understand about business models, gleaned from listening to people like Stephanie Draper and David Bent from Forum for the Future as well as helping the Travel Foundation and the Branson Centre for Entrepreneurship straddle the fields of start-up businesses and sustainability.  I'm also drawing on what I've learnt from working with the inestimable Julie Brown and Growing Communities on their grass-roots bottom-up start-up programme, ably assisted by the entrepreneurial advisors at UnLtd.

Follow the money

It seems to me that there are two different ways of thinking about business models.  One is about the governance and questions around who benefits from the business. The other is considering who is paying whom to add what value at each stage.  Those both sound like pretty tricksy concepts which you might well see on bullsh*t bingo, so I'll expand on them a bit here.

Who invests, who owns, who benefits?

On one side, we have private companies where investors put up the money and expect to get a return:  which might be that their capital grows (I invest £500 in a business and when I sell my share of the business I get £1000 for it) or that they get a dividend (I invest £500 in a business and every year I get a share of the profits, say £75 a year).

The growth in the capital or the income depends on how well the business does.

Depending on how risky the business seems to be, I might only invest my £500 if it means that I own half the business.  This is the kind of negotiations you see on Dragons' Den, where the potential investors strike deals with the candidate businessmen and women, demanding a bigger slice of ownership than is initially on offer.

Another way of raising capital for private business is through loans, which get paid back at an agreed interest rate, which is negotiated with an eye on the risk of the business not being able to pay the loan back (defaulting). The loan may be secured with a mortgage, in effect making the investor a potential owner if there is a problem paying back the loan.

There are also businesses with a sort of hybrid relationship with their investors and shareholders: like community-owned renewable energy businesses which raise capital by issuing shares, but the rate of return is capped.  See for example those linked to Energy4All (this is not financial advice).  These companies are run for profit, but the return to shareholders is limited by the rules governing the company, and the remaining surplus is reinvested or donated.

And then there are completely not-for-profit businesses like Growing Communities, which funds its activities largely through trading (selling stuff).  Growing Communities is owned by its members (box scheme customers), and any surplus is reinvested in the business.  In the case of Growing Communities, reserves built up over a number of years have been used to part-fund activities like its start-up programme, which supports other communities to set up their own financially self-sufficient sustainable food schemes.  The original capital to set up Growing Communities came in two forms: sweat equity (free labour and in-kind contributions from the entrepreneurs who set it up) and advance payments from customers (members) who paid for vegetables before they were sown!  I know, I was one of those veg buyers.

Not forgetting co-operatives and other employee-owned organisations, where ownership is shared among the people who work in them (or have some other relationship to the organisation, like being a customer or a 'member'), either equally or in ways which mean that one person can own a bigger slice of the organisation than someone else.

You can see immediately that different kinds of people are going to be interested in being investors in, and owners of, these kinds of businesses.

And you'd expect to see the 'rules' or assumptions about what returns investors could get, to be written down quite clearly - in share offer documents, articles of association and so on.

Interestingly, one of the special aspects of being a certified B-Corp, is that while businesses can continue to be 'for profit', their governing documents need to incorporate sustainability, so that they are also 'for benefit'.  This is explained in detail here. The point is that the directors of a B-Corp will have a mandate to consider 'who benefits' in a wider way than implied by the questions 'who owns' and 'who invests'.

Who is paying whom, to do what?

The other way that people use the term 'business model', is understood when you follow the money: who gives money to whom, in exchange for what?

The what is 'added value'.

So in a really simple retail situation, I pay a stall-holder at the farmers market to receive some delicious vegetables.  Here's a service example: someone pays me to design and facilitate a workshop. 

A slightly more complicated example: I pay a monthly standing order to Freedom from Torture, who in turn provide medical and therapeutic services to victims of torture. There's no real exchange here (I get a newsletter, but I often can't bear to read it...).  The organisation has told me enough about its effectiveness in a field I care about, that I am in effect paying it to do something that I want to see done, but cannot do myself.  This particular charity also gets money from grant-making bodies, which is likely to be tied to the provision of specific services or achievement of specific outcomes, which don't directly benefit the bodies which are making the grants.  So this is a 'benefit at a distance' from the perspective of the people providing the money.

Once you start to look at organisations this way, all sorts of questions jump out:

  • How can Twitter and Facebook, and similar businesses, provide free services to individual users? Because advertising and data mining.
  • How do Uber and Airbnb make money? Taking a cut from the people who provide the actual driving or hosting.  So why do those people pay money to Uber / Airbnb? Because they receive a service: visibility to customers who want a convenient way of locating and paying for their services.
  • Who would be paying who to do what, in a circular economy? It will depend on the interplay of a few factors: the comparative costs of using 'waste' as a raw material versus using 'new' raw materials; the comparative costs of 'disposing' of the waste, as opposed to processing it and transporting it to the people who want to use it as a raw material; the particular regime of regulation and taxation surrounding these things.  You might see the organisation which is generating the waste, paying for it to be taken away and dealt with.  You might see the organisation which is making the new product, paying the recycling organisation to provide it with raw materials.
  • What about 'payment for ecosystem services'?  This is the idea that, for example, a farmer might be paid (by whom?) to enable more water to be stored on their land during very wet periods, to help reduce down-stream flooding.  The payment might represent income lost by, for example, not being able to harvest crops from a flood plain. Or it might represent costs incurred by planting trees on land which otherwise wouldn't absorb so much water.

My reflection is that it's not enough to understand how physical resources might flow through a system, or who/what might benefit from a different way of doing things: when faced with a novel business idea, it's important to understand who might pay whom to do what.

Is one business model better than another?

There is a lovely dissection of business models for social good, by David Floyd here (warning: contains llamas). 

At a very exciting but top secret (OK, Chatham House rules) workshop on the future of sustainable business that I ran recently (October 2017), the participants from a range of backgrounds, including multi-national consumer goods businesses, got quite close to recommending alternative ownership and governance structures as being fundamental to business being truly 'for good' - because of the 'patient capital' needed to underpin them, and the need for leaders to be able to consider wider benefits than the financial benefits to owners.

 

 

Final places remaining - book now! Still conversations for sustainability leaders

Just a week to go until the second ‘still’ conversation.  Here’s what some people thought of the first one

“Thank you, Penny, it was a really powerful event you created a wonderful opportunity to reflect, listen, think and learn.  A really enriching experience and I would encourage any of my network in the sustainability community to consider signing up for one or more of your other forthcoming 'still' conversations.  A very worthwhile investment for both senior managers or practitioner level.” Thomas Enright, former Head of CSR, Affinity Water
“Thank you for your generosity, kindness and skill in making such a trusting space possible.”  Kath Dalmeny, CEO, Sustain
“Penny has created a unique space to reflect and share experiences. The carefully facilitated session provided new insights and a real sense of shared purpose with the other attendees.”  Matt Loose, Director, SustainAbility

There’s just one space left for next Wednesday, 12th April.  To find out more and book that place, click here.  The third 'still' conversation in this season is about getting sustainability into your organisation's strategy, and will be on 10th May.

To be kept informed about future ‘still’ conversations, drop me a line at still@penny-walker.co.uk

Work, growth, innovation and equality - Sustainable Development Goals and business

Stonewall and P&G's work to promote equality for LGBT staff in Spain, Rype Office's repurposed office furniture for Public Health Wales, Willmott Dixon Interiors working with the Amber Foundation to help vulnerable youngsters into work... These are just some of the businesses featured in part six of my seven part series for The Environmentalist on how business can help support the SDGs.

Credit: Nicki Priem.   Mafikizolo raised a flag to represent Goal 8, Decent Work and Economic Growth, at Constitution Hill in Johannesburg, South Africa, to support the UN Global Goals for Sustainable Development.

Learn more...

You can read the article in its proper home, The Environmentalist magazine here, if you are an IEMA member or a subscriber.  Or if you sign up for a free trial. 

If that all sounds like too many clicks, there's a pdf of it here.

 

 

 

Carousel in action

A description of carousel technique in action plus a free download on how to run one yourself.

Still...... a new season of workshops for spring

Images: David Caines

I'm very excited about this season of workshops that I'm piloting - still conversations. 

It's a vision I've had for a while, and it's begun to take shape over the last six months.

The groups will be small - a maximum of ten people in each conversation.  The atmosphere will be easeful, open, creative.  People will learn from each other and from the opportunity to think aloud with others who understand what it's like to grapple with sustainability - trying to move fast enough while bringing others with you; finding the authentic way to be truthful and motivating. 

To begin with, I'm offering three conversations on different topics and people can come to one, two or all three.  The themes are:

It's an experiment, so the price is deliberately low with discounts (for multiple bookings, self-funded people, people who took part in the survey earlier in the year, IEMA members).  So it's just £100 plus VAT for a single session (discount if you book more than one).  And I'll be looking for feedback on how to make them as useful as possible for people.

It's a chance to take time out and be still. Think aloud with other sustainability leaders. 

I've emailed and sent personal invitations to people via LinkedIn, and the feedback is that now, more than ever, those who don't already have these kind of supportive professional-yet-personal networks in place are keen to get involved.  The Personal Resilience theme is definitely striking a chord.  

 

Find out more and make a booking here.  

Clean energy, thriving cities: Sustainable Development Goals #5

Qiciao and Qixi, a pair of giant panda twins, inspect a flag to represent Goal 7, Affordable and Clean Energy, raised at the Chengdu Research Base of Giant Panda Breeding in China, to support the UN Global Goals for Sustainable Development. Credit: Mr. Yuan Tao and Ms. Yan Lu

Qiciao and Qixi, a pair of giant panda twins, inspect a flag to represent Goal 7, Affordable and Clean Energy, raised at the Chengdu Research Base of Giant Panda Breeding in China, to support the UN Global Goals for Sustainable Development. Credit: Mr. Yuan Tao and Ms. Yan Lu

Bringing affordable off-grid renewables to remote communities in developing countries; using cutting-edge data analysis to save money and carbon in modern buildings; micro-managing students' energy use to balance the national grid: some of the brilliant things that are featured in the latest of my series on how businesses are helping contribute to meeting the Sustainable Development Goals

This article in The Environmentalist also looks at making cities more sustainable: better buildings, convenient and reliable public transport and new technology which helps blind and partially sighted people navigate and enjoy the neighbourhood.

You can read it online here (IEMA login or subscription, or take a free trial) or there's a pdf version here.

What do we need now, from sustainability leaders?

Belaying. Aimee Custis Photography,  flickr .

Belaying. Aimee Custis Photography, flickr.

When I got the news about the US Presidential election result, I went through a lot emotions that I'm still processing.

One that may have been shared by those of you who are looked to for leadership - in ways big or small - was uncertainty about what to say to people who are wanting guidance.

I had to think about this pretty quickly, as I'd been asked present on leadership in the closing session of a four-day workshop on sustainable business.

So what now?

What kind of leadership do we want, what kind of leaders do we need to be, when the going gets really tough?  For me, it boils down to resilience and responsibility.

Resilience

It will be tough. There will be defeats and failures.  People will try to stop the things we are working for.  For some of us the challenges will be unbearably hard.  For some of us they already are.  (I know I speak from a position of privilege as a white, well-educated, able-bodied, straight, comparatively wealthy person from a Christian cultural background - I don't know I'm born.)

Part of what defines stepping up to lead - wherever we find ourselves - is that we are resilient and find ways to continue the work, especially when it is tough.

This doesn't mean that we can't take time out - rest, recharge, recuperate, get some R&R - these things are part of keeping ourselves resilient.

As Rabbi Tarfon said:

It is not your responsibility to finish the work of perfecting the world, but you are not free to desist from it either.

Responsibility

Knowing isn't enough.  We need to take responsibility.  Find the intersection between what we think is needed and what we are able to do, and step into that space.  If you are there already, thank you.

If you are able to step up, thank you.

What if you're not sure, yet, what is in that intersection?  Then keep doing the good you were already doing, and when you are sure you can step up. You're unlikely to be doing harm in the meantime.

Collaborate and support

Not all of us need to be leaders all the time.  Being a great supporter is an essential job too.  The climber relies on the woman belaying, in the picture. If the work you are doing is to enable and empower others to lead, thank you.

The event

The workshop was part of the 2016 Postgraduate Certificate in Sustainable Value Chains, part of the suite of brilliant executive education on sustainability offered by the Cambridge Institute of Sustainability Leadership.  Thanks team for asking me along!  The full slide set I used is here.

A global purpose: the Sustainable Development Goals and business #2

Business can help society meet the Sustainable Development Goals (aka Global Goals). Find out more about work on hunger, health and quality education.

Thanks to the lovely people at IEMA's The Environmentalist magazine, for the invitation to write this series on business response to the SDGs.  It's given me a reason to talk to lots of people doing important work inside lots of businesses and NGOs.

The second article is now out (May 2016), and it covers goals 2, 3 and 4:

You can access the article, and plenty of other environmental news, here, either sign in with your IEMA login, subscribe or take a free trial.

Alternatively, there's a pdf of it here.   The first article in the series, giving an introduction to the SDGs and looking at Goal 1 (poverty) and Goal 5 (Gender) is here.

 

Has there been a tipping point for sustainable business?

Sustainability types were discussing the Sustainable Development Goals (aka Global Goals) in London last night, at a regular meeting of The Crowd. If you are twitter-enabled, you can search for the #crowdforum tweets to follow that way.

I've got very interested in the SDGs, since being asked to write a series of articles about how business is responding, for The Environmentalist.

There was some great conversation, and I was particularly struck by Claire Melamed's view that businesses can cherry pick (or have strategic priorities) among the SDGs, as long as a business doesn't actively undermine any of the goals or targets.  That seems a pretty clear minimum ask!

How would you tell if a goal is being actively undermined?

So how would you tell?  Perhaps the easiest is to do an audit-style check against all 169 of the targets, and spot the krill oil which is staining the otherwise spotless business practices. Some will be easier to test than others, so the views of stakeholders will probably be useful in helping see the business's practices from a variety of angles.

What are the sanctions and disincentives?

The people who spoke about this seemed to be relying on good old fashioned campaigns to bring the undermining to public attention and turn it into a business issue for the company concerned.  Which seems pretty familiar to me. One person used the Greenpeace campaign against the use of unsustainable palm oil by Nestle's Kit Kat as an example.  And that campaign was way back in 2010. Friends of the Earth was launched in the UK with a mass bottle dump outside Schweppes headquarters, which became a well-known photo at the time.  Social media ensures that campaigns like this can become viral in a few hours. But in essence they are nothing new.

Another person said "you'd have to be not in your right mind, to actively undermine any of these goals."  And perhaps she's right.  But it's clear that either lots of people haven't been in their right minds, or perhaps it's been perfectly rational to undermine social and ecological life support systems, because we are here and here isn't a great place for many of the critical issues highlighted by the global goals.  Once again I find myself wobbling between irrational optimism and chronic unease.

But let's give this optimist the benefit of the doubt, and assume that it is now rational to avoid actively undermining the goals. 

What's changed?

The claim was made, with some strength of feeling, that COP21's agreement in Paris has made a tangible difference, with analysts using climate and fossil fuel exposure to make investment recommendations.  And there seemed to be general agreement in the room that this was new and significant.  And today, two days after the Crowd forum event, comes the news that Peabody Energy (the world's biggest privately-owned coal producer) has filed for bankruptcy.  So that's one of the 17 goals accounted for. 

Other voices suggested that the 17 goals will set a broad context for action by policy makers and government, helping business decision-makers have more certainty about what the future holds and therefore being more confident to invest in goal-friendly products, services and ways of doing business.  On the other hand, people noticed the apparent disconnect between the UK Government's pledges in Paris, and its action to undermine renewables and energy efficiency, and support fossil fuel extraction, in the subsequent budget and policy decisions.

Another change was the rise of the millenials, who make up increasing proportions of the workforce, electorate and buying public.  Their commitment to values was seen as a reason for optimism, although there was also a recognition that we can't wait for them to clear up our mess.  (As someone who still clears up her own millenial children's mess, while said young people are jetting off and buying fast fashion off the interwebs, I am perhaps a little cynical about how values translate into action for this generation.)

And the final bid for what's changed, is the recognition and willingness of players to collaborate in order to create system-level change.  And the good news on this is that there is a lot of practical understanding being shared about how to make collaboration work (Working Collaboratively is just one contribution to this), and specialist organisations to help.

So has there been a tipping point?

Lots of people were insisting to me that there has.  There were few negative voices. In fact, some contributors said they were bored and in danger of falling asleep, such was the level of agreement in the room.  I was left with the impression that we're getting close to a critical mass of business leaders wanting to do the right thing, and they need support and pressure from the rest of us to make it in their short-term interests to do so.

So is it back to the placards, or sticking with the post-it notes?

What does sustainability mean to your organisation?

When the new editor of the environmentalist, Paul Suff, asked me to write a kind of 'how to' article on understanding what sustainability means to an organisation, it took me some time to figure out how to make it fit into a two-page article. I'm pleased with the overall framework, and the questions which it seems to all boil down to:

  • What's the best thing we can do?
  • What's the best way we can do it?
“Ask yourself what sustainability means for your organisation, because finding the answer is one of the biggest contributions you can make to building a sustainable future.  
When you ask what sustainability means for your organisation, you are effectively asking: “what’s the best thing we can do?” and “what’s the best way we can do it?”.  These questions get to the heart of the organisation’s purpose and activities, daring us to reinvent them for the world of tomorrow, where the purpose responds perfectly to the environmental and social context and is delivered with the best possible impacts.  You will find the answers in conversations with other people: colleagues, critics and stakeholders”

See what you think: access a pdf of the article here.

This is the first edition of the environmentalist under its new editorship, and you can access the whole mag for a limited time here.