Coro’s Blog: On Purpose
Transformational companies redefine business for a sustainable future
Published on November 2, 2012
When Unilever announced their Sustainable Living Plan in 2010 they set three broad goals to position their company as part of the solution to environmental, social and economic challenges. They committed to help more than a billion people improve their health and well-being; halve the environmental footprint of their products; and source all their agricultural raw materials sustainably. These goals and the 60 targets underpinning them qualify Unilever as a transformational company. From the sourcing of raw materials through to customer use of their products in the home, they are tackling their social, economic and environmental performance across their business value chain.
Resource scarcity, obesity, economic disparities, changing customer expectations, government regulations and a burgeoning middle class are just a few of the global challenges, or risks, that will increasingly affect business in the future. Business well-being is becoming inextricably linked to social and environmental well-being. Forward-thinking companies monitor these risks. But “transformational” companies do something about them. They don’t just manage downside risks. Like Unilever, they design a business model that anticipates the challenges and embraces the opportunities that flow from being a market pioneer. This means they rethink their business models to create both shareholder and societal value over the long term.
With these new business models comes a new set of qualities that companies must embrace in order to manage this interconnection between commercial and societal success. Canadian Business for Social Responsibility (CBSR), a non-profit organization that works with companies to improve their social and environmental performance, conducted research into the essential qualities of a transformational company.
What Did We Find?
We found that transformational companies act beyond their own operations – and the foreseeable future. Their definition of success includes net positive impacts for society, the environment and their business. Leaders recognize they don’t have all the answers and that solutions may not yet exist. So they focus their innovation and development efforts to find solutions to systemic challenges. Transformational companies engage their value chain in their sustainability efforts. This includes up- and downstream suppliers and industry peers. Their business strategy separates growth from resource consumption and ecosystem degradation. They seek to be inclusive by expanding opportunities for all population groups in the company’s areas of influence including employee, supplier, distributor and customer. Importantly, transformational companies become successful by delivering social value within environmental constraints.
Who Else is Involved in This Transformation?
Unilever is not alone in their transformational mission. Interface, the global carpet manufacturer, committed to a zero environmental footprint by 2020. Plans are underway to eliminate waste in business operations, eliminate harmful product emissions, operate facilities entirely with renewable energy, and redesign processes and products to create a closed loop that uses renewable materials and re-purposes waste. They are getting results. Their waste to landfills is down nearly 80 per cent. With innovative product solutions that allow them to recycle carpet backing and carpet fiber, they are on the path to eliminate the use of virgin materials and close the waste loop while providing their customers reduced-impact products.
Another example is GE. The venerable technology company is meeting bold R&D and product targets to dedicate half of their $6.4B innovation budget to green products such as appliances, lighting and transportation. They have targets to grow these “Ecomagination” revenues at twice the rate of overall revenues by 2015. They have a further target to find 100 “Healthmagination” innovations that lower health care costs, increase access to health services and improve quality of health care procedures.
CBSR’s “transformational qualities” challenge today’s business model. We believe companies are ready for this challenge and many, like Unilever, Interface and GE, are actively rethinking their design, manufacturing, distribution, sales chains and customer relationships with this in mind. And they are doing all this for an explicit business purposes: the social license to not only operate but grow.