-By Tim Jones, Speaking at Globe Forum
Ten years ago, sustainability, the management of the social, economic and environmental impact that business has on society, was a marginal issue on the radar of several select companies: Just a few enlightened energy multinationals, materials suppliers and consumer goods producers had sustainability on their “watch list”. Since then, as the carbon agenda has risen above issues such as ethical purchasing or social innovation, “the environment” has gone mainstream and today it is at the heart of many a corporate strategy. However, for many companies, sustainability is still largely seen as a risk issue rather than as an area of opportunity: Whether an internal supply chain risk or an external reputation risk, most organisations have focused more on how to mitigate the challenge than exploit the available potential.
The exceptions, the companies that have successfully embraced sustainability as a catalyst for innovation, are however growing in number: From Toyota’s hybrid Prius or Renault’s 95% recyclable Twingo to GE’s $17bn Ecomagination programme and M-PESA – Vodafone’s money transfer service, leading firms are seeing higher sustainability performance as a source of advantage. This is occurring at both an external product differentiation level as well as driving internal margin improvement: This is a shift from risk to opportunity.
As carbon has become a hygiene factor for many, we now see that the water agenda is accelerating fast as the next major innovation catalyst. It is increasingly obvious that as populations grow, economies develop and consumption increases, our demand for fresh water is outstripping supply. Historically we have used water in production and manufacturing with little thought of the consequences – but next time you have a break remember it has taken 140 litres of water to produce the cup of coffee you are drinking.
As consumers, companies and regulatory authorities alike wake up to the global water challenge, more and more are now asking for support in defining the most appropriate water strategies for the next decade. As part of our scenarios work for the likes of Shell and P&G, we have been tracking the water issue since 2003 and have been helping companies understand the drivers of change and associated implications.
Now, as the first strategic bets that have been placed become public, it is clear that, as with carbon before, we are witnessing the shift from risk to opportunity: Recognising the supply chain and reputation risks from decreasing fresh water supply, the likes of Coca-Cola, Nestle and Dow have been changing their production processes and seeking to mitigate water risk. At the same time, other companies have taken a proactive stance that seeks to create opportunity: SAB Miller has gone public with its ambitions to reduce embedded water in its beer by 25%; Nike has announced its intention to label products with embedded water and embedded energy; and IBM has just launched a major new business unit focused on smart water metering.
In less than a decade, sustainability as a whole has moved from niche to mainstream and the leading organisations have been quick to see the potential: As more companies recognise the benefits that stand to be gained from seeing it just as much as an opportunity for innovation as an area for mitigating risk, the financial and reputation impacts are becoming evident and attractive. Going forward, expect a wider range of companies to surprise you with the extent of both their sustainability understanding and associated innovation ambitions.
Tim Jones – Founder, Innovaro and Water Strategies
www.innovaro.com
www.waterstrategies.co.uk
“The invitation to be a speaker at Globe Forum is a welcome opportunity to share our perspectives on the leading edge of innovation and sustainability practice and highlight where the two are converging to greatest impact.”
