Positive Thought Nine: Use sustainability to challenge your business model

Forty years ago, we worried about garbage. This led to the phrase, “reduce, reuse and recycle.” Recycled paper is now a major component of newsprint. Recycled tyres find their way into roads, playgrounds, and many other products. Recycled building products are being used in restoration projects around the world. 

New business models were created to solve the waste mountain. It continues – we have businesses producing energy from landfills. The City of Edmonton in Alberta, for example, has built a facility which is processing 100,000 tonnes of municipal solid waste into 36 million litres of biofuels annually, which will help reduce Alberta’s carbon dioxide (CO2) footprint by six million tonnes over the next 25 years. Again, this innovation was driven by the creation of new business models, not by what many call corporate social responsibility (CSR).

The CSR agenda tinkers with existing business models and, while that can be helpful, it would not have created the breakthroughs that led to the new waste management business models that exist today.

CSR is about meeting today’s consumer expectations on social and environment issues. Some, however, might argue that that’s just good business. Some push CSR a bit further, saying it is about predicting and preparing for future consumer expectations. This is what B&Q did. It was thinking ahead of its time. It took 20 years achieve certification for every timber product B&Q sells, but it would be a messy place today if it had done nothing.

Buying timber from well managed forests was, and still is, good CSR – but it also ensures that there will be enough timber to supply 9 billion quality lifestyles by 2050, let alone B&Q’s own growth.

That supply chain challenge is what that separates good CSR from corporate sustainability. Corporate sustainability starts with the capacity of the planet to meet those needs, NOT with the explicit demands of the customer. In many cases, they will be the same; but not in every case. CSR works within the constraints of the current business model, but sustainability challenges today’s model, and forces business leaders to seek out new ones. If the business model is wrong, there will be no business case that works for sustainability. 

In 2011, the CEO of Kingfisher, parent of B&Q, made the observation that the average power drill sold by his DIY stores (like B&Q) only does a total few minutes’ work over its lifespan before being replaced by a newer model. The customer buys a drill because they need it to complete a specific job, drills a few holes, puts up their shelves, and puts the drill in their garage. Two years later, they have another job to do, so they go out and buy the latest model.

B&Q was selling a product at a very low price which does a few minutes’ work before it is replaced. The demands on the planet’s resources – e.g. impact of metal mining, transportation and manufacture – for these few minutes are considerable. Even if all the ‘sources were ethical, the sheer amount of ‘stuff’ required and waste generated would be too much to supply 9 billion with drills in this ‘few minute use’ model.  The CEO admitted that it was time to look at the idea of leasing the drill for the duration of the job, rather than selling it. He is looking at changing the current business model, which will never be justified in the interests of sustainability.

 

There is currently no business case, at least for the next fifteen years or so, to fly an aircraft by using fuel made in part from biofuel, or even recycled CO2.  But if you’re interested in a long-term business model for sustainability, that is what the future of aviation looks like.

Richard Branson, whose airline Virgin Atlantic was the first commercial airline to test biofuel,  has gone even further. Is there a business in taking yesterday’s carbon dioxide out the air? Rather than sequestration during the production process, can we capture CO2 (which has a great many beneficial uses) from the atmosphere?  This is less mad than it sounds – he is  applying the waste hierarchy to greenhouse gases. What we want is an economy where carbon goes around in natural processes, rather than burning 200 million year old fossil carbons, and putting them in the sky. 

In 2007, Sir Richard Branson launched the Virgin Earth Challenge. A US$25 million prize was offered to anyone who can demonstrate a commercially viable design which results in the net removal of anthropogenic, atmospheric greenhouse gases to the judges’ satisfaction. Once an idea is proven as able to work, the challenge changes – to get it to work on a commercial and global scale; something Virgin companies have a lot of experience with.

Sustainability must harness true innovative capacity to undertake the needed development (since the research is there) to make this viable. Such interventions will not pass a business case-type thinking – they are completely new business models. It is not science fiction – the Earth Challenge received over 2600 applications, and in November 2011, the finalists were announced in Calgary, Alberta.

Virgin Atlantic, also in 2011, announced a strategic partnership with  LanzaTech, a Swedish company with technology that can recycle methane and CO2. They are using emissions from a steel mill to make jet fuel, so recycling CO2 from thin air might one day be possible. Other companies are finding other uses for recycled CO2; linking green houses to newsprint production; taking the CO2 emitted in the pulping process and using it to grow tree seedlings to replant the forest. Five distribution vehicles operated by Arla Foods’ distribution centre in Copenhagen are refrigerated by recycled CO2, sourced from other companies’ production. There are many more examples. Yes, we need to reduce emissions, but we also need to recycle and reuse those emissions into something useful.

Rethinking Corporate Sustainability – If Only We Ran the Planet Like a Shop! (374.8 KB)