How does sustainability translate in today’s business environment?
As society has grown to see the importance of living more sustainably, so too have organisations responded to growing demand to operate responsibly. Consider retail giant, ASDA, which recently opened a plastic packaging-free store, or IKEA’s announcement that their stores will now buy back used furnishings to resell or recycle.
Investor interest in sustainable businesses has surged dramatically too, as consumers seek out eco-friendly products and responsible services. In fact, recent research from PwC forecasts that assets in sustainable investment products in Europe will reach €7.6tn over the next five years, largely due to investors’ increased focus on sustainability in the wake of the Coronavirus pandemic.
However, despite growing consumer, corporate and investor interest, becoming sustainable still represents a significant business challenge - particularly when it comes to producing tangible results and measuring success.
In a webinar panel hosted by Investec, we heard from four inspiring businesses tackling sustainability head on:
- Justin Lunny, Founder and CEO at Everrati, founder of Everrati, a leading manufacturer of some of the most desirable, technically advanced, sustainable, zero-emission iconic cars in the world.
- Olivia Walker from Notpla, a London based start-up pioneering the use of seaweed as an alternative to single-use plastic.
- Jasper Smith, an experienced and successful entrepreneur and founder of Vala Capital, an entrepreneur-led venture capital firm, with a heavy emphasis on sustainable start-ups. Jasper is also the founder of Arksen, a luxury yachting company which aims to support ocean-related causes tackling real, current problems affecting the world’s largest ecosystem.
- Dr Antonia Ward, Global Director of Advisory Services at Stylus, experts in trends intelligence helping global brands to understand their future customers.
Listen to the webinar recording
What does sustainability mean today in businesses?
To start, we felt it was important to clarify what sustainability meant to our panellists, and the challenges it signifies in today’s business landscape. For Justin Lunny, sustainability is all about making the right choices. Antonia however, believes that it represents a more significant challenge that we all need to adapt to as business leaders.
Justin said, “I have young kids, and I'm passionate about what I can do in a very small way to hopefully make their lives safer from an ecosystem perspective. Therefore, for me, sustainability is all about making the right choices.”
“We owe it to ourselves and to future generations to take the lead in making changes in these areas - whether cars, clothing, property, or where you get your energy, there's lots of things we can do to be thought leaders and push the barriers on sustainability,” he continued.
Antonia added to this, saying, “Sustainability for me is the biggest challenge facing all of us. It brings new opportunities, but also the need to respond to change.”
“What I find most fascinating and terrifying about sustainability, is that the challenges are so complex and interrelated that they require a new way of thinking as well as a new way of acting,” she said.
The sentiments of Justin and Antonia both seemed to be representative of the significant change that must occur for businesses to become sustainable. But while both acknowledged that these changes will be crucial moving forward, our other panellists recognised there remain hurdles to overcome.
What are the barriers we face?
Two of the biggest barriers to sustainability highlighted by our panellists revolve around misinformation and accreditation. Unclear guidelines, which can be left open to interpretation by businesses, and numerous sustainable accreditations, have resulted in a confusing environment for businesses.
Olivia Walker at Notpla commented on this confusion, “There's so much misinformation in the market that it's really hard as a consumer and as a corporate to know how to best respond. A lot of sustainability guidelines are very ‘airy-fairy’ meaning there’s a lot of potential for greenwashing in the industry.”
“We need to be educated better in order to act in more sustainable ways,” she added.
Jasper Smith also acknowledged the numerous accreditations that are used to measure a business’ sustainability. He said, “We use B-corp as a framework, so any business we put capital into needs to go through a B-corp certification. We also use the SASB and the PRI, as these are really useful as frameworks for assessing whether a business is sustainable.”
“However, there are so many systems in place for sustainability that it's very difficult if you're a business to focus enough attention getting these stamps of approval,” He continued. “We are getting quickly to a point where from an investors perspective, B-corp and PRI are seen as the main pillars for investment, but perhaps they aren't perfect.”
How can we encourage more change?
In the final focus point of our discussion, we explored how - in light of the challenges businesses face - we can enact meaningful, sustainable change.
Jasper emphasised here that real change must be driven by those investing capital in businesses today - and by creating rules and regulations around this, we can ensure sustainability is a core requirement for businesses seeking investment in future.
He said, “From my perspective, it all starts with capital and entrepreneurs. For so long capital has been without an agenda other than profit, and it's only been in the last 7 years or so that we've been investing more with 'head and heart'. Now, I think it is just making sure there are ‘caps and collars’ around how capital is deployed - making sure that every VC has a mandate to deploy capital in a way that funds a sustainable transition.”
We're in a golden age for investors, and we have to hope that capital with a voice will fuel a transition. If this can happen, I'm optimistic that capital can be a significant driver of change.
By taking a top-down approach and vetting the capital flowing into businesses today, we can ensure that sustainability is represented at the very inception of a business.
Looking to the future
As our discussion drew to a close, we asked our panellists to share their thoughts on the future of sustainability. Reflecting on our conversation, Justin shared that, “Collaboration is key, with brands and companies moving in the same direction as a collective, creating sustainable products that the consumer wants to buy.”
Antonia summarised the change in mentality we all need to come to terms with.
“Change has never happened this fast before, and will never happen this slowly again. There's a huge opportunity coming, but there's going to be a lot of interrelated issues as new companies and old companies will need to work together. I'm hopeful rather than optimistic because the changes that are coming for us are enormous, but some might be terrifying. Regardless, it is all of our jobs to harness the cauldron of opportunity to create a more positive future for everyone.”