Taking the sustainability path is not an option anymore: with the world being confronted with climate change like never before, companies must learn to combine commercial growth with sustainability. However, today’s leaders are still struggling to answer two questions: how to overcome barriers to sustainability? how to take impactful decisions?
In the context of the development of its Sustainability offer, Argon & Co recently had the opportunity to attend the 2023 ChangeNOW Summit that took place in Paris at the end of May. ChangeNOW is a three-day summit that brings together innovative solutions and impactful changemakers tackling our planet’s biggest challenges, to take action, together. More than 400 speakers, including entrepreneurs, business leaders and policymakers, came to the summit to share their insights and solutions.
Understanding the problem: the Doughnut Economics theory
Fig. 1. Between the environmental / ecological ceiling and the social foundations is the doughnut itself.
(image: https://theconversation.com/)
The Doughnut Economics theory is a way to visualize (fig. 1) whether an economy is sustainable or not. This theory was first published in 2017 by Kate Raworth, a British economist, in a book called Doughnut Economics: Seven Ways to Think Like a 21st Century Economist. It combines the nine limits of our planet (environmental or ecological ceiling) on the outside of the doughnut with the twelve social foundations necessary to sustain life on the inside of the doughnut. An economy is considered to be sustainable when none of the planet limit is exceeded while all the social foundations are met. The nine planet limits have been defined by a group of 26 scientists led by Johan Rockström et Will Steffen, and the twelve social foundations are based on the United Nations Sustainable Development Goals (SDGs).
Fig. 2. The doughnut revealing the proportion of people worldwide falling short on life’s essentials, and, at the same time, the overshot of the outer crust, i.e. Earth’s life-giving systems. The doughnut shows important variations from one country to another.
(image : Kate Raworth and Christian Guthier, The Lancet Planetary Health)
Today, most of the planet limits are exceeded while social foundations are not met (fig. 2); and if we go into more details, we understand that developed countries tend to meet social foundations but largely exceed planet limits, while undeveloped countries do not, but are unable to meet almost all criteria required to sustain life.
The challenge is to remain within the doughnut boundaries, and to achieve that, we must investigate how companies can initiate their change.
Combining commercial growth with sustainability
The Ellen McArthur Foundation study on circular economy (Growth Within, 2015) has shown that the European Union could see its GDP grow by an additional 12% by 2050 if the economy was to switch towards a circular scenario. However, in addition to important investments, switching towards a circular economy also requires a mindset change to understand that commercial growth and sustainability are indeed compatible. Even if sustainability is seen as necessary, companies often consider it to be:
- Risky, especially if they try to initiate the change by themselves while their competitors do not take that risk;
- Scary, as a journey towards sustainability (net zero carbon emissions, new services proposal, product eco-design, etc.) is a leap into the unknown;
- Not a priority, since companies are mostly still shareholders-oriented rather than stakeholders-oriented.
To answer those points, it is essential that companies:
- Collaborate, either vertically with the whole value chain (suppliers and customers) or horizontally with competitors. Collaboration is also a way to generate innovation and resilience;
- Plan the change. To reach a defined target, such as net zero carbon emissions in 2050, companies must plan a roadmap, layer by layer, with material decisions along the journey. A good way to define a robust pathway is to use Science Based Targets (SBTi);
- Make sustainability relevant to the core of their business, with new ideas (e.g. selling a service instead of a product) or sustainable strategies (e.g. CSR report with publicly shared carbon reduction targets).
Rethinking the value chain
It is fundamental to understand that the journey to net zero is a carbon emissions reduction journey as well as a data journey. Data allows considering what is relevant to one’s business; instead of considering sectors’ or competitors’ averages, companies can reduce carbon emissions where it is relevant for them, i.e. where major impacts can be made. For example, reducing electricity usage might not be a top-priority area for improvement for every company in any sector (especially in France where the electricity is carbon-free). Being enlightened with data allows companies to make that call.
To remain pragmatic, companies must also embrace data imperfection. Data has to be holistic in order to understand the trends, identify the right improvement areas and avoid the streetlight effect, i.e. look for improvements only where you can see. However, trying to achieve data perfection will only slow companies down: successful companies will be those who are able to quickly identify areas to work on, make data-driven material decisions and launch tangible actions.
What are your thoughts on how to make it happen? How are you committing your company towards sustainability?
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