The great green business rethink is finally happening

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Is corporate sustainability as we know it finally? Are traditional green business strategies failing to the point where they are doing more harm than good?

Maybe not entirely. But the growing number of sustainable business leaders calling for a rethink of these measures suggests a tipping point is at hand.

For those of us who never thought that businesses and the markets that shape them would be enough to fix the looming threat of climate change, this realization is overdue.

But it is not trivial. There may not be enough time to overturn capitalism, but there is plenty of time for companies to push to reform markets in ways that lead to faster action on climate change.

So it was a relief to see a growing recognition that the status quo is not working.

Or, as Lindsay Hooper and Paul Gilding of the venerable Cambridge Institute for Sustainability Leadership put it in a paper this month, “it’s time to question the founding ideas and dominant approaches in the corporate sustainability movement.”

The Cambridge university-based institute is a prominent voice in corporate green, in part because of the support it has had for most of its 36-year history from its conservationist royal patron, King Charles III.

But as Hooper and Gilding point out, despite years of corporate green commitments and increased investment in clean technology, “the sustainability crisis is deepening.”

Worse, businesses and their sustainability advisors could add to the problem by giving a false impression of progress that delays the “radical changes needed by markets and the policies that frame them.”

The two say companies should move beyond setting goals to reduce their own carbon footprints and start lobbying for broad, long-term rules that reshape entire markets.

To begin with, this approach should reduce the competitive risks often faced by green business pioneers.

Another big advantage has been revealed this year by a host of corporate green turns, from Shell’s loosening of climate targets to Volvo’s delayed deadline to sell only all-electric cars.

Such a reversal underscores the fact that sustainability measures are still often seen as discretionary moves, taken by personally committed leaders and easily undone when times are tough.

As another sustainability veteran, John Elkington, wrote last month: “We need to become less dependent on the goodwill and good citizenship of individual business leaders, both of which can be fragile foundations for sustained engagement.”

Elkington knows what he’s talking about. He invented corporate sustainability ideas such as “triple bottom line” reporting to measure social and environmental as well as financial performance. But as he wrote last month, sustainability can no longer be just about business transformation. “Also, increasingly, it has to be about transforming markets.”

A more strident case for the dangers of relying on green leaders came from Jonathon Porritt, a sustainability campaigner who spent years advising large companies, including Unilever.

The consumer goods giant dismayed environmental activists by scrapping targets on measures such as plastic use and recycling after appointing a new CEO, Hein Schumacher, last year.

His approach marks a sharp break with that of former Unilever bosses such as Paul Polman, who memorably told investors who did not approve of his sustainability efforts “don’t put your money in our company”.

For Porritt, “Unilever’s fall from grace reveals the deep flaws in the whole concept of corporate sustainability as the primary driver of more sustainable ways of creating and distributing wealth.”

So will much change? May be. At Climate Week in New York last week, as it were, there was talk of the need for more regulation.

Jes Munk Hansen, chief executive of Danish insulation maker Rockwool, said at an event that regulators could reduce considerable carbon emissions from buildings by setting stricter standards.

Government rules have helped drive the shift away from incandescent bulbs to more energy-efficient lights, said Hansen, a former director at lighting group Osram.

As he later told me, “It would greatly help the green transition if building regulators used more tools, such as higher energy efficiency standards.”

He is right. Regulators and governments could do more, and some firms are pushing them to do so. But these companies are still in the minority. Many more must join them if corporate sustainability is ever to create a more sustainable world.

Climate Capital

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