In my last blog, I explained there were 3 ways for enterprises to be a source of social innovation:
- New products, services or markets;
- Environmental stewardship;
- Social well-being of their employees and the communities in which they operate.
In this post we will focus on environmental stewardship. Enterprises should use resources in a responsible fashion — reduce utilization and waste, recycle, and adopt renewable energies. Unfortunately, economic systems are not well-suited to address environmental issues. Businesses have a short-term perspective and limited geographic impact (read Arthur Dahl). Environmental issues evolve over long time periods and have global implications. There is an obvious mismatch when trying to manage large scale problems like climate change, water management, soil erosion and the accumulation of organic pollutants. That being said, the accumulated behaviour of enterprises all over the world can have a dramatic effect on the environment.
In the absence of any international regulatory body, the next best thing is to encourage responsible behaviour through moral suasion and economic arguments. The economic argument is actually quite compelling. In 2010, the United Nations Global Compact and Accenture released their CEO study titled A New Era of Sustainability. It concluded that the recent economic downturn had increased not lessened CEOs’ commitment to sustainability. This can be partly explained by the fact that sustainability practices actually reduce operational costs!
A 2011 MIT Sloan Management Review article entitled “Sustainability: the “embracers” seize advantage”, concluded that
in the area of sustainability, organizations qualified as strategy leaders ‘embracers’, are creating a gap with laggards ‘cautious adopters’. Companies increasingly believe sustainability will become a source of advantage and should be incorporated strategically in all aspects of a business’ operations.
Sustainability initiatives can be a source of innovation. Former Vice President of Dow Chemical, Claude Fussler explains
The themes of innovation and environment marry well. The need to operate the global economy at levels where society exists off the earth’s dividend and not off its resource capital will induce profound changes in existing markets….
This is further reinforced by Tomorrow’s Value rating 2011, a rating of sustainability practices among leading companies worldwide. It links game-changing innovations with sustainable practices:
• Innovation processes integrate environmental and socio-economic benefits across every product and all lifecycle stages.
• Innovation that pulls in ideas and insights from communities, peers, regulators, investors, from upstream and downstream, not just from customers and employees.
• Innovations that can create enormous change in the resources required to make products and the impacts of those products.
Some of the most common sustainability practices in enterprise include:
• Reducing the use of non-renewable resources (fuel, plastics, etc.)
• Replacing toxic materials in products with environmentally friendly ones
• Recycling (paper products, plastics, electronic components, etc.)
• Reducing the enterprise’s carbon footprint (reduced use of fossil fuels, encouraging carpooling, the use of bicycles, telework, buying carbon offsets for jet travel, replacing face-to-face meetings with web teleconferences to reduce travel…)
• Conducting life cycle analysis to engineer products that utilize less material and have a smaller carbon footprint (and lower cost)
• Creating products that last and reducing consumption and waste
Any one of these good practices can be a source of innovation to create new or improved products, processes and services that better meet customer needs while addressing the health of the planet.
