Sustainable business: The Sustainable Business Network's Fiona Stephenson gets the top tips for sustainable businesses from esteemed environmentalist, and advisor to both Prince Charles and Marks & Spencer, the Hon. Sir Jonathon Porritt.
Fiona Stephenson: What should businesses in NZ be looking at to help with sustainability?
Sir Jonathon Porritt: So much of this stuff is basic good business. You can call it sustainability if you like but it's really: managing costs; thinking about risks in the markets you work in; doing a brilliant job with employees to ensure motivation, commitment and development of staff; and then looking into this strange world of ours to see if anything can be achieved in terms of innovation for top line growth. Actually, if every business in NZ was doing that it would be a very sustainable economy.
It is as simple as that. It gets harder as companies get bigger. But why would a company want to pay more to get its waste managed and processed and dealt with than it had to, if it was really thinking in a strategic way about any waste in its production process, any waste in logistics and distribution, any waste in its supply chain and sourcing.
To me, well run companies do this stuff because they know it makes their companies better. You can call it sustainability, but to me it's just good business practice.
FS: How important do you think collaboration is between companies, and between companies, government and NGOs?
JP: SMEs don't really have the resource to do this. Engaging with other companies? Yes, if there's a very specific objective that can be achieved through collaboration. Otherwise it just turns into a really wasteful talk shop. I know small and medium enterprises (SMEs) really well. I run an SME - Forum for the Future. And I can tell you we don't have a lot of time for things that aren't really crucial to business success. You have to manage against that expectation.
FS: What are your thoughts about SBN's four transformation areas [Renewables/Community/Mega efficiency/Restorative] in terms of the future direction for business?
JP: I think this is really important. For me, this is really intriguing. At Forum for the Future, we run the UK Community Energy Coalition: we manage it on behalf of other organisations. We have found that the best way of energising communities is through an uplift in community renewable energy schemes. Our interest in this whole area is in how you actually empower communities by giving them access to self-generation at a community level to essentially make their communities more resilient, to enable them to reduce costs and to provide some resource to put back into the community. It's a brilliant way of getting community energy really moving.
So though I think these two things can be seen as completely separate, and there are tons of things you can do in the community that are nothing to do with renewable energy, you need to be alert to the degree to which they are synergistic as well as separate.
Renewables without efficiency is a very bad deal and an illusion. People in many European countries just push and push and say 'renewables work fine once you've really done everything you need to do about efficiency' - in the built environment. I get really quite nervous about pure energy plays (companies or NGOs) that only talk about renewable energy and don't talk about making the building that they're installing solar PV in efficient, or if they're installing some other technology without the efficiency there, it isn't such good as deal as it should be. For mega efficiency, you're really talking about whole resource flows through a business. So I think it's really interesting to do it this way.
Restorative is fascinating. We have a restorative 'thing' going on in the UK around natural capital but it's quite small and marginal at the moment. It's tough for business to get its head around.
Everything overlaps in our world in one way or another - it's what makes it so satisfying because it is generally holistic. It also makes it quite frustrating because in terms of actually doing programmes at work you have to keep that focus even though you know we should be looking at the whole system.
John Elkington [co-founder of SustainAbility and founding partner/Executive Chairman of Volans in the UK] has written about the need for businesses to undergo breakthrough, transformative change. What are your thoughts on breakthrough capitalism?
We know we need it. I don't think anyone doubts that. John's reminding people that if we continue to change at as slow a pace as we're changing today with this laborious incrementalism, steady but uninspiring performance improvement year after year - we aren't going to make it. So he's absolutely right to say that what we really need to do is to engineer the conditions for these breakthroughs, these bigger changes - within individual companies and between companies and inside the sector as a whole.
Everyone's pushing business all the time, telling business to go faster, to go to scale, to take more risks, to be more ambitious. The whole idea of breakthrough capitalism is: be open to risk as you think about what your organisation can do.
It's always amused me that after many years working with businesses who would love to lay claim to being the risk taker in society, actually I find most businesses incredibly risk adverse. We celebrate this entrepreneurial spirit that's in our business community but when you look at how they operate in this space and their openness and readiness for change that steps a little outside their conventional tracks, then they say, 'we can't do that'; we've never done that before'. But that's the point! I love working with business but I do get really frustrated by this crabby conservatism that exists at the heart of many companies who should be so much more nimble and light footed, open to change.
That's why I talk about the survival mentality for a lot of companies. They're hanging in there, struggling to survive. They're finding it difficult to see these things in the broader context that would help so much. It's a tough call at the moment.
FS: Do you think the current financial crisis over the past few years has pushed the whole sustainability movement back?
JP: It's certainly made it a great deal harder to do what we need to do, there's no question about that. Because of the rate of attrition now amongst SMEs in many countries, you can see why risk behaviours kick in when what they're really doing is defending their market share, the margin that they've fought so long to get. All these things make companies less open to the change process John Elkington is talking about, which is obviously the way we should be going. We should be trying to engineer breakthrough changes in everything we do. For SMEs that's one tough call.
FS: Do you think SMEs or larger corporates will be more able to take sustainability on board in future, for example in terms of risk?
FS: Big companies. We do 90% of our business work with big companies, so that will influence how I answer this question. In our opinion SMEs only ever do something for 3 reasons:
1. They are regulated to do it and don't want to be put out of business by prosecution.
2. A big business partner says to them, if you don't take sustainability on board you're not going to be one of our suppliers. A lot of that goes on these days.
3. They are usually set up by or managed by business leaders who have a passion for one or more aspects of sustainability. Then you have a very different model - a personalised, leadership model which looks very different.
That last category is very important.
FS: Given the high percentage of SMEs in NZ, how can we best get the message across about the importance to embrace sustainability?
JP: The biggest thing you can do is to demonstrate that getting good at sustainability is first and foremost about self-interest [for companies]. Then it's about doing the right thing for your employees, your community and the environment. You cannot talk to an SME in any other terms. It is so patronising to say 'you have an obligation to protect the planet'. That's true, obviously, but the first obligation for a small company is, 'how am I going to make this work?'. It's a precarious business being a small company.
FS: What are your thoughts on the need to divest away from fossil fuels in NZ?
JP: It's so easy for New Zealand - 70% of energy here already comes from renewable sources. Most SMEs I imagine could source from a supplier that's 100% renewable energy. So from the energy use perspective they don't need to divest. If they are borrowing money from banks then maybe they ought to ask question about what the measure of exposure is in their portfolio, but I don't think many SMEs would be doing that stuff.