Breakthrough Capitalism: “We are more than consumers, more than tax payers”

A UN Global Compact survey reported that 81% of CEOS believe sustainability issues have become part of their company’s strategy and operations.

Most people would see the survey as a positive sign for sustainable business. Volans’ Executive Chairman, John Elkington does not.

A few short weeks ago, John shared these survey findings to a crowd of Canadian business leaders and posed the question: if CEOs are ‘accounting’ for sustainability issues in their core business, why are we experiencing escalating pressures on our environmental, economic, political and social systems?

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John Elkington speaks to business leaders in Toronto, Canada.

The Volans team believes that part of the answer rests on the shoulders of executive level corporate leadership. Around one thousand companies control half the value of all the world’s publicly listed organizations. The power of some of the largest corporations and their leaders has become colossal in magnitude.

In response to the expanding dominance of business, Volans catalyzed a movement called Breakthrough Capitalism. Breakthrough Capitalism is a global call to action for corporate leaders to “reboot” capitalism through radically re-envisioning their business models. Volans has hosted Breakthrough forums in Berlin, London, Singapore and most recently Toronto.

In early November, Canada’s Breakthrough Capitalism forum challenged Canadian business leaders to rethink the way they do business in context to increasing global complexity. In his opening address, John Elkington acknowledged the increasing linkages between systems such as the food-energy-water-finance nexus, where one system cannot be fully understood without considering the others.

Toronto’s event brought together leaders from a cross-section of industries including financial services, energy, consumer goods, food, health, media and retail. The day was heavy on interaction and light on speeches. It opened the space for candid dialogue, questioning and brainstorming. Participants were asked to understand their business in relation to projecting three future world scenarios: Breakdown, Change-as-usual, and Breakthrough as depicted in the video below.

Following a fairly morbid discussion, participants recognized that the Breakdown and Change-as-usual scenarios are one and the same. Both will result in over-consumption, resource depletion, widespread poverty, and failed governance. The only distinction is that Breakdown will reach systems collapse sooner. Consequently, managers were quick to agree that the only viable way forward is the Breakthrough scenario.

 

What does Breakthrough mean to Canadian Business Leaders?

 

1) Executive Leadership

All participants agreed that buy-in from the top is critical. One only has to look at the likes of Paul Polman at Unilever or Jochen Zeitz at Puma to understand that executive level leadership holds immense power over corporate strategy.

2) Aligning Language

From shared value to corporate social responsibility, conscious capitalism to constructive capitalism, corporate social innovation to sustainability, the field is a cacophony of competing language. It’s painfully ironic that each movement is attempting to achieve the same goal of making the world a better place. Participants accept that language needs to converge in order to shift the movement from the periphery to the mainstream.

3) Creating Opportunities to Act

During the afternoon, the forum broke out into four groups prepared to hack the assumptions and models driving their respective industries. These breakout groups gave attendees permission to dig deep into the heart of their business and posit potential solutions.

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Hal Hamilton, founder of Sustainable Food Lab, facilitating a breakout session.

I.     Accountants

Generating a storm of new ideas and next steps, the accountants led the way for actionable solutions. Real time performance indicators, responsible resource stewardship, long-term thinking, and embedded sustainability education represented a handful of the accountant’s proposed objectives.

II.     Consumer Behaviour

Marketers wrestled with their dependence on ever-increasing consumption in order to meet their sales growth objectives. Group participants agreed that enabling consumers to align their social and environmental values with their purchases is the future of responsible consumer behavior.

III. & IV. Food

Solutions that bubbled up from the food systems group included creating a “sin food” tax, mitigating food waste, educating consumers, investing in local food, and collaborating along supply chains.

 

4) Personal Transformation

Although much needs to be done at the office, change must also start at home. Too often we ask the world to act differently and forget our own role in embracing the change we seek. It was widely recognized that we should be mindful of our own values and beliefs, and channel that energy beyond our workplace to permeate all aspects in our lives. Sandra Odendahl of RBC captured this spirit in her closing remarks: “We are more than consumers, more than tax payers. We are citizens.” As citizens, it is our duty and privilege to care for one another and support a healthy environment.

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Sandra Odendahl

What Now?

It’s up to us – business leaders, civil society and government – to push one another forward. As the CEO of MaRS Discovery District, Ilse Treurnicht, declared, “It feels like the world expects more of us than we expect for ourselves.” Let’s cut loose from the status quo and rise to meet the demands of wicked problems. We are ready. It’s time for a breakthrough.

Re-engineering the business model: leading companies show the way

A company committing to have a net zero carbon footprint by 2050 is transformational. As is targeting to have 50% of sales come from green products by 2015.  Companies around the world are stepping up with solutions-driven strategies built for the long-term. These businesses exemplify the qualities of a new kind of company known as the Transformational Company.

The Transformational Company framework was developed by CBSR as a guide for businesses who recognize the need to scale up their corporate responsibility and sustainability efforts in order to address systemic societal risks, challenges and opportunities. The framework identifies 19 qualities that represent a global consensus on the new standard for sustainability; the consensus highlights the imperative for companies to rethink their core purpose and customer offerings, to focus their efforts on solutions to systemic social, economic and environmental problems, and to go beyond “zero harm” to create net positive benefits.

Transformational companies commit to act outside their own operations, and the foreseeable future, to become word-class sustainability leaders in their region or sector. The following examples provide insight into how the transformational qualities are being mobilized.

Transformational Quality #4 Restorative

Generate net positive benefits for society, the environment, the company and shareholders, advancing local and global resilience.

Kingfisher is Europe’s largest home improvement retail group and the third largest in the world. In 2012, Kingfisher announced a new corporate social responsibility plan called Kingfisher Net Positive.  Net Positive was launched “with an ambition to contribute positively to some of the big challenges facing the world, while creating a more valuable and sustainable business for our stakeholders”.  The initiative is fundamental to the future of Kingfisher, as the company believes the businesses that will succeed in the future are those that today show leadership on the sustainability challenges facing the world.

To achieve the Net Positive objective by 2050, Kingfisher has set targets across the business until 2020 and focuses on four priority areas: timber, energy, innovation and communities. Each of Kingfisher’s priority areas is tightly linked with business goals and achieving each target will create measurable business benefits. Attaining Net Positive will enable Kingfisher to secure crucial resources, unlock new opportunities and drive growth.

np_CBSR_restorative example

Transformational Quality #2 Sustainable Customer Offerings 

Integrate sustainability into the full life cycle of product and service design, use and disposal, and advance sustainability through continuous improvement of core products and services

Phillips is a diversified health and well-being company, focused on improving lives through innovations.  As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions. Through their EcoVision program, Philips has set targets to increase their sustainable customer offerings. In 2012, Green Product sales increased to 45% of total sales ($15 billion USD), which is on track to reach the target of 50% in 2015.

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To be considered a “Green Product”, it needs to be a leader in at least one Green Focal Area, identified as energy efficiency, packaging, hazardous substances, weight, recycling and disposal, and lifetime reliability.

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To reach their goal of 50% of total sales generated from Green Products, Philips is committed to continuously improving the environmental performance of their products, which includes designing for energy efficiency, chemical content of products, life time reliability, and recyclability. To support the growth and development of green products, Phillips invested EUR 569 million in 2012 in Green Innovation and is on track to reach their target of EUR 2 billion by 2015.

These examples illustrate how companies can challenge and transform today’s dominant business model. Adopting the transformational qualities allows companies to anticipate the challenges and embrace the opportunities that flow from being a market pioneer, while creating long-term shareholder and societal value. On November 6, the CBSR Summit will advance dialogue and action on the Transformational Company and feature keynote speaker John Elkington, a world authority on corporate responsibility and sustainable development.

Editor’s Note: The day following the CBSR Summit, John Elkington and the Volans team will be bringing together business, government, investors and entrepreneurs for Breakthrough Capitalism at MaRS on November 7th to help a new form of capitalism find its wings.