AG INSIGHT | 27/09/2018
The business case: the key to the door to scaling sustainable business practice
Ahead of Green GB Week, Mike Barry, Director of Sustainable Business, Plan A at M&S, argues the business case for scaling sustainable business practice to the economy as a whole.
The business case for sustainability is oft spoken about, occasionally toyed with and hardly ever captured usefully and robustly. Yet it is of critical importance because it’s the key to the door of scaling sustainability at thousands of companies to create an economy that works for all. The UK Government is running a Green GB Week in mid-October and while it’s important to recognise the initial success of a number of UK businesses in adopting sustainable business practices, it’s just as important to highlight what must be done to scale these practices to the economy as a whole.
The business case for sustainability at M&S
Only by demonstrating that a company can be more successful by being more sustainable will we reach beyond the brave leaders who ‘sense’ the current system is not working and who are willing to strike out boldly for a sustainable endpoint with limited certainty of the exact destination and route.
We are seeing more and more evidence against a number of business indicators that sustainability is making us a better business.
– We’ve helped drive down our cost base, saving a cumulative £750 million over the last decade from less waste and resource use.
– We’ve supported farmers in building resilience into our supply chains from Suffolk to Kenya so that they can cope with more extreme weather and its impact on availability, quality and input costs.
– We are also seeing the advent of new marketplaces, for example meat alternatives and low alcohol drinks, that are fundamentally more sustainable alternatives and we believe these type of markets will grow rapidly in the future.
– We retain very high levels of customer trust in our business in a marketplace that’s never been under so much scrutiny and held to account so transparently. From Horsemeat to Rana Plaza; plastic use to data protection; wage levels to tax contribution to the public good there are ever more pieces to the ‘trust jigsaw’ puzzle. Trust in turn has helped us enter new marketplaces such as energy and financial services where levels of trust have been low.
– For our colleagues too working for a responsible business matters enormously. We’ve just completed a major event with all our stores volunteering in their local community, which in turn is driving engagement and better service for our customers. Over 5,000 colleagues took part with 99% saying they enjoyed it not least because 95% felt they had made a meaningful difference to their local community.
– Finally it’s helped us remain relevant in a rapidly changing marketplace. The sense that you are ‘still there’, a ‘player,’ a ‘shaper of global retail’ is an incredibly important commodity when ‘today’ is so quickly ‘yesterday’.
Scaling sustainable business practice across the economy
Now this is the nascent sustainable business case for a large corporation with significant ambition to be a leader. But if we want to scale sustainable business practice across an economy for tens of thousands of companies is it good enough to excite boardrooms to lift their heads from the tumult of today’s marketplace?
The answer is no. It’s still too imprecise, too much an ‘art’ rather than a ‘science’ to generate the mass mobilisation of companies that we so urgently need. So how do we fire up this great mass of the economy?
– Firstly we have to finish off the work on our business case in a way that demonstrates robustly the benefits of taking action.
– Secondly we must recognise that a business case is always a trade-off of cost vs benefit. Although the benefit case needs plenty of work we need to remember that all the time we are driving down the ‘cost’ of participation in sustainable business. Every time companies like Unilever, Mars, Ikea, Tesco et al break new ground they do the wider economy a service. Their upfront investment de-risks the path for the many greater number of followers. Every time the Aldersgate Group, CGF, CISL, BITC, BSR, RE100 et al create a cross sector or cross economy partnership for change they spread the costs of participation. Pilots, case studies and partnerships are central to scale.
– Thirdly we need to appreciate that a business case’s main driver will always be customer driven. For us, operating a B2C model that means navigating through the complexities of how 32 million customers feel about sustainable consumption. The marketplace needs to do a better collective job to show consumers that the sustainable choice is the better choice, not just for planet and people but for them personally too. But many companies are B2B and here the customer is often a large company like an M&S or Sainsburys at the apex of a huge global value chain involving 1000s of companies, big and small. The leadership we provide, standards we set, best practice we share, high performance we reward engages these many suppliers in change. Every time big customers ask for the same high standards we reinforce the message that sustainability matters and speed up a ‘network effect’ that normalises social and environmental leadership.
– Finally, the ultimate scaling mechanism is the business case induced by regulation and fiscal instruments. Again the early, voluntary action taken by the leaders allows policy makers to de-risk their interventions. In 2008 M&S introduce a voluntary 5p charge on plastic carrier bags in its Food Halls. The subsequent 80% fall in bag use played a key role in encouraging the introduction of a legal framework across the entire UK economy.
Policy to drive greater mobilisation
Scale will only come from creating a symbiotic relationship between voluntary innovation and statutory normalisation. At the moment there is too little long term commitment to manage a cycle of innovation, scaling through voluntary sector commitments (e.g. WRAP’s Plastic Pact) and then, when required, the setting of a definitive legal framework to complete the job. The UK’s Climate Act, independent Committee on Climate Change, 5 year Carbon budgets and associated alignment with research budgets has been a great model but has lacked for some governmental patience in seeing things through (Feed in tariffs, on-shore wind, zero carbon homes). We also need cleverer whole sector voluntary agreements to, for example, get the 10 main UK food retailers to support the tens of thousands of UK farmers that supply them in adopting low carbon agricultural practices.
So the ‘business case’ for sustainability is the key to the rapid scaling of a new approach to economic activity. But today we only have v1.0 to draw on, it needs to become a very much more robust science. But we should also embrace a wider definition of ‘business case’ to include innovation, voluntary sector agreements, supply chain standards and ultimately selecting the right legal and fiscal instruments to underpin an economy that works for all.
Mike Barry is Director of Sustainable Business, Plan A at M&S
This blog is part of the Aldersgate Group’s series ahead of Green GB Week. This week will highlight the opportunities of clean growth and the role of business and the public in tackling climate change. RSVP here to our Green GB Week event ‘Great Britain’s Clean Growth Story: celebrating business success and tackling the challenges ahead.’