How to create a profitable post-carbon business

Read on to find out what the most progressive leaders are doing and what it means for you.

Is it possible to run a business in a way that doesn’t make things worse for the planet and its people?

Can we decouple revenue and profit from greenhouse gas emissions, declining biodiversity and exploitation of the poorest?

It can seem impossible to create a profitable post-carbon business.

So let’s start somewhere different.

2033

Looking back at today from the vantage point of 2033 we’d see that #Gigacorns (a company whose technology can impact global CO2 emissions by 1 gigaton of CO2 per year) and the Amazons and Apples of a fossil-free tomorrow were already being born in 2023.

Meanwhile many dominant players of 2022 were ‘Zombie’ companies, they appear alive but they’re already dead because they’re not ready for what comes next.

Do you seriously think Shell will exist as one singular entity in 2030, a dying fossil-fuel company attached to a growing renewable energy one? Hmmm.

‘Zombie’ companies appear alive but really they’re dead, because they don’t have a viable business in what’s coming next.

Companies that find ways to make money green , i.e. to thrive with a ‘clean’ and inclusive market share, are securing a future for themselves and for all of us.?

Can businesses both deliver better financial returns and reduce their environmental and social impact at the same time?

People, Planet, Profit?

A meta-analysis (34 studies between 1997-2019) of the relationship between companies’ greenhouse gas emissions and financial performance showed that companies with relatively lower emissions have relatively better financial performance (Galama & Scholtens, 2021).

Businesses which express commitment to #ESG have seen profits jump 9.1% over the past three years, says accountancy firm Moore Global . That compares to a rise of just 3.7% for businesses that placed no greater emphasis on ESG.

Meanwhile the IBM Institute for Business Value (IBV) and Oxford Economics ran a global survey in 2022 revealing that 13% of executives are serving as trailblazers among their peers, putting environmental sustainability at the heart of their enterprise strategy and bringing sustainability and digital transformation together.

Little surprise these firms are growing revenues faster than their competitors.

Trailblazers close the Strategy : Action Gap

The same survey showed that whilst 86% of companies have a Sustainability strategy, only 35% have acted on it.?While more than half of companies have initiatives in place to improve reporting, less than 40% are incorporating sustainable initiatives into #SustainableInnovation , product design, supply chain operations and customer experience.

Reporting is important, vital even to establish a baseline and measure impact but we run the risk of reporting and pledging ourselves into oblivion unless we act, now.

We risk of reporting and pledging ourselves into oblivion

There are lots of real barriers to making the #greentransition ; the data is often incomplete or non-existent, doing nothing is the most efficient thing to do in the short term, there are technological barriers, regulatory barriers and customers appear resistant to adopt (typically poorly designed) sustainable propositions.

It’s easy to get frustrated by all this inaction.

Help Me Act On It

The Strategy : Action gap is just one reason why one of the founding principles of EdenLab is to generate revenue from green and inclusive pilots within two quarters of starting a project. It provides the positive commercial signals needed to give transition business models and propositions the oxygen they need to breathe.

It is tempting to throw the business baby out with the bathwater and turn to activism instead. But there's another way to look at it. All that inaction and dancing around the problem creates an opportunity for significant competitive advantage.

If you put dirty firms out of business, so much the better.

If you’re a progressive leader, you have a moral, social, commercial and fiduciary duty to switch your firm to a more sustainable, even regenerative business model.

And if in doing so you put dirty firms out of business, so much the better.

The climate crisis will be resolved by social innovation not technological innovation.

Last week I heard an Economist and former MEP, Molly Scott Cato , say that ‘the climate crisis will be resolved by social innovation not technological innovation’.

Whilst we hope technology will help us, the ‘Climate’ challenge is really a ‘People’ challenge. And that’s as true inside businesses as it is in wider society.

When we think about helping people in business move from inaction to action, two big themes emerge:

(A) Skillset

Today, sustainability know-how and technical expertise is locked-away in a silo and in specialist roles (think back to ‘Digital’ in 2010). Firms may have big Sustainability teams but that doesn't mean leaders across the business understand much about it, actually they have a real lack of confidence.

Siloed understanding must become shared understanding.

“Businesses are failing to empower their leaders.”

We find a consistent pattern in the work we do with leadership teams.

Leaders say they know ‘Ongoing climate change and increased scrutiny on how firms are progressing with decarbonisation is going to have a big impact on the category over the next 5 years’. And they expect ‘In the next 3 to 5 years, the dominant players in the category will also be leaders in Sustainability.’?

But it is not yet clear to them how ‘Sustainability can become a platform for profitable growth’ nor do they feel confident ‘Talking about Sustainability, ESG, the Circular Economy, Carbon Credits, Net Zero, Risks and Opportunities’.

There’s no shortage of climate and sustainability education available, what’s lacking is a Collective Movement in companies ready to raise everyone’s game. But that is changing fast. An awful lot of what we do at EdenLab is help leadership teams understand what good looks like and helping them identify who they can trust to deliver it.

(B) Mindset

But it is how you think about it that really makes the difference.

Even with all the technical expertise in the world, if you’re not able to help teams see the risk of inertia, you won’t succeed in driving change. It’s easier to measure what we have today than to quantify risks coming down line - but when firms do that modelling (e.g. as insurance companies do) the picture is not so rosy.

Inaction is a choice, its just a riskier choice.

As Humans we’re hardwired to see dystopian futures, scanning the horizon constantly for risks. But driving people forward on that basis is really, really hard. It’s hard to run towards something that’s big and frightening.

That’s why the biggest lever on mindset, and the one we at EdenLab go hard on, is using inspiration to ignite passion and action. Once people see a way forward and feel that they’re not alone, the positive collective energy becomes a powerful force.

People are inspired by people and stories people tell

Time and again, we find that ‘climate’, ‘gas’, ‘environment’ and ‘1.5C’ are hard for people to relate to. It is a bit like the difference between a climate science report and David Attenborough.

People care most about themselves, their families and their communities. So if you can reframe your sustainability strategy through that lens, it has a far stronger chance of connecting.

British business Peoplecareplanetcare is a great and inspiring example of what’s possible when you combine a regenerative business model with local regeneration. Based in a converted Casino in Margate, Haeckels harvests seaweed by hand and distills it into face and bodycare.

They say “Seaweed hydrates; it’s rich with valuable vitamins, minerals and amino acids; it’s anti-bacterial, skin rebuilding and anti-inflammatory; it’s all-natural, and all around us. Under licence, we harvest it by hand from the beach just steps away from our shop.” They’re now in Liberty’s store in London but, interestingly, it is reported they boldly turned down an offer from British Airways to carry their products on the planes. It just wouldn’t fit their ethos.

They’re combining a rich local heritage with natural ingredients, a positive supply chain and building a premium product and brand in the process.

How can progressive leaders create profitable post-carbon businesses?

The answer is that it cannot be all about ‘Sustainability’.

After all, what are we sustaining here?

Does what we have deserve to be sustained?

Does what we have deserve to be sustained or should we focus our energy on creating something better, cleaner, fairer and more beautiful instead? The companies that lose out tomorrow will be those that spent all their time and resources trying to sustain the current, broken, system.

“Everybody's on the decarbonization route now, one way or another but what they need to be thinking is how will exist in a decarbonized world?”

So what progressive leaders - the trailblazers - are really doing is reinventing and reimagining their categories, their value and their businesses.

They have to deliver on where the money is coming from at the moment, and yet at the same time, reimagine themselves in a space 5, 10 or 20 years from now.

That work is the work we all have to do and will be doing for the next twenty years.

Get In the Lab with EdenLab

It's time to start experimenting to determine what your post-carbon business is going to look like.

If you like what you’ve read and are ready for a fresh perspective, if you’ve got the core reporting down and you want to move into action mode, then let’s run an In the Lab session together.

Thanks and let’s do this,

Leo & the EdenLab team.

Some further reading

A meta-analysis of the relationship between companies’ greenhouse gas emissions and financial performance Jan Taeke Galama and Bert Scholtens

IBV Sustainability as a Transformation Catalyst

The decoupling of economic growth from carbon emissions: UK evidence