Sustainability is the New Black

We live in interesting times - and while populism is impacting various regional developments from a political perspective - the main driver for the next decade will be sustainability. So for all of us in the corporate world change is coming our way. This is fundamental and it will stay for good. So why is that?

Change is coming to our corporate world

Back 12 months from today at the beging of 2019 suddenly sustainability became popular. But it was already used by several companies in the past:

• Apple has always shown for each of their products their environmental footprint
• Train companies argued about the carbon footprint compared to airlines
• Renewable energy was praised by government of Norway as a short term policy goal
• Early stage investors put their money into companies aiming for sustainability

Some might say Friday For Future movement became popular by hitting a tripping point, media outlets picking up the topic more than in the past and driven also by attendance of Greta Thunberg in high level events. Others where impressed by the launch of the first unit of The Ocean Cleanup System in San Francisco earlier this year when an idea of a Dutch student suddenly became reality and hit the sea. Another reason could be seen as a way to express counter positions to U.S. policies after retreating from the Paris climate protocols.

All of this does not justify the broader adoption of sustainability strategies across industries and company sizes - from Fortune 500 to the Mittelstand. The impact of sustainability in those markets are based on demand of its customers. In a world of commodity and short product development cycles, dynamic pricing, instant comparison and limited product positioning the customer will look further when selecting a product or service.

Consumers in the past looked at the product which serves best for his needs. When there are many products servicing his needs in a similar suitable way he will look at how this product serves his needs (e.g. usability, design). But in a world where product designs are similar and even designs and usability are on the same level - what’s next to judge a product on?

The purpose driven producer will move into the center of a consumers perspective. How and from which resources a product is build, which resources are used and how a product will be recycled after its lifetime. Apple is reusing all of the components of its products in his production cycle. Adidas has offered sport shoes built from plastics recovered from the ocean.

While in the past this are voluntary initiatives by companies, those strategies will become mandatory in the future. Sustainability will be next to compliance, workers rights and environmental protection laws. Therefore companies will rather adopt this strategies the next year to be prepared when in future laws will be put in place by governments implementing environmental policy standards.

From #dabei to #wecare

CEOs will have the choice to use their budgets for marketing activities either to fight shit storms on social media or taking a dip in Ebitda margins on products and services based on sustainable strategies in the short term. Recently we have a discussion on fireworks for New Years Eve and its midterm impact on a business. In the long term those sustainability strategies will pay out due to higher customer demand, tax returns & governmental support and increased economics (e.g. more affordable recycling and sustainable resources like from ocean recovered plastics). Initiatives like #WeCare by Deutsche Telekom are the beginning of a long term evolution in the corporate mindset (disclaimer: I am an employee of this company). Hence investments in sustainability like renewable energy will pay out in the long term and this is an effect which will sustain. It will be cheaper, more customer friendly and more service oriented to provide an eSIM wirelessly instead sending plastic made SIM cards via post. Companies send most of their invoices and communication via email instead of letters in envelopes. Supermarkets are banning plastic bags to support the environmental cause - but also taking the savings of producing and selling those as well. Having a sustainable corporate mindset will increase your chances to hire talents in an environmental minded world of the new decade, where nomadic workplaces are common and remote workers can chose whom to work for independently from each others location.

The impact of sustainability across all parts in the corporate world will become more significant so you will be forced to adopt this part into your policies. As always adopting processes is expensive and takes time. So better start earlier and from a broader perspective. This trend is here to stay for good.