Sustainability Paradox

The Sustainability Paradox: Does the pursuit of sustainability force us into a paradox? If you are involved with your company’s sustainability strategy you will already have or will soon encounter the dilemma of balancing two paradoxical strategies: precompetitive cooperation and the pursuit of competitive advantage.

Sustainability is made up of three ‘equally’ important pillars. Failure in any one of the pillars will lead to the collapse of the system. The conflict arises because for many environmental and social challenges collaboration is the best path for success, but conventional thinking would suggest the route to financial success is in going it alone and developing a strategy to differentiate your company.

Competitive advantage – a new approach

Conventional business thinking would suggest that in order to sustain a company into the future it needs to identify/create a competitive advantage and leverage this. Very many organisations see being sustainable as a potential source of competitive advantage. This is because we are all being told that more and more consumers are interested in procuring in a socially responsible manner.

While there is still some debate about how quickly this ‘caring’ segment is growing or how large it is, the fact is it does exist and is typically characterised by people who are willing to pay for the privilege: examples are paying a premium for free range eggs or grass fed/high animal welfare beef.

“Letting go” competitive advantage

Competitive advantage is often created by filing patent’s to protect intellectual property (IP). Yet, this year Elon Musk, made 1000’s of pieces of IP freely available (https://www.teslamotors.com/blog/all-our-patent-are-belong-you). Is this is a sign of things to come?

“Sharing” competitive advantage

Unilever a company I had the privilege of being on placement with for the last 6 months is another company that is very willing to share. Unilever had a choice: it could have used its vision and foresight to go out and differentiate itself or to bring other companies with it: it selected the latter.

In 1997 Unilever and the WWF founded the Marine Stewardship Council (MSC). Today there are 240 certified fisheries, 100 fisheries in assessment and another 50 in pre-assessment. In 2002, Unilever with Nestle helped establish the sustainable agriculture initiative (SAI). In 2014, membership has now grown to 60 organisations. In 2004 Unilever helped set up the Roundtable on Sustainable Palm Oil (RSPO). In 2014 16% of global palm oil was certified, and a number of companies and countries are committed to sourcing 100% sustainable palm oil. In 2014 Unilever announced a partnership with WRI to end tropical deforestation (https://www.wri.org/news/2014/09/release-unilever-and-wri-announce-partnership-increase-transparency-key-commodity).

Why share your company’s vision

What have both Unilever and Tesla realised? Have they recognised that working with others can create both advantage for their company and the planet. Tesla probably realised that they can neither create or meet the demand for electric vehicles (EV's) on their own. In addition, to create demand, EV's must be manufactured to a high standard. Unilever are probably aware of the risks if agri-materials aren’t sustainably grown and that they can’t change things on their own. They both probably also realise that timing is a big issue as was identified in Barack Obama’s address to the UN summit in September when he stated:

“we are the first generation to feel the impacts of climate change and the last generation that can do something about it”

Industry leaders realise change must happen now, and while they might eventually drive change on their own, to do it in a timely fashion requires collaboration.

The trick is getting the right balance between pre-competitive partnership and gaining competitive advantage from sustainability i.e. figuring out what combination gets you the best return in both the long and short-term and to figure out if these goals are mutually exclusive or congruous.

What is the right balance of co-opetition, cooperation & competitive advantage

I don’t know if there is only one correct balance between the degree of collaboration and the extent of going it alone. I do truly believe that the balance lies in some combination of both, the combination of which will vary from industry to industry depending on the sector maturity and complexity.

To achieve the level of change required to make ‘sustainable living common place’ (Unilever’s strategy) I believe that more companies need to follow the leadership of Tesla and Unilever. This requires companies stepping out in front, developing new ideas and then reaching back to bring the rest of the industry with them.

Rewarding behaviour

Traditionally we have left solving problems of the collective to Governments and Agencies such as the UN and World Bank.

But I think we now realise that Governments and Agencies can’t do it alone and may not be best positioned to provide the solution. But companies, who I believe are optimally placed to deliver change, are not primarily social enterprises.

How we reward socially responsible companies is for another discussion but I would be interested to hear any ideas you have…..

Here’s hoping that we see more leaders joining Unilever and Tesla!!