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  • SustainAbility Research Director Chris Guenther recently caught up with John Elkington, Co-Founder of SustainAbility and Founding Partner and executive chairman of Volans, about the launch of John’s recently published book, The Breakthrough Challenge. In addition to the book, they discuss the dilution of the sustainability agenda, the shifting role of the Global C-Suite, and the upcoming Breakthrough Decade.

    Chris Guenther: SustainAbility has closely tracked–and frequently discussed with you–your work on Breakthrough Capitalism, which you framed at the first Breakthrough Capitalism Forum in May 2012, and subsequently in the Breakthrough and Investing in Breakthrough reports. How have these ideas evolved to what is now represented in The Breakthrough Challenge, and what specifically drove you and Jochen Zeitz to write the book?

    John Elkington: I had no plans to write another book, Chris, having only recently published my eighteenth, The Zeronauts: Breaking the Sustainability Barrier. But then I got an invitation from Sir Richard Branson’s foundation, Virgin Unite, to attend a small roundtable outside Geneva. On the second day, Jochen Zeitz walked in and, I have to say, there was electricity between us around our thinking and ideas. I didn’t give it much more thought, but a couple of months later he got in touch and suggested writing a book together.

    When Jochen and I spent some days together, the book evolved further. The Virgin Unite meeting we originally attended proved to have been the gestational event for what became The B Team, a not-for-profit initiative founded and co-chaired by Sir Richard Branson and Jochen, and where I am on the Advisory Board. The idea is to bring together a global group of leaders to create a future where “the purpose of business is to be a driving force for social, environmental and economic benefit.” …

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  • Flickr image by Tim Reckmann

    When Warby Parker launched its prescription eyewear brand four years ago, it broke the industry mold by offering a unique business proposition. Whereas most eyeglass shops depend on storefronts to bring in customers, Warby Parker created a business model based on bringing the glasses to the consumers. Using their “Home Try On” system, the company’s customers can order up to five pairs of glasses to try on in front of their bathroom mirrors – for five days at no charge.

    Much has been written about Warby Parker’s hipster brand identity as well as its social mission: for every pair of glasses sold, the company donates a pair to a person in need. What I find unique about its model, however, is the potential for sustainability by way of reduced resource usage. Just like Netflix and other virtual brands that have come before it, Warby Parker is cutting energy and resource use by streamlining operations.

    Once, the consumer marketplace was almost exclusively comprised of single-purpose brick and mortar stores – the butcher, the baker, the greengrocer and even the optometrist. Later, grocery stores – and, eventually, big box stores, retail outlets and shopping malls – put several of these services under one roof. It isn’t hard to see why the department store model was so profitable: erecting a store on every corner or in every town provides customers with convenience, builds brand recognition, and can even create a sense of community. …

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  • Image © CC Domiriel: Compfight

    The identification and engagement of a company’s stakeholders to build trust, reduce risk and develop effective partnerships have been at the core of our work with business leaders for many years. As the rhetoric grows that no singular business is capable of addressing environmental and social challenges alone, companies must think now more than ever about how they can engage with NGOs, governments and other actors to develop collaborative solutions to system problems.

    Over the years, we have seen stakeholder engagement move in this direction. It’s evolved from tactical, compliance and risk-focused to more strategic and solutions-orientated, with stakeholders engaged up and down the value chain—not only as partners on critical issues but also as key players to improve business performance. …

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  • DoD photo by Staff Sgt. Sean K. Harp via Flickr

    The continued downward slide of government leadership in driving the sustainability agenda forward, coupled with lackluster policy and advocacy engagement from the private sector, is the inconvenient truth revealed in this year’s GlobeScan / SustainAbility Survey, The 2014 Sustainability Leaders.

    While a clear majority of experts see collaboration with governments as the “most effective” approach companies can take to creating pro-sustainability policies, less than a third believe companies will engage in this manner, as noted in our 2012 Collaborating for a Sustainable Future report. …

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  • Flick image of step pyramid by Ed Yourdon

    In 2004, the late CK Prahalad, an influential management professor and author, published The Fortune at the Bottom of the Pyramid, a book that urged companies to use a new lens to view the poor. Prahalad advocated for envisioning those at the bottom of the economic pyramid as producers and consumers of products, rather than merely as philanthropic beneficiaries.

    Ten years later, several large companies have adopted Prahalad’s ideas and, in the process, have demonstrated that serving the “base of the pyramid” consumer can make good business sense. I analyzed several of these “base of the pyramid” business models — what we call “Building a Marketplace” — in Model Behavior: 20 Business Model Innovations for Sustainability, a report that I co-wrote and released earlier this year….

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  • This article originally appeared in Radar Issue 03: What Chance Change? Exploring Sustainable Finance.

    As the world’s multinational banks move, lend, invest and protect money for customers and clients in the decades to come, they can play a major role in the context of sustainable development.

    They must for three main reasons. First, they can enable sustainable growth. The unique capabilities of multinational banks, principally the large universal and investment banks, make these entities key enablers in the shift to more equitable distribution of income and the long-term investments needed to support more sustainable development.

    They can also contribute to financial stability. The health of the global economy is inextricably linked with banks’ success. By better managing their own health, banks can contribute to a strong, resilient global economy that protects jobs and livelihoods, avoids collapse in the face of external shocks, and in doing so, provides a platform for more sustainable forms of growth. …

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  • Flickr image by Melissa Wiese

    This interview originally appeared in Radar Issue 03: What Chance Change? Exploring Sustainable Finance.

    Scientific consensus seems to be growing that there is a causal link between excess sugar consumption, rising obesity and Type 2 diabetes and other NCDs. Analogies such as sugar is the new tobacco have grabbed headlines recently alluding to the addictive nature of sugar, and food products such as fizzy drinks are particularly under fire due to the high sugar content that is ingested very quickly.

    Although this isn’t a new issue, in recent months we have seen campaigners, governments and investors increasingly pay attention to the major health and economic costs associated with sugar-related health problems. Last year a report from Credit Suisse’s Research Institute brought into focus the staggering health consequences of sugar. The report revealed that approximately 30%–40% of healthcare expenditures in the USA are attributed to addressing issues closely tied to the excess consumption of sugar. The WHO has published draft guidelines that recommends people halve the amount of sugar in their diet from 10% of total calorie intake a day to a target of 5%. …

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  • Flickr image by clairebear83613

    Which business model innovations have the most promise for sustainability? How are leading companies exploring them? What role can companies play in advancing more sustainable business models?

    These are a few of the questions posed by SustainAbility’s latest think tank work, Model Behavior: 20 Business Model Innovations for Sustainability. In March, we held roundtable events in London and New York with representatives from Barclays, Cisco, Estée Lauder, Ikea, L’Oréal, Mitsubishi and Vodafone, among other organisations. Below are a few of the ideas we discussed. (As we held the discussions under Chatham House Rule, quotes from the discussion included below are edited to provide anonymity.)

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  • Philadelphia increased its residential recycling by nearly 20,000 tons after partnering with Recyclebank. Flickr image by Bob Snyder

    Imagine if you got rewarded every time you rode your bike instead of driving, or if you received a tangible benefit whenever you made a greener choice. Would this change how you go about your day? And could that change be a stimulus to speed up advances in global sustainability?

    Convincing consumers to change their behavior is a significant component of the sustainability agenda. But for the most part, these efforts have been based in apps and campaigns, such as Alcoa’s Aluminate can recycling app or Bank of America’s Keep the Change savings program. By comparison, business models designed to stimulate sustainable behavior change are a relatively new – and largely unproven – concept.

    However, given the growth of smart technology and social media, expect to see behavior-change-focused business models in the future. If these models can generate profit and scale, they could help drive an economy decoupled from resource use. …

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  • Radar Issue 03

    The financial crisis has dominated headlines for several years. Now the talk has switched to recovery, which has led us to the question what type of recovery? There is an urgent need to reshape the global economic system—including financial markets—to better serve the needs of society, the environment and the wider economy. While we welcome signs of improved financial investment, rising incomes and profitability, we must also ensure that they are not at the expense of more sustainable development.

    In this third edition of Radar, we explore the issue of sustainable finance and ask what chance is there for change? In our lead article we outline the business case for banks to be the institutions that steer us into a new era of sustainable finance (Banking on Sustainability: Financing the Future). Rob Cameron interviews Leo Johnson about his new book and the signs he sees of a new form of capitalism emerging (The Unusual Suspects: Leo Johnson). …

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  • Flickr image by NAMU-Cube

    Between traditional news channels, blogs, and social media, it can be hard to keep up with what’s making waves in the field of sustainable development. In this roundup we aim to cut through the noise with a handful of highlights that have caught our eye.

    In his 2014 State of the Union address Barack Obama underscored the urgent action required on climate change but made no mention of controversial and divisive energy policy matters such as approving the TransCanada’s Keystone XL pipeline. Environmental groups and energy experts question how long it is possible to sustain an ‘all of the above’ energy strategy, which backs investment in clean energy alternatives on one hand but also promotes rampant drilling and mining of fossil fuels on the other.

    The Obama administration is not the only one finding itself at this energy crossroads. The uncomfortable transition from fossil fuels to renewables is playing out in a tug of war between the high-carbon lobby and more progressive companies placing their bets on the transition to a low-carbon economy. …

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  • The idea of business model innovation—that a company could launch a new business model never conceived of before, or transform an existing business model—has long captivated business leaders. And yet, executives are often held back by vested interests in their current approach: “If it ain’t broke, don’t fix it.” But as global trends—environmental, social, political, technological—continue to shift the foundations of our current business models, incremental innovation will become less effective in enabling companies, industries and whole economies to adapt and succeed. There is an urgent need for fundamentally different approaches to value creation….

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  • Business Model Innovation: Postcards from the Edge

    24 Jan 2014 – Melanie Colburn

    Flickr image by emersonquinn

    What will business look like in 2025 or 2050? How will successful corporations adapt to the mega trends stemming from the sustainability challenge?

    These questions hint at a few of the implications of SustainAbility’s current think tank work. Earlier this month, we tested some ideas from our forthcoming paper on business model innovation, entitled Model Behavior, at a roundtable event in San Francisco. Attendees included representatives from B Lab, Gap, GlobeScan, Impact HUB Bay Area, Levi Strauss & Co, PG&E, Safeway, SAP, and Vodafone, among other organizations. (Quotes from the discussion included below are edited to provide anonymity, unless attribution was granted.)

    Tell Me How to Move This Mountain

    As one roundtable attendee attested, ‘The last time [my company] went through a business model transition it didn’t go so well—either for [the company] or [its stakeholders]—but we know business model innovation needs to happen.” …

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  • Crowd-sourced models enable individuals to invest directly in solar projects and novel partnerships will finance solar projects. Image by Activ Solar, Flickr

    This is post 8 of 10. See next or previous.

    For over 25 years, companies have valued our ability to serve as their early warning system—to interpret emerging issues and trends in the sustainable development agenda and help them anticipate, understand and respond to shifts in the business landscape. In 2013, SustainAbility re-launched a dedicated function to regularly track and interpret “what’s next”—our Ten Trends of 2013 series is the distillation and public output of our thinking over the year.

    In the wake of the 2007/8 financial crisis, the phrase “financial engineering” has come to have a negative connotation, conjuring images of math wizards creating esoteric financial products that brought our global financial system to its knees. While such engineering is showing signs of a gradual rebirth, we see a new form of financial engineering happening–one that promises beneficial social and environmental outcomes. …

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  • Beyond executive pay, we’ve seen the inequality conversation manifest itself into ‘living wage’ campaigns rippling through the service sector in 2013. Image by Ari Moore, Flickr

    This is post 1 of 10. See next.

    For over 25 years, companies have valued our ability to serve as their early warning system—to interpret emerging issues and trends in the sustainable development agenda and help them anticipate, understand and respond to shifts in the business landscape. In 2013, SustainAbility re-launched a dedicated function to regularly track and interpret “what’s next”—our Ten Trends of 2013 series is the distillation and public output of our thinking over the year.

    “‘How can it be,’ he wrote, ‘that it is not a news item when an elderly homeless person dies of exposure, but it is news when the stock market loses two points?‘” That was President Obama quoting Pope Francis in a wide-ranging December speech on income inequality, which he called the “defining challenge of our time.” It also represented a high water mark in what has been a remarkable year in raising the profile of inequality as not only an urgent societal issue, but also a critical business one….

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  • Speakers highlighted the electrification of cities as a major opportunity for cutting carbon emissions. But collaboration between city administrations and ICT intelligence providers will be critical to harmonizing electricity supply and demand.

    Last week, I attended the ‘Business Day’ event held by the World Business Council for Sustainable Development (WBCSD) as part of World Climate Summit 2013 during COP19 in Warsaw. The mission of the day was to explore WBCSD’s ‘big ideas’ to avoid the trillionth ton of carbon. For WBCSD, the big ideas are business solutions, the core of their recently launched Action 2020. The Action 2020 framework for action builds upon Vision 2050 and considers nine priority areas, including climate change, which addressed together will bring about transformative change….

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  • The promise of business-model innovation has long captivated the sustainability field, generating plenty of hype. But all the talk has yet to yield many real business-model changes.

    You might not know it to hear companies talk. Any business change can end up being classified as “business model innovation”. In a BCG and MIT survey of executives and managers earlier this year, nearly half of the respondents said their companies had changed their business models as a result of sustainability opportunities. However, the majority of innovations we see involve changes in companies’ processes and/or products, not underlying business models….

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  • Greenpeace's recent scaling of London's Shard shone a light on the continuing lack of engagement by fossil fuel companies, but could targeting investors bring more tangible results? Photography courtesy of Sandison/Greenpeace.

    Between traditional news channels, blogs, and social media, it can be hard to keep up with what’s making waves in the field of sustainable development. In this roundup we aim to cut through the noise with a handful of highlights that have caught our eye.

    Fossil Fuel Divestment Gathers Momentum

    Last fall, climate activist Bill McKibben’s organisation, 350.org, supported the launch of fossil-free divestment campaigns across cities and college campuses. Modelled on the South Africa anti-apartheid divestment movement of the 1980s, the campaign has reached over 100 US cities and 300 colleges. Similar versions are also taking hold in Australia, the Netherlands and the UK.

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  • Time is of the essence: Are investors failing to acknowledge long-term risks to their funds and overvaluing their assets?

    Earlier this month I attended two investor-related events – the launch of the new report published by the Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment, and the RI Europe 2013: Investor-Corporate ESG Summit. Both events recognised the challenges of incorporating ESG considerations into company valuations, and discussed the growing set of initiatives and approaches that investors are taking to resolve the situation.

    In the first report in the series – Unburnable Carbon: Are the world’s financial markets carrying a carbon bubble? – Carbon Tracker argued that if the world is to remain within the 2 degrees limit of tolerable global warming then it can only “afford” to burn approximately 20% of total known fossil fuel reserves, leaving 80% of assets technically stranded and meaning that investors who are valuing companies based on their ability to continue to burn these fossil fuels may be massively overpricing their assets….

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  • “The current economic system, built on the idea of perpetual growth, sits uneasily within an ecological system that is bound by biophysical limits.” So states the fifth Global Environment Outlook (GEO-5), published by the United Nations Environment Program (UNEP) in 2012.

    Renowned economist Kenneth Boulding reflected the same sentiment more pointedly many years ago when he said: “Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist.”

    Infinite growth is the operating principle, reinforced by our current economic and political systems, on which many of the world’s business leaders, policy-makers and investors make decisions every day. As a result, the gap between our current burn rate and what the planet’s environmental systems can support on a sustained basis continues to grow. This gap represents a significant risk – and an opportunity – for the business community.

    This is the context of the most recent collaboration between UNEP and SustainAbility, along with Green Light Group: a just-released report titled GEO-5 for Business. Using GEO-5 (a 500+ page compilation of environmental data, policy options and scenarios) as its foundation, GEO-5 for Business serves as a translation and primer written specifically for business leaders. While much analysis has been conducted on the impacts of business on the environment, this report looks in the other direction – at the impacts of environmental trends on business….

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