While sustainability is moving up many companies' priority lists, these efforts still aren't enough to meet looming challenges. Jenny Davis-Peccoud, who leads Bain's Global Sustainability & Corporate Responsibility practice, explains the six "next practices" that companies can take to develop a truly sustainable economy.
Read the Bain Brief: Transforming Business for a Sustainable Economy
Read the transcript below.
JENNY DAVIS-PECCOUD: What does a truly sustainable economy look like? Is it agriculture companies that are actually regenerating the environments in which they're growing? Is it consumer products companies that are contributing to health with everything they sell, both for their consumers as well as for their planet?
Sustainability is clearly moving up the corporate agenda. Eighty-five percent of companies say that it will be more important five years from now than it is today. But efforts, so far, have been a drop in the bucket, with projections, for example, that there's only a 5% chance that the world will meet the Paris Climate Accord goals.
But there are some companies that are leaning into this problem, instead of leaning out. And they are pioneering what we call "next practices" to help shift to a truly sustainable economy. We see them practicing six.
The first of these is moving from setting stretch targets to truly transformative ambitions. For example, instead of saying we're going to cut our carbon footprint, a leader like Interface says, we are going to become carbon positive. The second next practice is to make sustainable irresistible for customers and consumers. The No. 1 complaint that companies have is that people just won't pay for sustainability. But the leaders are realizing that actually if they bake sustainability into their products and make them a holistic part of a truly compelling offer, sustainability will sell itself with a product, whether that's in ocean plastic shoes or environmentally and responsibly sourced cocoa or coffee.
In order to do this, the leaders are moving to a third next practice, which is working with the entire ecosystem to deliver products sustainably. So instead of working just within their four walls of their immediate partners, they actually engage along the chain. If you want a sustainable tuna and you're Walmart, you can't just order more sustainable tuna. You have to work with the governments controlling the fishing zones. You have to work with the fishing companies, as well as working with your consumers to encourage them to demand more sustainable tuna.
And these ecosystem approaches require fundamentally different and more profound collaborations. It also requires the fourth next practice, which is around technology. And the real leaders are deploying technology in very innovative ways, whether it's Google using sensors to reduce the energy usage in their data centers, to agricultural companies using drones and others to really pinpoint the usage of fertilizers and minimize the environmental impact of that.
Now, as companies are doing that, they get to the fifth next practice, which is redefining what value means for the enterprise. Instead of saying it's all about financial value for our shareholders, they expand that definition to include environmental capital, social capital and community capital. That brings up the question, though, of can we really get to a sustainable economy with the businesses we have today?
And the leaders are turning to the sixth next practice, which is really challenging their core business. Twenty percent of companies say they fundamentally have to change their core, and 70% say they have to make some adjustments to their core business. For example, Philip Morris moving from 150 years of selling cigarettes to being committed to a smoke-free future.
Following these next practices implies some pretty big changes, and we all know change is hard. In fact, only 4% of sustainability change programs meet or exceed the expectations that have been set. And nearly 50% flat out fail to deliver even half of the targets that they've promised. But following the lessons from the leaders in the shift to these next practices means that we can all transform to a truly sustainable economy.