https://innovateuk.blog.gov.uk/2016/06/28/sustainability-its-not-about-tree-hugging-its-about-the-future-of-your-business/

Sustainability: It’s not about tree-hugging, it’s about the future of your business!

Innovate UK was set up under Royal Charter for the purpose of:

increasing economic growth and improving quality of life in the UK.

Since our foundation we have encouraged sustainable wealth creation.

Why do we worry about sustainability

Sustainability

 

Surely if an idea is innovative and has market potential we should support it? Certainly, but we are investing in projects that will come to fruition in the future, and they have to work in the market of the future.

There is no point in supporting a project that will ultimately fail because public sentiment or regulation moves against it, or whose profitability vanishes because of raw material access costs, or the costs of managing waste.

We need sustainability issues to be a fully integrated part of how we think about future markets; not a project, or an initiative, or a theme. And we recognize that we need to help business to think about how sustainability issues will affect their future markets, because it is not easy.

Innovators are comfortable with uncertainty about the future

If I ask an innovator or an entrepreneur what they think their customers will want in the future, they will tell me. They are probably wrong, and they know they are probably wrong, but they will have an opinion.

If I ask them about the technological changes that are likely to sweep through their sector, or regulatory shifts that are about to happen, they will have an opinion.

This thinking is at the heart of evaluating the future market and looking for the opportunities and threats that the changes offer. They have no certainty about any of this future, but they are comfortable with the uncertainty. That’s what entrepreneurs and innovators do.

Sustainability is not being incorporated into future market needs

But if I ask about the opportunities and threats from sustainability issues, I often get blank looks. It is not something that they are incorporating into their models of future market needs, and yet sustainability challenges will be a critical determinant of the shape of future markets.

How will business need to change to tackle sustainability issues?

A few years ago, I did a ‘back of the envelope’ calculation on how UK business would need to change to tackle obvious sustainability issues such as:

  • securing public trust
  • building in resilience
  • meeting carbon emission commitments
  • tackling shortages of key raw materials
  • reducing waste

It was crude analysis, but it said that of the total Gross Value Added by the UK economy in 2012 of about £1.5tn, just under a third of that (£427bn) was in sectors that would be fundamentally transformed by sustainability issues, such as:

  • manufacturing
  • energy
  • construction
  • agriculture and food
  • healthcare

These are sectors where business as usual is simply not possible in the coming years, and where new products, processes, services and business models will be needed.

How can they do this?

Business needs to be thinking about sustainability issues when imagining its future, but the challenge is how to do it?

A lot of companies don’t have the expertise to explore the sustainability issues with the biggest potential impact on their business; whether a threat or an opportunity.

We needed a way to help business to ask themselves the right questions to get sustainability thinking on the same footing as thinking about consumer needs and technology options.

So, over the last few years we have worked with Forum for the Future and Aviva Investors to develop a model of a sustainable future economy based on the best available research and thinking. Delivered in a way designed to help business to ask themselves the right questions about the future market. We called it the Horizons tool, and it is freely available on-line.

Horizons tool: help you think about the future operating environment for your business

Horizons is designed to help you think about the future operating environment for your business. It looks at:

  1. the environmental boundaries that are essential to keep the planet in good health
  2. the social and political foundations that enable society to flourish
  3. the essential needs that must be met for humans to survive and thrive.

Each factor is backed up with the evidence, and how you might as a business react to the challenge.

There are plenty of case studies to show how successful businesses are using sustainability thinking to drive their market analysis, business strategy and innovation.

It is linked to the best thinking in the world, but is firmly focused on helping you to integrate sustainability into your business strategy and tactics.

Don’t ignore sustainability issues; change IS coming

But it doesn’t matter whether you click with the Horizons tool, or find another way of thinking about the impact and opportunities raised by sustainability issues. The important thing is not to ignore them because you don’t know how to deal with them.

Change is coming and it is not negotiable.

So act. This is not about tree-hugging or environmentalism. This is hard-nosed thinking about the future of your business.

Follow me on Twitter: @miller_klein

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