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Sustainability Is the Foundation of ‘Capitalism 2.0′

Source: Environmental

Despite the worst recession since the 1930′s, sustainability has found its way into the consciousness of progressive boardrooms around the world. Clearly companies see sustainability as part of a successful approach to business, even during, or perhaps especially during, difficult times. But what does this really mean? Are companies actively embracing sustainability as a defining aspect of their corporate strategy or are they just talking the talk but not really changing their fundamental business approach? I would argue that we’re getting better but we’re still a long way from where we need to be.

Sustainability Is a Loaded Word

The word sustainability still makes many business people cringe.  It’s a loaded word with a complex definition and it often creates rifts rather than harmony among people.  To some sustainability is about energy efficiency, to others it’s about carbon reduction and climate change, while for others it’s about factory working conditions.  People’s interpretation of the word and their motivations for embracing sustainability may vary, but what’s interesting is that the corporations that have found success by embracing sustainability have all done so by following a similar path.

It May Sound Easy But…

First, they clearly define what sustainability means to their organization.  Then, they harness their existing corporate culture to drive behaviour with strategic goals, well defined metrics and a clear vision for the future.  This sounds easier that it actually is but the simple reality is that when done correctly, it works.  When a company fully integrates a sustainable vision into its corporate strategy, employees have a meaningful framework within which they can interpret the new goals of the company and make sense of their role in the organization.  They feel a sense of purpose and become energized to close the gap between the current state of the organization and their envisioned collective future.  For these companies, sustainability is a defining driver of innovation, employee engagement and greater profitability.

A Missed Opportunity

But unfortunately this is not a winning recipe for widespread change – it’s just too difficult for most companies to get it right.  They’re still busy struggling with definitions, culture, strategy and figuring out where – and why – sustainability fits into their organizational chart.  And it is precisely this confusion that paralyzes sustainability’s potential as a corporate driver of risk reduction and seized opportunities.  How can companies define a sustainable vision when they still haven’t figured out what sustainability is all about? Without a clear department or a mandate to operate strategically, it gets incorporated as an ‘add-on’ to business as usual.  In fact, depending on the level of awareness, support and culture development in the organization, sustainability can evolve to be seen as a barrier to ‘business as usual’ and thus be further isolated from the important strategy decisions of the day.

Towards Capitalism 2.0

Going forward we need to redesign the existing capitalist model so that we aren’t asking companies to act more sustainably within a broken system but rather we must elevate and tweak the current system so that business is conducted in a new, more sustainable, way.  As Matthew Kiernan would say, we need to be more “strategically aware” in a way that maximizes profits, engages employees and is more innovative while reducing environmental and social harm.  In this way, we’re not asking people to learn about something new that they don’t understand – we’re using familiar language while tweaking the system with new metrics to help us better gauge success in the context of the modern world with its finite resources.

The time has come to change the conversation from how to be more sustainable within our broken system to how can we can re-create capitalism in a way that celebrates the concepts of sustainability, and ultimately increases wealth and happiness for the widest group of people.

Brad Zarnett is the Founder and Director of Toronto Sustainability Speaker Series (TSSS). This topic will be explored at the next Toronto Sustainability Speaker Series (TSSS) event on December 5th, as thought leaders convene to discuss how to create a better form of capitalism: Capitalism 2.0. Click here for details.