How Sustainability Survived the Great Recession

This blog is part of our Inspired Ethonomics series

money

Around this time last year, the deathwatch for sustainability was on full alert. Many wondered whether the "green bubble" would burst the same way the tech bubble and the housing bubble did. Would sustainability follow Lehman Brothers into the pages of history, a relic of the good times?

As we go into 2010, it's clear that sustainable business is not only here to stay, it will define the next wave of prosperity.

Consider the evidence: The number of sustainability reports—where companies report their performance against social and environmental criteria—continues to increase, according to the Global Reporting Initiative. Sustainability is everywhere on the agenda of the World Economic Forum meeting in Davos, January 27-31, 2010. And nearly nine out of ten business leaders surveyed at our recent BSR Conference said their companies' sustainability budgets would stay the same or increase this year. Suffice to say, the predictions that companies would abandon their commitments to corporate responsibility have not come true, and sustainability is as critical a business imperative as ever.

It's turned out this way for three main reasons.

There's money to be made. Recessions, even "Great" ones, come and go. When historians look back on the annus horribilis of 2009, they will likely conclude that the sharp increase in commodity prices was more a sign of the future than the sharp fall in share prices and employment. The prices of core materials like oil, wheat, and iron shot through the roof during the first part of the year. Conflict erupted as supplies of food, water, and energy dramatically dropped, and businesses battled over the competing uses of commodities such as biofuels and food. All this convinced the C-suite that resource inefficiencies are a material risk to their businesses today, and will be even more so tomorrow. To outlast the Great Recessions, companies have to improve resource efficiency to position themselves for success.

There's also a top-line story here. Companies now know that big global challenges create big global markets. That's why blue chip companies like GE, Philips, and Vodafone have all identified growth opportunities in areas like health care, consumer energy use, and social applications of mobile phone technology. It's why venture capitalist John Doerr is banking on a renewable energy revolution that he estimates could grow as high as US$6 trillion, or six times the size of the Internet business.

Despite (warranted) concerns about short-term thinking, business actually does look to the future. Look no further than the strong and growing business constituency for action on climate change. While governments move slowly on Capitol Hill and in Copenhagen, business leaders (and NGOs) are making the case for action. Executives responded to the tepid outcome in Copenhagen with a cry for governments to do better. Deutsche Bank Vice Chairman Caio Koch-Weser put it this way: "A strong deal is essential to create the rules, price signals, and risk-return incentives that business needs." Shell CEO Peter Voser called for "much more" to happen to build a strong deal on climate. They are doing this because they know that a price on carbon is coming, and they need to start planning their future today.

Society's expectations have changed—forever. There's just no turning back. Can you imagine the response if companies pulled back from their efforts to protect labor practices in their supply chains? If companies stopped providing information about energy and water use, or workplace diversity? Consumers—and the media—now view such activities as another dimension of product quality, and they're not considered optional.

Critics of sustainability have been planning its funeral several times in recent years. They have missed what most business leaders now know: Over the next half century, winning companies will be those that roll up their sleeves and build solutions to our most pressing global challenges. We need businesses that devote themselves to delivering a climate-friendly energy system, making efficient use of scarce natural resources, and creating efficient transportation for mega-cities. And because companies are waking up to the fact that this is where tomorrow's markets will be made, more and more are on that journey.

This is why sustainability not only survived the "stress test" of the Great Recession, it will define the next wave of prosperity.


Aron Cramer Aron Cramer is President and CEO of BSR, a global business network and consultancy focused on sustainability. He is also coauthor of the forthcoming book Sustainable Excellence (Rodale 2010), about the corporate responsibility strategies that drive business success.

Add New Comment

6 Comments

  • tobybarazzuol

    It's true, sustainability has turned the corner and is becoming a mainstream business concern and consideration. The exciting thing about embracing sustainability is that it encourages businesses to completely review their purpose and operations - in many cases leading to discoveries of improved efficiencies, cost savings and new opportunities.

    However, the greatest strength of green business is often the one that's most understated. A focus on sustainability has the power to engage and motivate your staff. People want to work at companies that have a soul, they want to work at companies that care about more than just money. Embracing sustainability also means embracing the human element of business, caring for people, and creating healthy and inspiring places for them to work. Ultimately, it is about building and creating new communities where people interact with one another (and the environment) differently.

    Understanding sustainability is the single greatest investment that a business can make towards it's future success. It's great to see this permeating the thinking of our business community.

    --
    Happiness Delivered
    http://www.eclipseawards.com

  • Jean-Luc Marcoux

    We will remember 2009 as the Three-E Crisis Year with the Economy, the Environment and Energy at the center of a perfect storm- remember oil at $147 a barrel in the summer of 2008! We may have survived the great Recession of 2009 but the challenges ahead are even greater than people imagine. The environment and sustainable development are back on peoples' agendas from CEOs to the everyday man but as sustainability entrepreneur, and professionals we must do a better job communicating what is Sustainability. Green is here to stay as a new way of looking at the world. It is a paradigm shift with opportunities and challenges for everyone. I believe that Reduce-Reuse-Recycle is Sustainability in action through a more efficient use of resources. We need to simplify the sustainability message for everyone.

  • Jean-Luc Marcoux

    We will remember 2009 as the Three-E Crisis Year with the Economy, the Environment and Energy at the center of a perfect storm- remember oil at $147 a barrel in the summer of 2008! We may have survived the great Recession of 2009 but the challenges ahead are even greater than people imagine. The environment and sustainable development are back on peoples' agendas from CEOs to the everyday man but as sustainability entrepreneur, and professionals we must do a better job communicating what is Sustainability. Green is here to stay as a new way of looking at the world. It is a paradigm shift with opportunities and challenges for everyone. I believe that Reduce-Reuse-Recycle is Sustainability in action through a more efficient use of resources. We need to simplify the sustainability message for everyone.

  • Jean-Luc Marcoux

    We will remember 2009 as the Three-E Crisis Year with the Economy, the Environment and Energy at the center of a perfect storm- remember oil at $147 a barrel in the summer of 2008! We may have survived the great Recession of 2009 but the challenges ahead are even greater than people imagine. The environment and sustainable development are back on peoples' agendas from CEOs to the everyday man but as sustainability entrepreneur, and professionals we must do a better job communicating what is Sustainability. Green is here to stay as a new way of looking at the world. It is a paradigm shift with opportunities and challenges for everyone. I believe that Reduce-Reuse-Recycle is Sustainability in action through a more efficient use of resources. We need to simplify the sustainability message for everyone.

  • Bernd Nurnberger

    A timeless piece on where to look for value that people are willing to pay for: winning companies will be those that roll up their sleeves and build solutions to our most pressing global challenges. I would apply that to local challenges as well.

  • andrew kresge

    It is great to read that sustainability has become the foundational value for the transformation of current businesses and the base upon which new businesses will be constructed. One of my concerns for those companies either claiming to have adopted or claiming plans to implement sustainability, which seemed to have survived the quick-win profit schemes commonly associated with being "green", is that they understand there is no room for empty promises; these will result in waves of consumer doubt, potentially leaving the company in an irreparable situation.