Our first session for 2015 kicked the year off on a positive note and asked if businesses that do good are really just doing good business: are people and planet really as important as profit, and can you deliver on the first two without compromising on the third?
Colmar Brunton’s New Zealand CEO Jacqueline Ireland has made a career of listening to what consumers think, and she’s recently seen a shift in consumer attitudes toward sustainable businesses. When Colmar Brunton first started looking at the area in 2009, sustainability didn’t seem to be much of a driver for consumers.
Since 2013 though, it has become an increasingly powerful driver of consumer choice.
That’s not surprising – every other ad on TV these days (most of which will have been based at least in part on Colmar Brunton-style research) seems to mention sustainability, eco-friendliness or some other vaguely planet-friendly claim.
That reported consumer preference doesn’t always translate to the cash register, though. New Zealand entrepreneur and Eco Store founder Malcolm Rands built his business to be environmentally friendly from day one.
But while Eco Store’s household cleaning products sell well in New Zealand, Australia, Singapore and Hong Kong, Mr Rands has previously said that shoppers aren’t prepared to pay any more than they would for the regular (and presumably made from grated dolphin) products.
What’s possibly more interesting than consumer behaviour, and what any business hoping to employ Gen-Y staff should take notice of, is that Colmar Brunton reports sustainability is emerging as a powerful factor in job choice – people, young people especially, are choosing to work for companies that have priorities beyond purely profit.
Radio Live business correspondent Andrew Patterson is a big believer in the potential of young people, and has spent a lot of time helping them connect with business leaders both here and in the US. For this generation, he says, planet-friendly business plans are second nature, and he’s inspired by the creativity and optimism of the students he works with.
But what about investors? For a company to launch and succeed, it needs money. Does the investment market see the value in sustainable companies?
Matt Mooney is a portfolio director at private equity managers Knox Investment Partners, and for him it’s a pretty simple answer: no.
While investors prefer to put their money into companies that don’t make life worse for people or the planet, ethical issues don’t currently drive investor behaviour.
According to Mr Mooney they don’t drive CEO behaviour either. Although 84% of CEOs surveyed agreed business “should lead” when it comes to environmental issues, only a third of them reported that they were acting on this belief. Critically, only 5% reported that their businesses rewarded their employees for sustainable or environmentally friendly behaviours.
For Derek Handley (fresh back from The World Economic Forum at Davos) the focus on sustainability is something of a red herring.
His take is that business leaders are shifting their focus to a new and broader definition of success beyond purely financial measures and looking at issues that have been traditionally left to governments and not-for-profits – not just environmental.
Mr Handley believes businesses are ideally placed to effect global change as, unlike governments and charities, they have the necessary combination of global reach and funding to actually make things happen.
And when CEOs believe change is necessary, they’re in a position to do something about it. A good example, Mr Handley says, is Unilever chief executive Paul Polman who, as well as heading the profitable multinational, works with the UN and other groups to tackle global problems.
He has also been instrumental in establishing the Unilever Sustainable Living Plan, with an aim of reducing the company’s environmental impact and increasing its social contribution, while doubling its size in traditional revenue terms.
So to return to our original question … are businesses seeing the good in doing good? And if not, how can we change that?
The obvious answer is to think in terms of The Simpsons (and if they don’t teach this on MBA courses they should start):
Mr Burns – the business owner – sees no reason to change. He’s rich, he’s old, and his mansion is a long way away from Lake Springfield and its three-eyed mutant fish.
As Mr Mooney pointed out, while we’ve been talking about the triple bottom line for decades, neither investors nor CEOs (with notable exceptions such as Unilever’s Paul Polman) are doing much about it.
Homer Simpson – the consumer – says he’s all for the environment (mmmmm … environment), but tends not to follow that up with his purchase decisions. (And if Homer’s a Republican, there’s evidence that he might associate environmental product claims with left-wing politics and be even less likely to make a sustainable choice.)
Mayor Quimby – the politician – works to a three-year cycle so is unlikely to make an unpopular short-term choice if the benefits won’t be seen in his term of office. Public opinion might drive his decisions but, if Homer doesn't care about the planet, then neither does he.
And that leaves Lisa – generation Y, the new employees, the next wave of entrepreneurs. If it’s true, as Andrew Patterson and others at the table believe, that this generation has sustainability, creativity and optimism baked in, then one approach might be just to sit back and wait for Burns, Quimby and so on to die out.
A more positive approach, though, might be to accelerate their progress up the ladder.
Aggressively seek out and hire younger staff. Find ways for younger voices to get heard by senior management and political leaders. Get people under 50 on to boards.
And teach them our sneaky old-people business skills so they can use them to create the change we all need, but for all sort of reasons just can’t bring ourselves to make happen.
The Moxie Sessions is an internet economy discussion group held once a month in Auckland. Its purpose is to bring together a group of interesting folks from across the economy to talk about how New Zealand can take advantage of the internet to improve its economic performance.
Vaughn Davis is principal at social media and advertising agency The Goat Farm.
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