By Martin Johnston, Founder and Managing Director at Earth Strategies
The natural world is a masterful blueprint for balance, with everything in alignment. This is as true for the solar system as it is for ecosystems and social systems.
But human behaviour, business theory and infrastructure development haven’t had the benefit of millennia of evolution to find that balance. And in today’s world, the way we do business is most certainly not in alignment.
Research from Deloitte has shown that more than 80% of executives are concerned about climate change but the pandemic and economic downturn have stalled ambitious actions.
As ambitions are tempered, the direct threat of climate change becomes more and more palpable. Roughly 1 in 3 executives say their organisations can already feel the operational impact of climate change, while more than a quarter face a scarcity of resources due to unsustainable business practices.
What emerges is a paradox.
Senior decision-makers recognise that climate change is both a human problem and a business problem — yet fail to substantially change the way that organisations function and operate.
This imbalance in the way we do business has a direct impact on our planet’s equilibrium.
It’s time to reimagine sustainability — not as a cost but as an opportunity. To make money, save money and most importantly, give your business permission to exist.
Can We Quantify the Whole Value Chain?
By now, most of us recognise that brands have a big impact on the environment. But at what cost?
A new wave of economic thinking has evolved that puts a monetary price on the value of our natural world. The idea of putting a monetary price on nature is simply wrong but measuring the risk to our natural ecosystem is a completely different thing altogether.
According to the world’s largest reinsurance company, Swiss Re, more than half of global GDP – approximately $42tn (£32tn) — depends on high-functioning biodiversity.
In other words, the natural world that sustains human life is a trillion-dollar asset class.
The cooling effects of forests, the flood prevention characteristics of wetlands and the food production abilities of oceans can all be understood as services with a defined financial value.
This is equally true for animals. Research from The IMF shows that the value of an elephant’s contribution to its ecosystem can be quantified at $1.75m per elephant.
However, the value of a bee is even more significant. Without them, you wouldn’t be sitting here reading this article.
This raises an even more existential question. If human society wouldn’t exist without bees, then how can we even begin to quantify their value?
This question inevitably leads to a profound conclusion: bees are priceless.
Value Is so Much More Than Money
Harvard Business School has attempted to put a dollar value on the impact that business has on the planet.
The researchers calculated the median environmental impact as a percentage of an organization’s revenues, referred to as “environmental intensity”.
This figure is close to 2% and above 10% in 11 out of 68 industries, suggesting a significant level of “hidden liabilities” and potential for value erosion if environmental impacts are priced.
This thinking moves the need forward and can make tangible improvements to the way businesses operate but it still doesn’t represent real value.
This is monetary value but value is so much more than money.
Yes, we need to prove commercial benefits, cost savings and gains but some things just cannot be measured in monetary terms.
A Balanced System Thrives; A Broken System Doesn’t
For decades, businesses have been looking at operations through a singular lens of shareholder value. Naturally, shareholders have been defined as those who have an actual financial interest in an organisation’s success.
However, those who have a financial interest in the success of a company make up a very small percentage of the engagement needed for the business to succeed.
This concept of shareholder value has come at a cost and now the world is out of balance. To rebalance business and society, brands must opt-in to a different system, one that isn’t defined by financial value but rather brand value as a wider concept.
In this framework, a brand activates value beyond its products and services so that it encompasses the entire business model. This is how a company ensures that business needs are in balance with its surroundings.
Making the shift to this wider interpretation of a brand is not only imperative for the planet but also inextricably linked to a company’s continued existence.
Doing so requires a change in how we view sustainability. It’s not a short-term cost. It’s an opportunity to advance and transform business, to make or save money and to give your business permission to exist.
Only then can we restore the balance between our planet and our society.