WHAT DOES IT REALLY TAKE TO RUN A SUSTAINABLE BUSINESS?
10 important lessons for small business from some of the world’s leading brands.
A few years ago, I was walking through the streets of Le Marais. That beautiful area in Paris where bagel shops and quaint cafes, gorgeous boutiques and art galleries collide with big brand names. I stopped at a line with hundreds of people queuing out a door and down the street. Glancing up at the glowing Uniqlo signs, I realised they were waiting to get hold of 40 Euro cashmere jumpers. A few minutes later, we were inside grabbing luxurious jumpers for everyone (and I mean everyone) that Christmas.
Fast forward almost seven years, and it has hit me that 40 Euro cashmere just doesn’t add up. It doesn’t add up from a wage perspective, it certainly doesn’t add up from an animal rights perspective, and due to the incredible impact of such high intensity farming that the land can’t keep up with, it is leading to severe environmental problems too. Areas of China where goats are farmed for cashmere are now entirely ‘dessertified’. Creating barren areas of land, which leading to dust storms that some estimate could be as far reaching as the US. It might be turning a profit, but it isn’t working for people, land or ecosystems.
At some point as business owners, we need to catch ourselves. Yes, we might have customers clambering at our doors for products like fine cashmere sweaters with very healthy markups, but at what point does our conscience and our basic values stop us?
And when we do stop, how do we then start to create a change? And rally our customers to back us?
What I want to show you is not just how important it is, but how every business (and consumer) can take amazing, positive steps towards change. How it can help you to find your audience and have them support you even more. It doesn’t have to be as hard as you think. It is, however, necessary for the true sustainability of your businesses. Not just in the environmental sense, but also for survival, risk mitigation and continued success.
I think we are lucky. I believe we are at a tipping point. Our consumers are growing weary of over-consumption, new models, and faster trends. We are increasingly aware of how we are treating people, animals and land that support us, and many people are desiring simplicity. This brings with it a phenomenal opportunity for innovative business to make some incredible changes in how they run business, every day.
We need to start calculating the real costs of our businesses. Not just the monetary value of production, but the full cradle to cradle impact of our resources, chemical use, energy, people, animals and at the end of the life-cycle, how they biodegrade or sit in oceans or landfill. We need to ask how sustainable really are people’s wages, our treatment of people or animals, and the way we source goods from land, animals or oceans?
I will tell you upfront that changing how we do business is tough. When you really stop to assess all you are doing, it can take considerably longer and be more expensive. Sometimes you will look in the mirror and wonder why you are doing things that people may never even see. You will ask questions people don’t know the answer too, because no one has ever bothered to ask them before!
But this is where it starts to get interesting… being sustainable requires you to be truly creative, or disruptive on a whole new level. It gives opportunity to innovate and create whole new industries in waste, energy or efficiencies. It enables you to reconnect with customers and to tell the stories of your products. All in all, it asks you to do business in a very different, wonderfully exciting and challenging way. And yes, it demands for a moment, that you put aside some profits. But in the long run, research tells us that these come back too.
I’ve dedicated most of my life to sustainability, business and human rights. I’ve studied it, lived it, volunteered for it, advised on it, and built business based on it. The funny thing is, I live in a big city, I’ve worked in the corporate world and now I run my own business. I can’t just be off grid, but need to figure out how to translate ideals into the real world. I’ve advised some of the world’s biggest and smallest businesses to help them assess where to change and set up my own business to really see how it works on the ground.
So with this premise, here are the big lessons that can change how you run your businesses for the good of the collective – people, animals and earth:
Sustainable means people, planet and profits too
There is no point in being the world’s most sustainable business if tomorrow, your business fails. All the jobs you were funding, people you were employing, livelihoods you were part of – all start to fall apart.
If you are a small business, then remember that sustainability isn’t just about saving the world. It is about doing good business too. That means really nutting through the numbers, understanding your market and what they need from you, in order to keep your business alive for many years to come.
However, being sustainable can in turn truly benefit your business. And this is where it starts to get interesting.
Just this month, leading management consultancy firm McKinsey & Co wrote that “Consumer companies will have to greatly reduce the natural and social costs of their products and services” to meet rising demand in a way that the planet can sustain.
Our supply chains represent over 90% of our impacts on air, land and biodiversity. That is before we even get hold of a product in our local stores. This doesn’t happen in isolation either. Going waste free or low impact or organic or low-tox shouldn’t be just about what happens when products land on our customer’s doorsteps. It needs to focus on our whole ecosystem and we need to find ways to improve all we do, right back to the farm.
As an example, DDT poured onto a landscape in South East Asia many years later, has later popped up in fish all over the world. Pesticides find their way into breastmilk and can cause devastating issues for newborns. We all know there is a plastic island floating in the middle of the ocean while microbeads are (again) finding their way into our fish. We can’t disconnect from the world around us, but we can make phenomenal change.
In McKinsey’s report, ‘Starting at the source: Sustainability in supply chains’ (Nov 2016, both Bové and Swartz note that over 50% of the value of consumer businesses is at risk from sustainability issues, like child labour violations, air pollution, water shortages, deforestation or workers’ health. Yet despite this, “Relatively few businesses are working with suppliers to manage these risks.”
To bring it down to numbers, they quote Unilever estimating it has lost over EUR300 million due to declining water scarcity and agricultural productivity. Due to drought,Graincorp, an Australian business, had expected profits fall over 60% in 2014. Two apparels businesses were dropped from a list of the world’s most reputable companies due to human rights abuses and for failing worker health and safety in the Rana Plaza collapse in Bangladesh.
As someone who has built a business based on social enterprise, sustainability, ethics and commitment to my suppliers (right from the farms), I want people to know that you can do this. It means playing detective, and learning to say no, it means admitting mistakes and being transparent. But if you are running a business or working within one, you can help make sustainable change.
So, how do we do this in practice? What are the steps we need to take?
Remember that product is king. Are you a Tesla or Prius?
Being sustainable is not enough for people to really need to buy from you and covet what you do. One of the first lessons I learnt while researching textiles for my business, was that nothing is sustainable if it just ends up sitting on a shelf not being bought.
Tesla is a brand forging new ways of storing energy and creating very sexy, covetable cars that happen to be run off electrical power (hopefully renewable) alone. It is responsible and sustainable, but it is doing it in a way that people can’t help but stare.
As a sustainable business, you need to be deliver a better product or service to customers that they want to buy. It just so happens that behind the scenes, you are doing some remarkable things too. This is so important. Sustainable, eco or green products or services cannot be second rate. Instead, they have to be designed, marketed, and presented in line with or better than the best out there.
Get to know your products, right from the start
This is a tough one. It is tough because in today’s world of global production many businesses simply don’t know where their products come from.
The Australian Fashion Report 2016 put together by Baptist World Aid estimated that only 5% of assessed fashion businesses knew where their raw materials were coming from. It can be even more complex for electronics or processed food.
But for business to be truly sustainable – not just be at risk of greenwashing – we really need to understand the full impact of what we are creating, where it comes from and what happens every step along the way. We need to able to understand and assess our businesses right back to the start and take responsibility for more than just where our products are ‘made’.
Two great documentaries covering the real complexities showing just how much it takes are the BBC’s documentary ‘Apple’s Broken Promises’ or ‘The True Cost’. If you want to see what life is like for people who do make our good, please spend a good few hours looking through Gapminder’s incredible Dollar Street photography project. Visit people’s homes. See what real lives look like. Get closer to the world we all live in.
In practice finding out the answers to this often means asking uncomfortable questions. Many of these questions are met with silence or a simple we don’t know. Questions like – where does the raw material come from? Can I visit? What standards or certifications do you uphold? How do you handle toxic waste? Exactly which chemicals do you use? Do you minimize or recycle water and energy? Is your packaging sustainably sourced? Where do your metals or minerals come from? Who mined the sparkly mica in your makeup? Is there child labour? What about trafficking? What do you do to try to stop these things? It goes on…
If we don’t even know where your raw materials are from, how can we truly say we are trying to make sure we are ethically or sustainably made? It is hard enough when we do know where our products come from, right from the farm.
There are a million questions to ask as you truly get to understand the journey your products go on. The problem is that for so long people have been driven solely by price, that we have forgotten to ask what is really going on – or better – see it with our own eyes.
But customers are becoming savvier. They want someone who can tell them what is what. They want a business who they can see is truly and wholeheartedly doing all they can to fix the problems.
In practice, when you start to ask the questions, you will find you get to meet and get to know the most amazing people at all stages of your supply chain too. From first hand experience, moving out of your comfort zone and speaking to farmers, to people all over the world, to workers can make your business get out of the automated zone and truly come alive.
Stand out from the greenwashing. But how?
Research, research, research. Find the experts, talk to them, and never stop asking questions. Then tell your story, as openly and transparently as you can.
Yes, greenwashing will always go on and it is incredibly frustrating if you are doing so much to get it right. Particularly as eco or green products become more popular, more claims start to flood the market in order to take more share of the pie. We’ve seen it happen with organic or natural and we see it happening with eco and green too. Sometimes even influencers or apparent specialists in your area will grab headlines or be swayed by greenwashing and spread ideas that simply aren’t true.
The good news is that as a business you can truly standout buy showing the gritty details behind your products from farm to table, farm to finish, mine to mac or even ocean to end.
Visit your suppliers, go back in your supply chain. Talk to workers, do interviews alone with people to understand what is going on. Then really put the photos up there for people to see. If you want to stand out from greenwashing, then also be ready to admit to where you trip up. Tell your customers where you want to improve? Things you want to change as you grow? Or be honest when you find things going on in your supply chain that you didn’t like or didn’t know about. This level of transparency – I can tell you form experience – doesn’t always get noticed. But when it does, it really generates trust. We share everything on our website and let people know where we want to change and grow.
The more we openly discuss the journey of our products, who works on them, where they are, how they are created, and what measures we take to make it sustainable – the more customers start to realise the phenomenal impact their choices have on a very big world around them, every day.
As an example, did you know that 99% of Australian cotton and 95% of Australian wool is shipped offshore for the next stage of production? Why are they going offshore and what standards are they upholding? How sustainable are the parts of the supply chain that perhaps are further away or more hidden? What really is going on and how can consumers be better informed? I’m not making an argument for Australian produce to be better or worse – I believe we should support people everywhere, at home but if it makes sense and less air miles, then overseas too. What I am pointing out is that there is so much going on that we usually don’t hear about. The NSW Government even gives the example that Australian wool might visit four different countries before it reaches its final destination.
The more we start to talk about these things, the more people start to find out what is going behind the scenes. This is already driving proposed changes in standards, like better disclosure of the journey our food products truly make.
When you start telling your story, you start telling the story of the people you are connected to in your business. They might be close to you, they might be many thousands of kilometres away. But importantly, you get to meet people you otherwise never would have met, people who can tell you amazing stories and take you far behind the headlines too.
Lastly, if you need help to stand out from the crowd, get support. Become a B-Corporation, get certified by the best green, eco, human rights, organic or sustainability credentials in your area. Let your customers know what these certifications mean and perhaps how they differ to others out there. If certifications are prohibitive in cost, find ways to help your customers know the lengths you are going to. Take advantage of people Google searching for answers to draw people in to your knowledge base and expertise through your blog.
Again, we just need to explain our story better and slowly, people will support you because you truly stand out from the crowd.
Get ready for higher costs. But there can be benefits even to the bottom profit line in the end
One of the most interesting things with sustainable business is that in the long term, it can really pay off. If you are prepared to take some short term losses you can find they actually help your business become more resilient in the end.
It pays off because in becoming more sustainable, perhaps you become more efficient and minimise waste. Perhaps you become more self-sufficient by having more control over your production or even energy supplies in order to get it right. Perhaps your suppliers realize how important they are too you. They aren’t just parts of a ‘supply chain’ but real people you value for the amazing work they do. Perhaps your employees and customers become more engaged, empowered by the basic idea that they are doing great things to create change or even better – that you are asking them for advice on what they would like to see the business do.
The biggest lesson is that you must expect to pay more upfront for being sustainable (and even more if you are going to be ethical too). In my experience, we pay up to five times more than we would for products than we would in the conventional market. It is a massive hit to margins.
But there is a counter. As sustainable businesses we need to get smarter, find more meaning, be more efficient and more innovative. Which research tells us, in the long run, helps you to thrive in the end.
Start telling your customers to buy less
I’m not sure in what business textbook this is a winning formula. How as a business can you tell people to buy less? It seems like a path to true business… failure. Right?
However, draining resources and then creating massive amounts of waste from overconsumption is one of the biggest issues that we currently face. It turns out, that asking people to buy less can actually give your business a boost.
One champion of sustainability, the outdoor and active wear clothing company Patagonia has been doing just that. They look right back to the raw materials their products are made from and go to great lengths to be ethical and sustainable. They create goods that last longer in order for their customers to be able to buy less. They repair things that break, they encourage passing them on. And interestingly, the more they encourage this, the more support from customers they get.
Nudie Jeans is another brand that has long championed organic processing and buying for the long haul and repairing when need be. Even IKEA was a business who very early on voluntarily removed heavy metals and toxins from their products and later asked people to bring back furniture to reuse it instead of going to waste! As a ‘fast’ business it has its drawbacks but it is still on the path to doing sustainable things. France has gone so far as to start bringing in legislation requiring electronics and white goods businesses to declare how long they last and give guarantees to back it up. This is to stop the trend of people being sucked in to buying cheaper goods that need replacing far more often, while businesses who create things to last suffer.
As business we truly need to embrace the minimalist movement, slow down what we are doing and go back to creating products that last. Then convince our customers that we are creating true quality and ask them, simply, to buy better and buy less.
Make it for real – not for marketing. Eventually, people will see
Engagement with customers and employees is central to all we do. So if you are going to pursue a more sustainable business, start with things that are important to you. You need to focus on what you are passionate about.
If you do it just for marketing, it isn’t long before someone will pull you up. We’ve all seen how loosely a term like ‘organic’ ‘free range’ or ‘natural’ can be thrown around. You might have missed it, but Choice magazine Australia put out a request to essentially boycott egg brands they determined to be using these words without merit. I’ve never seen them put out a request like this before, but such was the scale of misleading marketing that they were compelled to do something about it.
So whatever you do, make it consistent, real and make it come from the heart.
If waste is your pet hate, start with figuring out how to design things that last, or to minimize waste in your office. If climate change gets you down, then switch to a more eco office space, use renewable energy or even start ensuring your staff are aware of places they can invest to support renewable energy too. For me, it was devastating toxicity, destruction of waterways and ecosystems and trafficking that really got to me, so I decided to fix it through business. Not just at my end, but to stop it impacting everyone my product came in contact with right from the farm. I can’t be low waste, low-tox or organic at my end and equally try to remove these issues from the environment people live and work in every day too.
Inconsistency can also hamper your efforts. H&M is a brand that is better than many at trying new ways to source sustainably. They buy a large proportion of the world’s organic cotton and they are at least transparent about all first and second level parts of their production chain. At a minimum they are reminding us that their products are more than just where they are made. However, despite their (limited) conscious clothing lines, they keep being pulled apart by sustainability experts because they are, plainly, confused.
We can see H&M are making efforts – but when it is intrinsically fast fashion and supports an industry of exploitation and waste, we start to wonder how true their sentiments can be. Now there are counter arguments here. H&M employs huge numbers of people. If their business ceased to exist, many livelihoods would be lost. There is an onus here to choose their conscious lines over their standard products too. Again, this is where you need to have the loyalty of your customers and tell your full story if you really want them to support your efforts to create a change.
Remember there will be a tipping point. Start early and you can enjoy the ride.
If you are Shell or Goldman Sachs, you’re probably going to have to accept that people will take your sustainability efforts with a grain of salt. Even when you promise to put $150 billion toward renewable energy as Goldman Sachs did late last year.
But before you think they will be opening an office in Byron Bay, think again. This is about profits as much as it is about realizing where the world is headed and the changes we need to make. It is about an opportunity to de-risk their business, participate in rising trends and ultimately, to look after the profit line too.
Which at the end of the day, is a wonderful thing. If businesses like this are willing to commit to at least one area of sustainability, this tells me that a tipping point is occurring. No longer are we relying just on goodwill, but slowly, on people’s financial interests too. This is when traction can truly happen. No matter how cynical you are of their intentions – if you are in favour of change for better, then the sentiments behind it shouldn’t matter for an impact to really take hold.
Having worked with big businesses, some of the largest companies have been planning how to manage environmental, human and sustainability risk for years behind the scenes. It will put them at the front of the pack in years to come.
If you are a small business, then do consider how you can not be left behind, but be ready when that tipping point comes too.
Revel in doing business differently and turn away from the status quo.
“If I had asked people what they wanted, they would have said faster horses” is what Henry Ford said many years ago.
When you are doing something different to the norm, don’t always expect support. You might find pockets of it, but don’t expect everyone to be singing your praises too.
If you look at the renewable energy industry in the US, it is reported to employ six times or more the number of people employed by oil and gas and it has been growing by 15% plus year on year. It isn’t just about climate change – but about energy security, reducing pollution, reducing the cost of energy and creating jobs. But, because some people are still dubious about climate change, despite all the other positives, they still hesitate to support. That doesn’t mean that Elon Musk stops creating batteries or electrical cars. Quite the opposite.
Simply put, being a sustainable business is about knowing what the world will need tomorrow.
Some of this is simple: it’s pretty obvious we need less waste.
Some of it more complicated: when is our potable water source going to dry up?
The one thing I have seen with businesses who are sustainable is that they are looking 20, 30, 50 years ahead. The world’s largest and most successful car companies were building renewable energy years ago to power their businesses and hedge against energy risk. Sustainability isn’t just about being green – it is about ensuring you can future-proof your business too. Sometimes that is about weathering a recession, sometimes it is about being resilient about rising sea levels too.
Finally, never forget that little things add up.
Deciding to focus your efforts on being a business that is more sustainable or ethical is hard. Really hard if you want to make it comprehensive and do all you can do.
It can seem overwhelming and you can be forgiven for throwing your hands in the air wondering why you would bother or if you can ever make a change.
So please remember the tiniest things can add up.
As businesses or consumers we have phenomenal power to create change. We don’t need to wait for governments to achieve this for us.
As an example, one thing I am always amazed at is when people tell me they wish governments would invest more in renewables. So do I. But people forget the power is in our hands too. We can invest our personal or business wealth in clean energy.
Where have you allocated your own pension funds or business accounts?
How do you power your business or home?
What green rating of building do you work in?
These are all ways we can individually vote for a change with our money. Very quickly, our own actions add up.
Another simple example of sustainability is the blatant need to get rid of plastic bags (or perhaps plastic anything). You can ask that suppliers don’t use them, or remove them from your own packaging, or even find ways to recycle them when the local recycling won’t take them (look it up on the internet and you will find dedicated recycling places that take all kinds of things you didn’t know could be recycled!)
As a more powerful example of how little things add up, in 2015 the UK required customers pay a tiny 5p for most single use plastic bags. By July 2016 an estimated 6 billion plastic bags had been kept out of circulation. That’s around 38,000 tonnes. This is a phenomenal impact that was had by just a simple change. Most of Australia, is time to get on board. And unlike the UK, we don’t need to wait for all of our state governments to agree (SA, NT, ACT and Tassie – hats off to you).
To be a sustainable business we need to be innovative, be forward thinking and willing enough to make these changes before governments or customers even demand we do.
The magical thing is, that when you do, you will be amazed at how quickly it starts to bring a host of unexpected benefits to your business. It may be in the added meaning it brings to your employees, your customers or your own drive. It might help you connect better with every step of your business from cradle right through to cradle again. Without a doubt it will bring you closer to your employees and customers and it will bring loads of new challenges. But most of all, you will quickly realise that we are at a point where over the long haul there is no option but to change – and no better feeling than leading the way.