By: Michael McQueen
The need for environmentally sustainable moves in business has been common knowledge for years. However, while many businesses have implemented changes and strategies to address this, many others have been held back by the need to maintain profits and ROI.
Despite common fears of the financial unviability of sustainable practices, responses of consumers to environmentally conscious businesses speak for themselves. According to the Harvard Business Review, over forty academic studies have found a positive correlation between operating with strong social values and financial performance.[1] Assets in US funds that aim to produce social or environmental benefits alongside financial returns grew fourfold to $12T over the past decade.[2] In a recent Morgan Stanley survey, 61% of Millennials reported making at least one sustainable investment decision within the past year and 75% expressed a belief that their investments should make an impact to reverse climate change.[3]
As recently as last month, changes in the industry mark the ever-increasing business moves and consumer demand for character and conscience in the corporate world. On the 14th of September, a new member of the National Market System was launched, this being the Long-term Stock Exchange. This new sector of exchange connects socially and environmentally conscious public companies with potential investors. With the aim of enabling businesses to align their long-term social and environmental goals with their short-term goals of ROI, this industry move signifies another milestone in the relationship between business and environment.[4]
While the financial motivation for sustainability is there, many businesses are unwilling to sacrifice short term ROI for building profits and a customer base over a longer term. Interestingly, the financial concerns that hinder corporate moves to sustainability are often the same ones that hold leaders back from making moves in innovation. What trends of the last year and the year to come are revealing is that these areas have now combined to produce a brand new motivation for business to make serious moves in both of these areas.
Leaders are referring to the ‘Fourth Wave of Environmentalism’, that is, the current wave we are in which is engaging with the capabilities of technology to grapple with issues of sustainability. Technologies including data analytics, AI, automation, sensors and blockchain all feature in this Fourth Wave, offering innovative and financially viable options for facing environmental challenges.[5]
The reduction of waste is a benefit greatly enabled by the integration of automation, AI and robotics in the production and distribution of businesses. These technologies’ capabilities in efficiency and predictability do not just empower businesses in terms of cost but also in terms of waste and energy consumption as the human error factor and the inevitable imprecision of the human hand compared to the robotic are eliminated.
In a move that brings it even greater appeal to its Millennial market, Apple, by 2018 was powered entirely by renewable energy. Facebook also has goals to be 100% powered by renewables within the near future. Google is the world’s largest buyer of renewable energy and has been using AI to reduce its consumption of energy in data centres.[6] The innovative technology required to achieve these aims, while harbouring an element of risk, keeps businesses at the cutting edge while dealing with some of sustainability’s greatest problems.
Innovating in the field of freight and shipping is often simply attributed to the businesses aims of reduced costs and greater efficiency, but Amazon and IKEA have implemented this innovation for environmental purposes as well. With Amazon investing in 10,000 driverless trucks, it has both cut expenses as well as reducing emissions.[7] On top of this, Amazon is aiming to have half of its shipments be carbon neutral by 2030 and claims to have cut waste in its packaging dramatically in recent years.[8]
The world of data raises many concerns, most of them related to privacy, but some of the less prominent fears in this area are those around energy consumption and carbon emissions. The information and communication technology sector in 2018 accounted for 2% of global carbon emissions.[9] It is only on the rise. As a sector known for its innovative technology and certain in its future, it is a fair expectation to hold it to high standards of sustainability.
Data is essential for businesses attempting to boost efficiency while also moving forward for the environment. At UPS it is being used to optimise the routes taken by drivers who typically make 120 deliveries a day. Choosing the most efficient route from the countless combinations is near impossible for the human mind, so the company is using data to calculate it, reducing both costs and emissions simultaneously.
Beyond this, machine learning also offers opportunities to cut costs as well as carbon footprints. By predicting wind output, machine learning algorithms are enabling greater efficiency for Google’s wind power. Machine learning is also used to measure water quality and waste in the energy industry, giving businesses ample opportunity for faster and more precise responses to related issues.[10]
Data analytics also provides businesses the predictive capabilities to alter their strategies with the knowledge of their long term effects both economically and ecologically. Predicting emissions, waste and broader climate change, data gives businesses the ability to make the changes before it is too late.[11]
Measurements such as these are expanded in capability by the more frequent use of sensors which enable businesses to quickly and clearly understand the progress and impacts of their production. An example of this is the oil and gas industry’s monitoring of their use of methane, which has now enabled them to form strategies for reducing emissions in partnership with the Environmental Defense Fund.[12]
While recent have years have seen the financial motivation for environmental business moves arise solely from consumer demand and pressure, technological developments are now providing a new motivation which allows financial gains to be made in the environmental moves themselves. The goals are no longer mutually exclusive and within the world of business in the Fourth Wave of Environmentalism, it is clear that a smaller footprint leaves a greater impression on the opinions of consumers and on strategies for the future of the planet.
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[1] Keohane, K. 2016, ‘The Case For Purpose Driven Brands’, Branding Strategy Insider, 9 September. [2] Edgecliffe-Johnson, A. 2019, ‘Beyond The Bottom Line: Should Business Put Purpose Before Profit?’, Financial Times, 4 January. [3] 2019, ‘How Millennial Ethics Are Reshaping Fintech’, CB Insights, 27 March. [4] Field, A 2020, ‘Just Launched: Long-term Stock Exchange for Companies Building Lasting Impact for All Their Stakeholders,’ Forbes, 28 September. [5] 2019, ‘Business and the Fourth Wave of Environmentalism’, Environmental Defense Fund, 26 October. [6] 2019, ‘Business and the Fourth Wave of Environmentalism’, Environmental Defense Fund, 26 October. [7] Murray, T 2019, ‘Applying Technology To Sustainability Is A Win-Win For Business And Profit,’ Forbes, 26 October. [8] 2019, ‘Business and the Fourth Wave of Environmentalism’, Environmental Defense Fund, 26 October. [9] 2019, ‘Business and the Fourth Wave of Environmentalism’, Environmental Defense Fund, 26 October. [10] Murray, T 2019, ‘Applying Technology To Sustainability Is A Win-Win For Business And Profit,’ Forbes, 26 October. [11] 2019, ‘Business and the Fourth Wave of Environmentalism’, Environmental Defense Fund, 26 October. [12] Murray, T 2019, ‘Applying Technology To Sustainability Is A Win-Win For Business And Profit,’ Forbes, 26 October.Article supplied with thanks to Michael McQueen.
About the Author: Michael is a trends forecaster, business strategist and award-winning conference speaker.