Innovation: Key to sustainable future

By Tiara Anthonisz

Tiara Anthonisz of STING Consultants explains the importance of looking at sustainability within the context of a profit making business model, and not as a ‘nice to do’ initiative.

2015 saw great strides made in the global sustainability agenda, through the Paris Agreement finalised in December. This will bring about numerous changes in how individual countries and the businesses within them operate, as they work towards achieving their own targets for reducing emissions. However there has already been a change occurring, as some companies demonstrate how they can tackle social and environmental problems through their core business strategies. 

Writing for Fortune’s Change the World List last September, Michael Porter and Mark Kramer said, “Companies globally are demonstrating the radical idea that companies that tackle social problems through a profitable business model offer new hope for innovative and scalable solutions…Companies like these see societal problems as opportunities for business innovation and competitive advantage. They reveal important unmet needs that can be addressed through new or redesigned products.”

Porter and Kramer do not refer to companies simply engaging in reactive sustainability risk management – which is to a large extent what happens here in Sri Lanka. Instead, they refer to companies who are innovating new products and services which address social or environmental issues through the nature of the product or service itself. The key point is that incorporating these aspects into a profit making business model, and tackling issues through the power of capitalism, can actually result in viable solutions.

The critical component of this is innovation, which is also what’s required if countries are to achieve their emission reduction targets. Innovation is required not only in developing new products and services, but also in the mindsets of business leaders and governments the world over. 

An example of the type of thinking required is seen in Denmark, where the concept of waste has been reformulated into being a resource that can be used for further economic activity. This concept of a circular economy seems simple and is an obvious choice to solve both waste and resource availability problems.

However, many businesses still see their corporate responsibilities through a traditional lens, and transformative changes and innovation of products and services are a rare occurrence. 

Innovation takes many forms

The correct regulatory environment and incentives are important, but there is much that business can do on its own while working within the for-profit model. Innovation can take simpler forms than the circular model of Denmark, and can still result in solving a multitude of social and environmental issues.  

For example in France, plans are underway to ban supermarkets from discarding or destroying unsold food, which instead must be donated to charities or for animal feed. Some innovative businesses have foreseen practical difficulties, and have instead come up with their own solutions to the problem, such as creating new products (e.g., gourmet soups made using their unsold vegetables), which would complement the efforts set out by law. This shows how businesses can take steps to strategically combat issues and come up with viable solutions, through simple but innovative measures that surely can be replicated here.

A global drive for innovation

On the global front, the biggest names in business have taken a step further towards driving innovation, by collaborating to invest into innovative clean energy developments. The Breakthrough Energy Coalition launched by Mark Zuckerberg and Bill Gates, boasts a number of high profile business leaders including Richard Branson as investors. The Coalition was launched with the aim of providing flexible long term investment into research on innovative energy solutions. Companies and research institutes have little excuse for not immediately grabbing this opportunity to create new methods of powering the world, which can translate into profitable product or service offerings for themselves. 

Meanwhile, Unilever is crowdsourcing innovation through its ‘Foundry Ideas’ platform which acts as a hub for entrepreneurs and consumers to work together to tackle significant sustainability challenges, by encouraging the sharing of ideas and facilitating collaboration to improve on these. Issues that have been tackled so far include how to reinvent laundry so that it’s less dependent on water.

Smart Cities

To change the world for the better, innovation is not only needed with regards to products or services at an individual corporate level, but it’s also required in terms of the type of thinking policy makers should have in terms of regional or national level planning. 

Disruptive changes are required in order to make a difference, and Oslo is a good example of a city making such changes. Oslo has announced plans to shift focus away from individually owned cars, by banning all private vehicles from the city centre by 2019. Over 1000 EV charging stations have been installed around the city to meet the needs of electric vehicles that now make up 30% of all cars driven there. 

Car-free days have also slashed pollution in other cities around the world including close to home, where the weekly ‘car-free Thursday’ in Hyderabad’s IT corridor has been a resounding success. 6 weeks after its launch in August, there were nearly 10,000 fewer vehicles on the city’s roads on Thursdays, 100,000 litres of fuel saved, and 273 tonnes of GHG emissions prevented. Speaking of the program a state government spokesperson said, “We now have overwhelming evidence that such an initiative is immensely doable, brings enormous benefits, and, in the end, is a cool and fun thing to be part of.”

This is the type of open and forward looking thinking that’s required if national economies and the businesses that constitute them are to make transformative changes for the betterment of society and the environment.

The changing climate of Sri Lanka

We have seen significant changes in the socio-economic climate of Sri Lanka within the past year, and with it, a gradual move towards combating some of the dire sustainability issues that we as a nation face. 

Waste has been a problem to which we have struggled to find viable solutions, but there are now plans in place to introduce regulations banning polythene usage. While being a welcome relief for our waste issue, this is also an opportunity local businesses can take advantage of, by developing innovative new environmentally friendly products to replace non-biodegradable polythene packaging. 

A recent offer by a finance company to lease solar panels with which to charge the electric vehicles also available for lease through them was an excellent example of a local company combating sustainability issues through its product offerings. The Government’s surprising move to increase taxation on electric vehicles is a hindrance to the progress this could have made, but it brings to light the importance of collaboration in order to come up with the best long-term solutions to our problems through sustainable national strategies. 

Together with the positive outlook that we see amongst our citizens, particularly in Colombo, we also now see a rise in entrepreneurship particularly within the 20-35 age group. These start-ups are largely characterised by innovation or innovative thinking, and with millennials generally being idealistic individuals who want to make a difference in the world, we see that many of these ventures seek to address social or environmental issues. There are now many small ventures operating in Colombo, who aim to put good use to waste items by converting them into up-cycled fashion, homeware, or other products. If small one-person businesses can take such leaps in terms of thinking outside the box towards addressing social and environmental needs, then so too can big corporates. 

It’s important to remember that innovation and green business does not have to be just a small subset of the local economy, but it can actually become a key driver of the economy as a whole

Conclusion

While significant progress is being made amongst the start-up community of young entrepreneurs here in Sri Lanka, as well as amongst businesses in other parts of the world, large corporates here are yet to make radical changes to their business strategies through re-imagining their product and service offerings in order to address various social or environmental needs. There is much room for improvement and room for innovation in order to change the current product portfolios of companies and link them more closely to sustainability objectives that have now been set out nationally, as well as globally. Big corporates in Sri Lanka must take immediate steps to update their thinking and strategies – they can and must compete with each other to change the world.

(The author is the Head of Strategic Corporate Responsibility at STING Consultants. She holds an MA in Corporate Social Responsibility from Nottingham University Business School and a BA in Economics from the University of Nottingham, UK and can be contacted on [email protected]).