Can companies grow, and profit, with no impact?

One of the Big 4 accounting firms has been noodling the idea that we can create an economic model "that allows 9-10 billion people to live in harmony with nature and in well-being." One might reasonably conclude that they've been sniffing a little too much red ink.

That's not the case. Indeed, the folks at Deloitte couldn't be more sober, or more serious. They're envisioning a world in which "a new bottom line would arise, not allowing economic success on the back of nature and society."

Welcome to the brave new world of Zero Impact Growth.

A new report, from Deloitte’s Netherlands office, researched 65 companies in 10 industries on their readiness for a “green and inclusive economy.” The Zero Impact Growth Monitor 2012 (PDF) reveals that only six of those companies — Puma, Nike, Nestlé, Unilever, Natura and Ricoh — “have reached a level on which they are ready to take radical steps to transform their industries.” The majority of the companies “are still vague about their strategic growth ambition in a world where ‘growth as usual’ is not an option anymore.”

The report also reveals four key gaps that decrease the ability of companies to move forward in their sustainability journey:

  • Comparability gap — a lack of consistent definitions and descriptions that companies use to explain their sustainability efforts in the various components examined.
     
  • Implementation gap 
— a wide discrepency of implementation effectiveness among companies that have proposed ambitious sustainability strategies.
     
  • Balance gap
— an overall tendency that environmental goal-setting is more consistent than social goal-setting in supporting overall strategies, primarily because it is easier to monetize environmental benefits and, therefore, easier to assess their contributions to overall economic success.
     
  • Gaps in and between industries
 — while the research focused only on the so-called “leading companies,” there are still considerable differences, even within the same industry.

That last point is noteworthy. Said Deloitte: “We have seen the biggest gaps in some of those industries that will see the highest EBITDA loss in case of the internalization of additional external costs.” In other words, the companies that could face the biggest hits to their bottom lines if they are required to account for their environmental impacts are some of the sectors least prepared to do so.

Next page: More questions than answers