The Next Smart Sustainability Idea: A Net Positive Impact Business
<p>Going beyond what is currently the leading edge of sustainability to a strategy that puts people and the planet at the heart of operations is going to be the key to survival in the 21st century, and a few smart companies are leading the pack.</p>
What if two guys got up in front of a room full of people and announced that they are developing green products, but they won't ever call them green? What if someone told you that they are able to transition developing countries into the low-carbon green economy, by just changing how they make batteries, or that it is possible to be more profitable by using fewer resources and telling customers to consume less?
Well, those are just some examples of what I heard at the GreenBiz Forum in San Francisco last week, so maybe what I suggest as the next smart sustainability idea isn't so crazy. Companies can build leadership, competitive advantage and performance by adopting a Net Positive Impact (NPI) target that combines state-of-the-art avoidance, mitigation and conservation actions that ultimately support healthy, sustainable economies; promote human welfare; and protect the natural resources we need to thrive.
Certainly the world demands such an approach. The U.N. estimates that the world's population will grow by a billion people every 12 years and reach 9 billion by 2050. With this population explosion, we are doubling our demand for food, water and energy -- and bringing newer, greater demands on our dwindling natural resources.
The 2012 State of Green Business report also notes that the environmental impacts of the world's largest companies continue to rise. Four sectors in particular -- utilities, food & beverage, basic resources (such as timber and mining) and oil & gas -- are responsible for 65 percent of the roughly $1.2 billion in impacts.
The publication The Economics of Ecosystems and Biodiversity (TEEB) for Business and Enterprise calls on business to embrace the concepts of Net Positive Impact and No Net Loss. Establishing such a goal will allow companies to seize upon the myriad of opportunities to hedge risk against volatile commodity prices, ensure a sustainable supply chain for strategic materials and appeal to a new generation of consumers demanding sustainable products.
Rio Tinto was one of the first companies to take on an NPI approach on biodiversity. The company's NPI framework focuses on avoidance, mitigation and offsetting the negative impacts of its operations. This goal set a benchmark within the mining industry and with other extractive sectors that other companies are now aspiring to emulate.
Several companies have perhaps directly or indirectly started developing approaches towards NPI. Good examples of these efforts include:
• The Consumer Goods Forum, an independent global network of retail and manufacturing companies, is showcasing its ability to develop standard approaches with members through its intention to mobilize its collective resources to help achieve zero net deforestation by 2020.
• Walmart, noting that 90 percent of its GHG emissions come from its supply chain, has begun an initiative with Earthster to create an open data commons for product designers, manufacturers, suppliers and sustainability experts looking for current information on materials, energy, water, social and climate impacts throughout the product life cycle.
• The apparel company Puma is developing an Environmental, Social and Economic profit & loss statement that will assess the benefits of their business against their environmental and social costs. It will be interesting to see what is required to translate this to a net positive impact.
On the policy side, the European Union is also trying to determine how this idea will play out as part of its E.U. Biodiversity Strategy to 2020. They have established an E.U. No Net Loss initiative to begin in 2015.
Responding to the call for NPI will require the design of a portfolio of strategies on the ground, creation of new tools, and ultimately, a standardized approach. Integrated reporting is one step forward in the right direction, offering a model for linking an organization's strategy and financial performance to the social, environmental and economic context in which it operates. Rio Tinto continues to look for ways to improve its implementation of the strategy on the ground. This is one area where employee engagement can play a large role.
The growing trend in corporate ecosystem valuation will also provide better data/information to help companies establish and meet an NPI target. Companies can better assess the deep and resounding efficiencies required throughout the supply chain, effectively target investments in high risk areas (e.g. raw material sourcing), and marry two critical strategies -- sustainable production practices (the optimum use of resources to maintain the planet's valuable goods or services) with the growing movement in sustainable consumption.