Businesses across the world embrace sustainability and work on meeting the criteria for clean, fair, and regenerative practices. But the fundamental question remains - can a business be sustainable and generate profit? With sustainability becoming not only a nice addition to the main company’s vision but also a requirement for a business to receive financing and attract customers, more organizations try to combine green initiatives with profits.
The issue will only become more relevant in the upcoming years, as the European Union Green Deal aims to reduce the EU carbon emission to neutral by 2050. However, to achieve positive results, M Wallace Green, Founding Partner at ActNow Ventures emphasized the need for a collective shift in the mindset of business owners and consumers.
“We have a collective mission until 2050 to reach carbon neutrality, which is 30 years away. We have a target to achieve an objective, which is to become climate neutral as an economy. And I see that as a 30-year journey, and now we have a ten-year target for a 55% reduction in carbon.” Mr Green continued saying, “It’s not about just not doing harm, but we have to undo and fix the damages that we've caused because it's not enough to just stop.”
Although each individual effort matters, businesses and big manufacturers can make a significant difference faster. Fintech and Sustainable Innovation center Rockit hosted a discussion about sustainable and profitable business and what it takes to achieve both.
What it means to be a sustainable business
Sustainable business is a multifaceted term composed of the company’s mindset, people, goals, customers, and actions towards the better good of consumers and the planet. M Wallace Green describes the sustainable business as “a company whose business model co-exists within the harmonies of society and nature.”
Jovita Tamosaityte, CEO & Founder at Impactful, added that a sustainable initiative starts with three main pillars: people, focus, and action, “How does our product or service contribute to society? Are we solving real problems that people need, or just creating overconsumption?”
While some believe that to achieve sustainability you need to start small, Simon JD Schillebeeckx, Co-Founder and Chief Strategy Officer at Handprint Tech and The Global Mangrove Trust says that even in today’s market there’s no business that’s 100% sustainable. And that should motivate business owners and associates to change the whole market ecosystem to be restorative and more in tune with our environment and nature.
“We need to have businesses that are fundamentally restorative. We have done so much damage to our natural ecosystems that even being sustainable, which basically means not doing any harm is not good enough,” explained Simon JD Schillebeeckx.
He emphasized that a business that is restorative and in tune with the environment benefits everyone, and thereby it should become a goal to achieve this state instead of just being partly sustainable. “We have to create businesses that have a primary goal to create public goods. Value for everyone and succeeds in appropriating part of that value so that they can be profitable. And for me, that is really what the future of sustainability is. We need something that is much more ambitious than just sustainable.”
But goodwill alone can’t achieve fast and sure results. Companies need to embrace a full transition, while governments and regulators support it with incentives and financing.
3 trillion euros to support green initiatives
All efforts should be taken into consideration to achieve greater goals and lay the groundwork for fully restorative and sustainable activities. However, a lot of established companies are afraid of sustainability because it means change and transformation, which can be expensive.
However, if the organization is still in its early stages, Mr. Wallace Green believes it can benefit from being sustainable because nowadays, financing is more focused on supporting green activities, moving traction towards sustainable businesses.
“There is 1 trillion euros in the Green Deal that the European Union is going to unleash on the European economies. The European Union is putting forth nearly 2 trillion euros to promote the economic recovery post-COVID. Now there’s going to be some overlapping across that 3 trillion euros, but that’s three really good reasons to start a business and to take advantage of that wind, catch your sail and do something.” told Mr. Wallace.
3 trillion euros is a significant amount, and many business owners are tempted by governmental incentives. However, to qualify for the financing, it’s not enough just to call your company sustainable, the whole organization needs to change from the core and develop based on a new mindset and goals.
Challenging transition to sustainability
If the company doesn’t have the basis of sustainability, the transition will be complicated and shift the company’s position in the market. However, according to Henrik Wagenius, Founder & CEO at Eucaps Ltd, businesses that were developed with sustainability in mind or those that integrated it into their strategy will only need to enhance sustainable initiatives and push the organization towards them.
“Is there an easy solution for a company to become sustainable if that’s not the basis for the company? No. There’s no easy way. The only easy way is to rethink what you’re doing and to try to focus on what parts of that you can enhance or take out or skewer your business towards.” added Mr. Wagenius.
Transition to sustainable practices is more challenging for large enterprises, raising the risk of greenwashing (a term used to describe an activity when a company or person position themselves as green and sustainable while doing a small fraction or nothing to achieve it). According to M Wallace Green, even though there are and will be companies that use sustainability to manipulate market advantage, in the end, genuine and actionable initiatives will gain a bigger market share.
One of the most significant accelerators during the transition is employees. “Venture capitalists typically look for the area where you have the cool kids with the smartest ideas,” said Mr. JD Schillebeeckx. More and more talented people move towards sustainable business because it has tons of opportunities for young entrepreneurs to flourish.
However, Simon JD Schillebeeckx believes that every business can meet the transformation if they change their mindset. According to him, the first step for a company to embrace sustainability and generate profit is to change the way it sees sustainability, and answer the question: “does sustainability become a limitation or driving factor?”
“Sustainability is understood as a constraint that limits the potential. What makes you successful as a company is driven by lots of different things that can drive that success, sustainability being one of them. So if you consider sustainability in your corporate lives, anything in your equation, it can increase the size of your potential profits because there is value now and consumers care about as governments care about this.” explained Mr. Schillebeeckx.
Sustainability has been on the radar for decades, and now we are on a threshold to a mass transition to greener and restorative business practices. While there’s plenty of room for improvement, changing consumer needs and new generations are already ahead of the process and might determine the success of it. But to transition to green initiatives, large organizations and developing businesses need to change their mindset and use sustainability as their driving force.