August 25, 2022
In the last article of this series, we looked at the pitfalls of an asymmetric implementation of climate management and provided guideline frameworks to ensure a successful integration across all business operations. This article explains the benefits of considering business ecosystems for successful corporate climate action. Net0 provides essential support in this process. By automating and simplifying the data collection process of carbon emissions across the entire stakeholder network, the platform gives instant insight into reducing your carbon footprint.
The fact that integrating climate management leads to higher cost efficiency has been repeatedly proven. To mention concrete numbers: supply chain efficiency efforts from around 4,800 global companies that report to the Carbon Disclosure Project enabled cost savings of US $14 billion. Approaches included smarter packaging, product life cycle analyses, and circular design that saved 551 million metric tons of carbon. Furthermore, their study on 1500 companies revealed that business models with higher carbon efficiency - those that use the least amount of carbon for a unit of output— are more profitable and less vulnerable to macroeconomic risk.
Calculating growth and the profitability of holistic climate management does not rely on a simple cost-benefit analysis of inputs and outputs. Anchoring climate management into the core of the overall corporate strategy puts carbon mitigation and adaptation as equal metrics to customer and employee satisfaction in the value creation process. As the Cambridge Value Mapping Tool indicates and thought leaders of new leadership paradigms emphasize, considerable value can be captured by considering the enterprise as part of a broader closed-loop system. Otto Scharmer, lecturer at MIT Sloan School of Management and co-founder of the Presencing Institute, talks about eco-awareness in that context:
“Our society must move from ego-system to eco-system economics. This requires that we shift from ego-system silos to eco-system awareness that considers others and includes the whole.”
Carol Sanford, CEO of the Carol Sanford Institute, who leads systemic business change for Fortune 500 and new economy executives (e.g. Google, DuPont, Intel, P&G, Seventh Generation) stands for a similar approach to corporate accountability. In her book The Responsible Business, she explains the importance of managing wholes and interrelationships instead of parts and pieces:
“A Responsible Business sees stakeholders as full partners and meaningful instruments for the evolution of healthier communities and more successful businesses.”
Eco-awareness means looking at broader time horizons and the value that can be gained through positive synergy, taking stakeholder interrelationships and their quality into account. The technologies used equally count for those stakeholders. To apply whole system thinking for value creation surely challenges linear approaches to growth.
Consulting qualitative research on business model innovation for climate adaptation and mitigation strategies can be helpful in this context to understand its benefits. The case studies demonstrate through a structured and spatial representation how synergistic value can be captured by applying a business ecosystem perspective. This study excerpt below stems from an analysis of an organic agriculture firm in California, U.S., with yearly revenue of U.S. $100 million, sourcing a variety of crops from Baja California, Mexico. Adaptation action was taken for the following business inputs and categories: financial resources, infrastructure, information, and knowledge transfer. The study results showed that value-generating processes significantly improved if executives took all stakeholder needs, location-related climate risks, respective adaptive actions and a larger time frame into account. Initial and regular investments were surely needed. But it becomes clear: If business innovation for climate adaptation is based on an intelligent assessment and managed well, efforts ultimately pay off by preventing considerable profit losses that occur through an accumulation of setbacks due to non-action and stagnation (see chart: Giesen et al., 2010).
The shared valued perspective opens conventional business models to circular economy systems, resource efficiencies and strategic business networks. Thus, impactful ecosystem-level action requires systemic thinking that redefines priorities, constraints and outdated perspectives on competition.
As Dr Doroteya Vladimirova from the Cambridge Centre for Industrial Sustainability explains:
“Collaboration in business may seem counter-intuitive to competition. However, several highly competitive sectors such as automotive, furniture and FMCG are working together in order to achieve energy and resource efficiency. Companies such as Xerox, Kingfisher, British Sugar, Unilever, Marks & Spencer, Vitsoe, Toyota, Riversimple – to name but a few – are engaged in innovative and disruptive cross-sector initiatives for sustainability. These kinds of activities involve significant changes to overall business processes, resource flows and activities – both at the company and network level. The research suggests that it is helpful if those involved take a holistic approach to redesigning their business models using a ‘shared value perspective’.”
But not to sugarcoat the challenge: for SMEs, the first undertakings may surely put considerable pressure on the company’s budget, especially if conventional financial measures and time frames are used to evaluate climate-friendly practices. Thus, a preliminary assessment of benefits and actionable short- and long-term reduction possibilities is key to making the transition practicable. Otherwise, initial efforts can quickly lose traction, and employees may soon remember a company’s climate initiative as a ‘well intended, but not feasible trial’ experience. A step-by-step approach is common and even recommended.
After all, the ‘Trial & Error’ principle applies to all business and life aspects. Nonetheless, smart assessment tools, strategies and governance frameworks enable entrepreneurs to implement work systems that can add real (financial) value up from the first attempt. But what tools and work systems can ensure higher chances of instant success?
Other articles in this series:
If you would like to expand your knowledge about the successful integration of climate management, please refer to our following content:
• Are Net Zero Business Models The Future of Responsible Leadership?
• Redefining Value & Corporate Priorities For Successful Net Zero Climate Management
• Integrating Climate Thinking Into Corporate Strategy For Net Zero Business Models
• Next article: Climate-Smart Work Systems For Net Zero Companies
This article is authored by Julia Ruff - Founder & Lead Trainer of JR | Regenerative Leadership, a consultancy agency & knowledge hub for Conscious Business & Leadership Development.