Corporations have both internal and external drivers that incentivize and facilitate the journey into becoming actors that create a positive impact. Internally, corporations need to align their purpose, adopt a long-term mindset, and embrace new ways of production and consumption. Externally, regulation, investors' interests, and changing consumer preferences play crucial roles in shaping corporate decision-making. By understanding and leveraging these drivers, corporations can prioritize decisions that lead to a sustainable and regenerative future.
Internal Business Drivers:
Purpose: Purpose is vital for corporations on the regenerative path. Without genuine motivation, sustainability and regeneration are elusive. Purpose can stem from personal revelations or long-term opportunities. Without purpose, green practices miss the potential for change. A deeper purpose aligns individuals, driving actions towards the vision. Corporations become active actors, generating positive impacts with a clear vision
Long-term Mindset: Shifting from short-term to long-term thinking is crucial for sustainable transformation. Quarterly focus blinds corporations to long-term impacts. Prioritizing tasks aligned with larger goals shapes the future. Assessing individual actions' impact and alignment with purpose is essential. A long-term perspective enables effective navigation of the regenerative path."
Ways of Production and Consumption: To achieve sustainability, corporations shift from linear to circular systems. Circular models, inspired by nature, aims to eliminate waste by transforming products into nutrients for other processes. Today, global value chains are fragmented, with limited consideration of externalities. Embracing circularity involves accountability and responsibility for production among all value chain actors.
By understanding their competitive position, corporations can incorporate sustainability principles at every stage of the value chain. A long-term competitive advantage lies in adopting circularity and minimizing waste generation. It is essential to recognize the interconnectedness of actions and prioritize initiatives that create a positive impact throughout the value chain.
External Business Drivers:
Regulation: Global environmental protection frameworks are increasing. Unlimited economic growth has harmed the environment, requiring awareness, taxation, and regulations. The European Green Deal and carbon taxes impose stricter rules on corporations. Adapting to changes is crucial to avoid risks and sustain businesses. Regulatory systems should consider broader impacts beyond short-term profits.
Investors' Interests: Economic incentives drive corporate transformation. Sustainable finance and ESG standards reduce risk, attracting investors. Events like Covid-19 expose links between ecology, inequality, and economic fragility. Investors align investments accordingly. To access resources, corporations must comply with ESG standards, fostering pressure for sustainability transformation.
Changing Consumer Preferences: Consumers increasingly prioritize sustainability, impacting brand trust and competitiveness. Educated and demanding, they seek products/services that align with standards. Traceability is sought, and preferences change if expectations aren't met. This external pressure urges corporations to transform practices and embrace sustainability
Another key instrument for transformation is public opinion. In the past, public opinion lacked critical reflection, allowing environmentally negligent companies to thrive. Recognizing the need for environmental standards required sustainability advocates, which incurred additional costs. However, as public opinion shifts, sustainability becomes a central concern. The demand for transformation rises, outweighing the cost of reputational risk.
Internal and external drivers are interconnected. Commitment fosters creative solutions. Corporations have a responsibility to seek alternatives, proposing environmentally-friendly ideas to the market. They must rethink products and services until harm to the environment is minimized. This simultaneous economic growth and environmental healing require bold and challenging approaches.
Trade-offs
Leaders seek opportunities that benefit themselves and others. They explore new ventures, needing experimentation spaces for success stories. The corporate environment is shaped by trade-offs, and strategy involves navigating them. Business models create, generate, and capture value, including the unique value proposition that engages clients and employees. It reflects a corporation's purpose and desired impact, providing tools to operate and withstand external forces.
Understanding mission protection and impact measurement is crucial for achieving objectives and competitive strategy. To prioritize sustainability in trade-offs, meaningful reasons must guide decision-making. Environmental concerns lead to trade-offs, where one path may benefit at the expense of others. Analyzing unintended consequences and implementing measurement systems allows for adaptation and iteration.
Written by Carmen Escobar https://www.linkedin.com/in/carmenescobar3/