Rethink Sustainable Business (5 of 7) Accelerators

Warm welcome my friend to this seven-part series, where we answer:

How can businesses accelerate their profits by building a better world?

In Part 4 we looked at business model innovation. This time we’ll cover the two first accelerators (technology as well as metrics and disclosure). Let’s explore.

Technology 3.0: What is most important?

NEW WAY OF THINKING ABOUT TECHNOLOGY: As an Industry Leader 3.0 we recognize technology as a powerful tool, which we leverage to accelerate our net-positive business model for better impact and value.

THE POWERFUL TOOL
Today, technology is embedded in every aspect of our lives, delivering huge benefits in terms of speed and accessibility. Technology is evolving at an exponential breadth, depth, and pace — catalyzing entire systems.

But, in all this it is important to recognize one thing: technology is just a tool. It can accelerate sustainable business models — as well as unsustainable ones. To illustrate this, a pair of glasses with two special lenses are useful: net-zero in technology and net-positive by technology.

1. NET-ZERO IN TECHNOLOGY
This is making the technology itself sustainable through green software solutions and by eliminating the side-effects of technology, such as data pollution, cyberbullying, and built-in bias or discrimination in the use of artificial intelligence.

2. NET-POSITIVE BY TECHNOLOGY
Here technology is leveraged to accelerate net-positive impact, such as boosting the business model, and building trustworthy ecosystems where privacy, transparency, and fairness are valued.

From an emissions perspective, Information Communication Technology (ICT) today account for up to 4% of the global footprint and is estimated to increase. However, this sector simultaneously has the potential to positively impact all other sectors with their 96% footprint; a 96% handprint opportunity window.

Net-positive innovation starts from the business model. Technology is then leveraged like a supersonic Swiss army knife to accelerate great customer value and net-positive impact aligned with the Global Goals.

TYPES OF TECHNOLOGY
Technologies are exponentially emerging nowadays and broadly fall into three types that have the potential, scale, and pace to accelerate Business Models 3.0: biological technologies, physical technologies, and digital technologies. Let’s look at them and how they might be applied for sustainability purposes.

1. BIOLOGICAL TECHNOLOGIES
They utilize biological systems, living organisms, or biological processes to develop products. Examples include:

Bioenergy is a form of renewable energy generated when burning organic materials such as harvest residues and organic waste.

Bio-based materials are materials intentionally made from substances derived from living organisms. From a sustainability perspective they are great since they biodegrade.

Genetic engineering is the modification and manipulation of an organism’s genes. It can for example be used to fight crop diseases instead of using harmful pesticides, such as in organic agriculture; a farming system that strives for sustainable agriculture.

Precision fermentation produce ingredients with similar properties found in regular foods. It is a low-cost process compared to using animals or crop fields to produce foods.

2. PHYSICAL TECHNOLOGIES
They are based on basic properties of materials, energy, forces of nature, and their interactions. Examples are:

Robotics involves using robots to, for example, clean the world’s waterways, transporting people with autonomous road vehicles, and drones delivering medical or nutritional supplies to remote areas; reducing road transport of people and goods. Robots can also perform jobs that only people could do previously, such as social care.

3D printing creates physical objects from digital design to, for example, reduce transportation of physical objects and its emissions. It is now possible to manufacture everything from concrete to biological tissues.

Internet of Things (IoT) is the key to turn products, machines, facilities, and other physical things into digital assets. It can enable more efficient farming, waste, water, and energy use.

Energy harvesting converts energy in its environment to electrical energy to, for example, power wireless devices directly and sustainably.

Renewables is naturally replenished energy collected from, for example, sunlight and wind.

Nanotechnology is about manipulating atoms and molecules at nanoscale to, for example, purify water and reduce emissions.

3. DIGITAL TECHNOLOGIES
They are based on communication, computer, and electronics sciences. Digital technologies can align entire ecosystem and enhance virtual collaboration to find innovative and scalable solutions that address green opportunities. These are the ABCDE’s:

Artificial Intelligence (AI) simulates human intelligence in machines. AI can allow for more efficient and effective production and consumption at a scale and complexity that is beyond existing approaches. It can, for example, enable intelligent grid systems to manage the supply and demand of renewable energy.

But AI is nothing without Big Data. The exponential increase in data is helping AI drive innovation, solve complex problems, and provide net-positive products and services.

Blockchain is a distributed system that records information in a way that makes it difficult to change, hack, or cheat the system. One big enabler with blockchain is trust, such as through transparent supply chains with end-to-end traceability.

Companies can uncover insights to build more sustainable organizations. Customers can verify sustainability claims by companies and trace the origins of product resources.

Cloud is on-demand availability of digital resources, without having to manage the physical infrastructure. Cloud can, for instance, reduce emissions by a whopping 98%.

Digital Twins are virtual representations of physical systems or products from real-world data, such as buildings. With digital twins you can explore a wide variety of sustainable innovation options with simulations and 3D modelling long before releasing, or even producing, the product. This helps inform decisions around optimal resource utilization, efficiency, durability, and safety.

Extended Reality (XR), such as Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR), are immersive technologies that enhance user experiences by either going all-in on the virtual experience or blending the virtual world and real world together. XR can be used for immersive and experience-based learning about any of the Global Goals, such as poverty, climate change, and gender equality.

And then there’s the metaverse.

THE METAVERSE
Many believe the metaverse to be the next big thing, comparable to the creation of the world wide web. In the US alone, $8 trillion is seen as a metaverse business opportunity. 25 of 100 people are estimated to spend at least one hour in the metaverse by 2026. 79% of people active in the metaverse have made a purchase.

Despite these figures, the metaverse is still largely a concept where everyone seems to differ in their interpretations and predications. It might:

• Be the intersection of ecosystems and the convergence of most, if not all, the technologies mentioned; the next level of today’s internet.
• Allow people to engage in real-time three-dimensional interaction and experiences — unbound by physical constraints — blurring the line of our physical and digital lives.

METAVERSE AND SUSTAINABILITY
As the metaverse is still mainly a concept, it is mostly speculation of how it might impact sustainability.

Some potential ways include:

• Net-positive city development, using smart city digital twins, virtual stores, and living labs.
• Reducing physical travel needs and increasing the efficiency of communication and collaboration.
• Leading to increased energy consumption and the generation of electronic waste.

But all these things we can already do and impact us today; whether it is called metaverse or not.

THE MOST IMPORTANT THING
Technology is one of the great drivers of human development and can fundamentally change everything.

But, again, it’s not about looking at technology and asking what the sustainable application is. Rather, the question is: 30 years ago, the internet had yet to be born, and sustainability was not even a coined expression; 30 years from now, how do you want the world to look like — and how might you leverage technology to accelerate that future?

HP (Hewlett Packard), for example, are a technology company born of the belief that companies should do more than just make a profit. They should make the world a better place.

The most important contribution we can do is to use technology as a tool to better impact planet and people.

For the challenges and reasons here, what will make people gain trust in your net-positive efforts?

Metrics & Disclosure 3.0: What is the current state of your net-positive impact?

NEW WAY OF THINKING ABOUT METRICS AND DISCLOSURE: As an Industry Leader 3.0 we recognize disclosure as a brand builder and profit as the effect of the better value we provide people and planet.

THE TRANSPARENCY ADVANTAGE
The idea of only considering financial (quantitative) metrics is outdated. Non-financial (qualitative) indicators are now expected to sit along-side financial indicators in annual reports and be aligned with financial strategy.

For Industry Leaders 3.0 credibility is key. Measuring and analyzing their negative impacts to reach net-zero and producing annual impact reports is seen as a hygiene factor. The differentiation lies in transparency about their non-financial metrics and net-positive ambitions and progress.

With stakeholder expectations, the days covering up unsustainable efforts or outcomes by creative marketing, greenwashing, and branding are over. Transparency no longer is an option.

Honest, transparent, and ethical communications resonate best with people. Companies who are trusted by customers also see annual growth rates of over 10% on their top and bottom lines. Not only that, but as Yvon Chouinard and Vincent Stanley notes from their time at Patagonia in their book The Responsible Company, is that in a downturn people do business with fewer companies — and they do it with those they respect and trust most.

It’s not only customers. More than ever investors are demanding transparent, traceable, and quality sustainability data from companies. Larry Fink, CEO of the world’s largest asset manager Blackrock, in his 2020 letter to CEOs, called sustainability their new standard for investing.

This calls for open, clear, and measurable metrics that align the company and its stakeholders.

BEING A SOLUTION PROVIDER
Most frameworks or methodologies for measuring today use an accounting approach that allows organizations to track their own emissions (scope 1–3), without understanding how their products and services lead to avoided emissions in society (scope 4–6).

This incentivizes leaders to focus on cost and risk reductions; holding back development of innovative solutions that have a far greater impact on avoiding emissions across the planet for net-positive impact.

What is vital then is to not only be a problem mitigator but, more than anything, a solution provider that measures product opportunities for $12 trillion green revenues.

DON’T WORRY, BE HAPPY
What is measured matters — but differs between the companies’ contexts and ambitions. However, some similarities are universal, and it all ends up in: Happy Finances = Happy Customers x Happy Employees x Happy World

HAPPY FINANCES
To understand if you’re on a good path to improve the world or not, then financial health is important. The profit and loss (P&L) statement is a good indicator of that, with green revenues per active customer.

HAPPY CUSTOMERS
The company of course needs finances to breathe, but without customers and investors, you will sooner or later run out of oxygen. Measuring market share, customer satisfaction, customer life-time value, referrals, and investor parameters are therefore essential.

HAPPY EMPLOYEES
Equally, to provide that value in a qualitative, compliant, and speedy fashion, the company will want to measure Lean metrics (such as flow-efficiency and lead-time), employee satisfaction and net-positive capability as well as the increase in innovation and learning. Without that backbone, the company skeleton will crumble.

HAPPY WORLD
Look at the full range of impacts. How is your impact in sustainable sourcing and gender diversity in company total, senior management, and board of directors? How far have you come measuring your negative impacts (dematerialization percentage of products, decarbonization progress to net-zero, biodiversity, water use, human rights, bribery and corruption incidents, health and safety) and positive impacts (regenerative impact on nature, avoided emissions in society, improved citizen impact and well-being) through scope 1–6, the 17 Global Goals, and their 169 targets?

All-in-all, make metrics fact-based, evidence-based, and quantifiable. Absolute metrics are non-negotiable here. Relative metrics are useful for comparison purposes.

SCIENCE-BASED TARGETS
Science-based targets are crucial. Aligned to planetary boundaries they provide a clear evidence-based path for companies to reduce emissions and future-proof business growth.

Creating policy and business metrics aligned with science, such as 1.5°C compatible solutions, is something sustainability investors want to align with to enable the greatest impact.

WITHOUT DATA YOU’RE JUST A PERSON WITH AN OPINION
Leverage data. It is the new oil. For good reason. Data fuels the potential of emerging technologies to trigger anticipatory insights that leaders can profit from; essential to understand if a company is bettering the world, their organization, and their bottom line.

Only tiny parts of data are useful. As Geoffrey West clarifies in his book Scale, without a framework you might get lost, or even worse, draw the wrong or damaging conclusions. Know your baseline and system boundaries and identify who is contributing to what impact in scope 4–6. Then from a well-understood and well-tested framework build supportive digital platforms of feedback-driven intelligence to track and collect accurate, reliable, and real-time data aligned with your metrics. Analyze for insights to facilitate faster and better-informed business decisions.

MEASURE TO MANAGE
Integrate the metrics into everything the company does. Ensure that they are pursued, tracked, and disclosed through adequate forms of incentives, accountability, and support.

Microsoft, for example, are measuring and disclosing their net-positive efforts for 2030; carbon negative, zero waste, and water positive.

IMPACT AS BRAND
Brand is powerful as it marries company and customer identities. Brand is usually included in strategy but has not been mentioned until now. That is because brand is built on trust and credibility, which is highly dependent on transparency.

Leaders can shape their narrative with a clear articulation about the potential for long-term value of a net-positive businesses to get stakeholders onboard. But in the end, it will boil down to outcomes and disclosure. For this reason, let your actual impact tell your story and be your brand. Imagine what will happen when the world starts valuing your impacts more than your ambitions and actions. That day is soon upon us. Better start now.

Trust and the AHA model are all about people. We started with purpose and will now finish with purposeful people co-creating for net-positive impact.

See you in the next one.

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