Why the time is now to speed up the green transition in your company

I hear many business leaders holding back or thinking about holding back on their sustainability effort. You are missing a huge potential to cut costs and distance yourself from your competition that is occupied with looking at their energy bill.

“Newer waste a good crisis” as Churchill supposedly said. When it comes to the current energy and raw material crises and sustainability this is most certainly true. If used correctly you can find ways of cutting down costs while making a decisive move at a time when most of your competition is fully focused on the risk, uncertainty and cost of energy and raw materials.

I am NOT saying you should not focus on the cost, just that if you approach sustainability like most business leaders do, you miss a ton of opportunities.

I am NOT saying this approach is for everyone. But it is for some and that could be for you! “So who is it for?” For this purpose, I find it meaningful to divide companies into three groups.

The first group is the highly energy- or material (or both) intensive companies. In most cases, the rising cost and security of supply will, and should be, the key focus.

The second group has a more average spend on energy and raw materials but runs a business that is not hugely profitable and thus experiences a threat to their financial stability do the rising cost. In my experience these companies often have the most to gain from the green transition, namely to move from barely profitable to a very profitable and prosperous business that makes the world a better place. But in most cases, there will not be mental bandwidth or resources to do the work.

The third group are well-driven profitable businesses with an average spend on energy and raw materials. If this is you, reflect carefully on the message in this newsletter. For you, this could be a great time to speed things up.

As always it is essential that you go about it the right way and that you have the right understanding of how to work with sustainability in a business(if you want more tips on what you need to create a competitive edge using circular economy read this article your bigger Mission and this one Mapping the actual pathway. An essential thing is to use sustainability as a tool to solve meaningful problems that take up your time and energy right now. I often use circular economy as the toolbox and the essence is to look at your situation or your customer’s situation and see how a circular business solution could be a new and better way to solve the problem.

Start and end with business

You can be excused for thinking sustainability must be about sustainability. That is what most people do, and this is the first of the common five fatal mindset errors I have discovered amongst business leaders. The first component of your mindset that puts you on the wrong track.

We are so used to sustainability being seen as a mainly technical discipline. Consequently, it is often driven by people with solid environmental or technical backgrounds. But if you think it is an environmental and technical discipline, you are missing the point.

The thing is that circular economy can be used to solve a range of common business issues. Circular Economy is really a toolbox, so view it as extra layers in the toolbox for leadership, management, and business development. This is essential as it will shape how you address it, where you focus and the level of commitment from everybody in the organization.

I boil it down to this statement:

It is all about creating business with embedded environmental impact!

Notice it is not the other way around like you are used to. It is not about solving an environmental problem and getting a return on investment within a decent number of years. The starting point must be the business.

If you do that you will automatically focus on solving important problems either for you or your customers – or both. Once you have a solution to the problem and simultaneously create a positive environmental impact, then the questions about whether to scale it or not become a no-brainer. Of course, it should be scaled. So, no matter if you are in it to change the world or make your business better or prove to someone else that you are capable of doing either of these two, then this approach is the most impactful one.

Decide right now, that the starting point for how you work with sustainability going forward will be to solve a business problem. A meaningful one – one that somebody has an interest in getting solved. And then use the circular economy toolbox to find new and better ways to solve that problem while simultaneously creating a positive environmental impact. Once you find a solution for it, you will want to scale it rapidly.

That is a radically different result than what most sustainable projects end with. Quite typically the environmental project creates a proof of concept and in the end, there are some recommendations for how to scale it. But many solutions will never be scaled, as it does not really solve a business-critical problem – not for your own company, not for your customers. It might be a critical issue for us as a whole – a critical issue for mankind. But it doesn’t really matter if nobody has the willingness to buy and thus “sponsor” the solution. Such initiatives end up competing with all the other nice initiatives and good ideas on the nice-to list that we do a couple of each year.

Coming to circular economy from a business point of view and creating value from solving a problem is essential. There are a lot of different types of business value that I see companies generate through circular economy. These are some of the typical results that I see companies get again and again across industries and geography:

  • Cost reduction
  • Increased sales
  • Innovation
  • Access to new markets
  • Product development
  • Competitive Advantage
  • Ahead of upcoming regulation
  • Investor relations
  • Massive uptake in satisfaction amongst employees
  • Increase in productivity
  • Attracting valuable partnerships
  • Attracting and maintaining talent.

Hopefully, you now see that there is a clear link between the most common problems that business leaders are focusing on and the kind of outcome that working with circular economy delivers.

And once you recognize this you see that circular economy is in fact a business discipline. This is your starting point. It is about creating business results with embedded environmental impact.

For a lot of businesses right now the problem to deal with is cost reduction. The circular economy will give you new ways to look at your business setup which is a prerequisite for discovering new ways of doing things.

Simultaneously, it will put you on a track to elevate your game on sustainability and move ahead of your competition. And the market is not lowering its expectations regarding sustainability. Customers, partners and talent might accept a short temporary slow down due to the current situation, but not for long.

Address this right and you can reduce the cost you need and position yourself to be able to accelerate when the worst of this crisis is over.