HÅKAN NORDKVIST, who manages sustainability innovation at the IKEA Group, told a fascinating story recently. He was taking part in a panel discussion on the stage of the Grand Hotel’s elegant Winter Garden in Stockholm. In the audience were 150 business leaders, policymakers, and experts eager to hear the latest thinking about sustainability and business.
As Nordkvist explained, IKEA is now deeply involved in transitioning its energy supply to renewable sources. The company owns about 140 windmills and has installed more than 550,000 solar panels on its buildings around the world. By 2020, IKEA plans to produce more energy than it consumes, contributing to global sustainability while making IKEA more competitive.
What caught my ear was Nordkvist’s comments about a discussion in IKEA’s boardroom. When asked about the idea of investing in renewable energy, the company’s financial people apparently had urged against it, maintaining there was no economic case to do so. Investing in solar and wind would be more expensive than the alternatives, they’d pointed out. But when Ingvar Kamprad, the founder of IKEA, spoke up, he insisted that they should go ahead anyway. When asked why, Kamprad’s answer was simple: “Because it is the right thing to do.”
The story resonated with me because it reflects a huge shift taking place in the way that businesses treat sustainability. A decade ago, many companies dismissed sustainability as an aside—an engagement in corporate social responsibility (CSR) outside of core business. But today, companies are integrating sustainability into core business strategy. Issues related to climate change or ecosystems are no longer the exclusive realm of directors for the environment; they’re an agenda item for boardrooms. Resource efficiency, circular business models, low-carbon value chains, and environmental accounting are all key pieces of strategies, not only to be profitable but also to produce long-lasting companies.
Some game-changers are happening already. The B Team, a non-profit initiative started by Jochen Zeitz of Puma and Richard Branson of Virgin, has been promoting serious integration of sustainability across business sectors. Unilever, Royal DSM, and Walmart are each pioneering sustainable value chains in the food industry. Carl-Henrik Svanberg, chairman of BP, has lent his support to a global price on carbon, saying it’s not reasonable that oil companies should be able to pollute the atmosphere for free. General Electric (GE) has saved 300 million US dollars (USD) from energy and water improvements in their own operations (since 2005) and has generated more than 160 billion USD in revenue from technology solutions that have saved money and reduced environmental impacts.
More and more businesses have reached the conclusion that sustainability gives them an edge over competitors who can’t keep up with change. The old strategy of exploiting Earth’s natural resources and polluting the planet as much as possible no longer works, as The Economist noted not long ago in a special issue about the future of oil. Industries that continue to invest in fossil fuels are doomed to fail, the magazine maintained, not on environmental grounds primarily, but because clean energy will become so abundant, cheap, and attractive it will outcompete the volatile, dangerous, unhealthy, risky, and increasingly scarce fossil alternatives.
The writing’s on the wall. As the chapters in this section detail, humanity’s very survival depends on a deep shift in the way we think about natural resources, energy use, pollution, fairness, and sustainability. As pressures mount from population growth, climate change, ecosystem degradation, and the increasing likelihood of sudden changes in Earth’s behavior, a growing number of business leaders have discovered that a safe pathway into the future can also be a profitable one.
Walking down the snow-covered streets of Davos, Switzerland, during the annual World Economic Forum these days, one can’t help but notice that every company wants to brag about its most innovative ideas. Whether it’s the electric car manufacturer Tesla, VW E-Up, or Audi’s E-tron, solar technologies, or new lightweight carbon materials, everybody’s talking about innovation aimed at sustainability. Think about it: When a business really wants to show off today, it doesn’t hang its logo on the equivalent of a gas-guzzling Hummer; it proudly puts forward its leanest, cleanest, and coolest new product.
Because it’s the right thing to do.
The loss of rainforest such as this in the Bandan River area of Sarawak, Malaysia, may affect moisture feedback from the forest, thereby changing regional rainfall patterns.