The United Kingdom (UK) has, over recent years developed a favourable regime for starting new business. But a business is not just created in a vacuum. As well as government policy, environmental, societal and scientific factors govern all aspects of our daily lives and forming a new business is no different. If you are considering establishing a new business, these factors will inevitably influence the direction you take both in terms of the product or service you will seek to offer and the form your business will take. Your goal for your new business may only be small and local or you may intend for your new sustainable and resilient business to be a major international force. Whatever the scope of your ambition, you can make a difference to your own life and those of other people. If this motivates you, developing your new business to design and create a new product or service that can have a positive environmental impact could be one of the best things you do.
The current political and economic world view suggests that the economies of the world can continue to grow without limits and that the environmental system is a function of the economic system. Economic growth is seen as the primary goal of government policy throughout most of the world and success is measured by gross domestic product (GDP). Conventional economic thinking suggests that as a resource runs out, we will find an alternative and substitute that resource for the depleted one. But this is clearly not the case for all resources. For example, phosphorous is an important plant nutrient, essential to food production. Current estimates suggest we have only between 60 and 130 years of phosphorous reserves in the world. Increasing price and scarcity could force changes to global agriculture and there are already shifts in the global trade in phosphorous-based fertilisers. How will we cope when the supply has run out?
Even if we can find alternatives to scarce resources, this does nothing to affect the way we dispose of the waste created by our resource use. We cannot, for example, expect our oceans to continue to absorb carbon dioxide without limits because as they do, they become more acidic and this affects the plant and animal life they can support. Similarly, we cannot continue to push pollutants into our atmosphere because we cannot control where they go and there is a limit to the level of pollution humans, animals and plants can cope with before we begin to suffer the effects. This is seen by the increased rate of illness and death resulting from air pollution in our cities.
This view, that economic performance is all that matters, also holds true for business, where profit and return on shareholder value are the key metrics used when comparing business performance and deciding where to invest. Providing your business is making a profit and returning dividends to its investors, it does not seem to matter that it is spewing pollution into the atmosphere and the water courses or that it is exploiting vulnerable people, either here or in other parts of the world.
What is a sustainable business?
This current worldview sees the environment as part of the global economy. The reality is that without a healthy and functioning environment, there is a limit to our economic development. We have to recognise the environmental limits that govern our lives and we have to find different models for our businesses that are healthy and regenerative rather than exploiting both human and physical resources. In this context, a sustainable and resilient business is one that has a minimal impact on the earth, safeguards and husbands our resources and looks after the people with whom it comes into contact.
The UK and the rest of the world has a long way to go before we can consider our businesses to be truly sustainable and resilient in the long-term. To reach this stage will require a complete change of mindset as far as most policy makers and most business-people are concerned. Changing this mindset will take time or, perhaps some cataclysmic event. But while this change is taking place, there is a desperate and urgent need for new innovations in products and services to help us reduce the carbon intensity and resource inefficiency of our current business models. This change offers two different opportunities for creating sustainable and resilient businesses:
reducing the impact of existing businesses by eliminating or minimising their impact by for example, decreasing the use of scarce resources and on-site generation of renewable energy
the design and creation of completely new products and services that meet the current and future needs of businesses and people
The first opportunity is about transforming existing businesses which is happening but not nearly fast enough or on a sufficiently large scale. The second of these opportunities is the more exciting and the one which provides the greatest opportunity for fundamental change. While it may be good to think about a world where everyone helps each other rather than competing, we need to recognise that people trade with each other. With the right business model and the right set of values, there is no reason why new and adapted businesses cannot make money while also changing the world for the better.
There may be opportunities in helping individuals and other businesses to recognise their own impact and to reduce it. A massive reduction in consumption, as people become more aware of the impact of ‘disposable’ clothing and other consumer goods may reduce some business opportunities but others open up. For example, rather than selling new washing machines, could you design a rental model that would work more effectively? You could supply the machine to a household and charge a fee per wash cycle. A periodic payment by the user would include a full maintenance package to keep the machine running as long as possible. At the end of the rental period, you would then take back the machine, refurbish it and replace worn out parts before leasing it to another household who cannot, perhaps, afford the charges for a brand new machine.
This business model would reduce the amount of waste generated but it would also extend the life of the machine and serve customers much more effectively. It might feed into the design and manufacture of the washing machine in that it would be in your interest and that of your customer for the machine to run as long as possible with minimal intervention. This is the opposite of the current model where the manufacturer wants the machine to wear out and be replaced quickly. It also changes the financial and social relationship between business and customer in that you are being paid a regular, small amount for the service provided by the washing machine instead of a larger amount periodically for the customer to “own” the machine. It is also in your interests to maintain a longer-term relationship with the customer to make sure you secure the repeat business when a replacement machine is required.
The way forward
The environmental goods and services sector contributed an estimated £30.5 billion to the UK economy in terms of value added in 2015. This is 1.6% of GDP. Although GDP is not an effective measure of a country’s health or wellbeing, it is the default measure of performance we currently use. If we are to become a sustainable and resilient country with sustainable and resilient businesses with a low impact on the earth that safeguards our resources and avoids energy insecurity, we have to shift the balance so that only 1.6% of our GDP (or better still, even less) is generated by our current model of resource inefficient and polluting businesses.