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Executive Perspectives

EXECUTIVE PERSPECTIVE: Emerging Sustainability Priorities

John Paluszek

10 Jan 2014

The ground is shifting under global capitalism and corporate citizenship.

Company leaders in sustainability, sensitive to the arguably epic changes appearing at the interface between business and society, enter 2014 making new commitments that would have been unimaginable just a few years ago.

Get comfortable with new sustainability concepts such as, “Natural Capital”, “Business For Peace” and “Startup Diplomacy” among other bold emerging corporate initiatives.

They’ll become increasingly important in 2014. But the outlines of this amplified sustainable business zeitgeist are already visible:

“Natural Capital”

Here is the “Natural Capital” thought progression for “internalizing externalities”:

“There’s no business to be done on a dead planet” – the late conservationist David Brower.

 “By understanding the relationship between natural capital and business performance, companies can conceive of strategies to minimize and mitigate risks, while generating value through improved resource efficiency, reputation and sustainability-based innovation.” – Polly Courtice, LVO and Director, Cambridge Natural Capital Leaders Platform

“The EP&L [Environment Profit & Loss] statement is an essential tool and a shift in how companies can and should account for  and, ultimately, integrate into business models the true costs of their reliance on ecosystem services …[it] will help Puma build a more resilient and sustainable business model and ultimately better manage its impact on the environment.” – Jochen Zeitz, Puma chairman/CEO and chief sustainability officer at Puma parent company PPR.

The “Natural Capital” community is expanding rapidly.

An example at the forefront of this movement, Puma is developing “natural capital” values on all of its environmental key performance indicators such as water consumption, waste and land use – this as a foundation for an even more ambitious sustainability commitment – an Environmental and Social P&L account , incorporating values for worker safety and working conditions  as well as fair wages.

The company’s ultimate goal: a comprehensive P & L statement offsetting the value of these “natural capital” costs with valuation of the benefits of Puma’s operations in creating jobs, paying taxes, philanthropic initiatives and other positive impacts on society. In this pursuit of competitive advantage and reputational advancement, Puma is applying valuation methodology developed by PwC and Trucost.

Puma is by no means alone in addressing “Natural Capital” valuations. Other companies developing such accounting management include Unilever, SABMiller and Coca Cola. The Cambridge Natural Capital Leaders Platform has developed a web-based “natural capital tool kit”. And, according to Triple Pundit,  the First World Forum on Natural Capital, held in Edinburgh in late November, 2013, “over 500 business leaders, NGOs, government folks and a handful of media [addressed] how one might go about pricing  the myriad benefits of nature.”

“Business For Peace”

At its September 2013 “Leaders  Summit”  in New York City, The United Nations Global Compact   launched its global Business For Peace initiative , a powerful new engine to help business do what it does best: improve the standard of living and quality of life, invest in market development and generate economic stability.

Augmented by new “B4P” web technology, “Business For Peace” is building public-private partnerships via its 101 local networks across some 140 countries, supporting infrastructure development; job creation and training; and cultural and interfaith understanding and tolerance.

Sir Mark Moody-Stuart, former Chairman of Royal-Dutch Shell and now UNGC Vice Chairman, has issued this invitation: “Joining … will help companies in troubled zones to better identify and manage risks, engage in dialogue, establish local priorities and conciliate groups…”

“Startup Diplomacy”

One of the cardinal principles of current sustainable development progress is partnering – public-private cooperative programs achieving both business and social objectives. And one of the greatest stimulants to economic success is entrepreneurial spirit and expertise.

Now comes an uber-partnership that merges these powerful forces – “Start Up Diplomacy”, being championed by the U.S. State Department and UP Global , a non-profit enterprise “empowering entrepreneurs and their communities around the world.” At a late-2013 “Youth Forum Startup Weekend” these partners brought together Youth Forum delegates from thirty countries for a crash course in business creation.

The U.S. State Department /UP Global partnership intends to reach 1,000 cities and train 500,000 entrepreneurs by the end of 2016.

Capitalism’s flexibility

This is, of course, a subjective selection of sustainability harbingers.  “Black swans” – and, yes, “white swans” (clearly, sustainable development presents business opportunities as well) — will no doubt appear. But capitalism’s systemic flexibility over many decades is hardly debatable.

Ironically, that flexibility may have been best articulated by the late American Socialist, Michael Harrington: “Capitalism’s most daunting characteristic is its ability to co-opt the reforms, even the radical changes, of the opponents of the system.”

 About the Author:

John Paluszek, @Bis1John, is senior counsel at Ketchum and executive producer of Business In Society , video programs reporting and analyzing news of business addressing global social issues.

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