Infine’s founder, Tiina Saukko, discusses both the cornerstones and stumbling blocks of corporate responsibility in her blog series. This time, she reflects on sustainable business and its potential.
As the global population grows, we have moved into a world that consumes faster than it renews. Finland’s “Earth Overshoot Day” was already on March 31st this year, meaning we had used up our share of the Earth’s renewable biocapacity during the first quarter. However, instead of focusing on apocalyptic vibes, let me share three reasons why businesses can fix this situation if they choose to.
1. Leadership
Companies often operate under an oligarchy or even a dictatorship. An enlightened ruler can be found behind most successful businesses. Generally, successful businesses are led by market-savvy, team-building leaders who make the right decisions at the right time. The clear decision-making model of businesses has an undeniable advantage: it’s efficient.
Decision-making is, of course, influenced by political processes and legislation, but they tend to be slow, and decision-making is often decentralized. However, because proactive companies generally win in the marketplace, legislative changes are implemented faster in businesses through leadership.
Good leadership is particularly influenced by anticipating consumer behavior and knowing customer needs. Many companies also educate their customers on sustainability, thus creating a market. Choosing sustainability is a good investment, as it also ensures attracting good employees.
2. Consumers
Under the “consumers” heading, I also include citizens, who, at an extreme interpretation, exercise decentralized political decision-making. Citizens are also consumers, so this dual power should ideally mean double the speed of change. However, that’s not the case. I argue that in today’s world, the power of consumers is greater than that of citizens: every single day, they can vote with their wallets multiple times. And they can also express their preferences in consumer surveys—supporting good causes and opposing bad ones. I call this phenomenon the “green bias” since the reality is often less ideal.
Researching consumer attitudes on sustainability requires special expertise to reveal the true intent. It is clear that concerns are growing, meaning that soon not many companies will succeed with the old “create demand—meet demand” marketing approach. Instead, they need to adopt “identify concerns—solve concerns” thinking and segmentation. This helps position companies on the side of solutions and solution providers.
In any case, media and social media have dramatically reduced the size of our human communities, meaning consumer behavior and opinions can change quickly. Sustainability issues also become crucial business factors through risk analysis, which aligns with different financing initiatives and (I must also add) varying quality ESG tools.
3. Scalability
Companies learn quickly—they learn from each other, and they learn globally. Globally operating companies often have more power than any other entity in the world, and they use this power efficiently.
It may sound obvious, but let me say it anyway: 100% of the revenue of a healthy company is generated by sales—the products sold to consumers. Companies scale according to the laws of supply and demand: whether they can make or buy the right products and sell them. Some companies’ value might be 99% brand and 1% sugar water, but the brand is built on actions (through which the product sells), so every company must take a stand on sustainability at some point—whether through action or inaction.
Summary
In conclusion, sustainability is profitable. It will help pioneering companies win a significant share of consumers, employees, and, as regulation tightens, even competitors. My prediction is that sustainability will increasingly be reflected in consumer choices—at the product level. If a company’s brand is tied to its products, all products must be sustainable. If the brand is tied to the company itself, there will be little room for unsustainable products in the future—they will erode the entire brand. For this reason, business will save the world.
Tiina Saukko
The author is the founder and CEO of Infine, who has worked for over 20 years in product responsibility, sustainability marketing, and corporate responsibility.
