2014-06-16

Co.Exist

Sustainability Doesn't Mean Less Profit, It Means Profit Forever

Reframing what a tired term really means for the business world.

Sustainability has become a term that serves as a catch-all for everything altruistic and pro-social. These are not bad things, of course, but as the word sustainability has entered the collective consciousness, it has—in many ways—been denuded of meaning.

This is often a lament of people working in sustainability: without a common understanding of what the term even means, it’s very difficult people to rally the cause, or even know what the cause is. This is made all the more difficult by the fact that most sustainability executives have a very strong belief in what sustainability means to them, and seek to mold others to this definition; people often think that their definition is the right one.

A few years ago, sustainability was more of a fad than a true movement, especially in the corporate arena. Many companies—and executives—were left to figure out what the hype was all about. Without a meta-narrative of sustainability, many of the corporate forays into sustainability were scattershot and uncoordinated. And while many companies have established themselves as true leaders with breakthrough and innovative platforms, many pundits now take all talk of sustainability with a grain of salt. The same is true of consumers. Why buy anything labeled "sustainable: when the word itself really doesn’t mean anything?

This is where the concept of profit forever comes in. Sustainability, in corporate terms, is really about helping companies thrive forever. The point of corporations is to make a profit. The methods of accomplishing this vary greatly, but the goal remains the same.

Sustainability thus becomes about evaluating your business for its ability to endure forever. It becomes about identifying the roadblocks to infinite market success and finding a way around or through them. It is not as much about good for good sake, but the enlightened self-interest of pursuit of doing well in a sustained manner. The trick is to be expansive in thinking about what these roadblocks really are. Unhappy stakeholders, activist investors, disaffected workers in the supply chain can—and should—stand in the way of corporate profit. Smooth the underlying issues with these groups and the path to continuity to profit becomes clearer.

More than 1,000 companies have achieved B-Corp status, which allows for a lower tax burden for companies that can prove that they provide social benefit. Many of these companies reinvest in their businesses, customers or communities in ways that would be deemed expensive—and thus burdening profit—by traditional businesses. While purpose may be an important motivator, these companies generally make such decisions on a strictly rational basis. Providing social benefit is their way to establish a market position with a greater opportunity for continuity of profit.

By getting honest about the true footprint of their company, Patagonia started a chain reaction of intellectual honesty that has led them to a firmer grasp of their place in the world and what they must do to endure. And while encouraging people to first look for their products second-hand, Patagonia has figured out that it’s not just about grabbing as much cash as they can right away, but forging a company that can truly sustain itself.

Rethinking the value of a company and the role it plays in society has enabled companies like Method and Seventh Generation to get a toehold in the hyper-competitive consumer packaged goods industry. Time will tell how these companies hold up against their more massive competitors, but their exploration of true risk and the ability to think about profit through a different lens gives them a chance to thrive when almost all new entrants flounder.

Certainly companies don’t have to be certified B-Corps to show a new path forward. For example, would Toms Shoes really have established itself as a trendy and thriving brand without the 1:1 model it so bravely pioneered? Probably not. But they thought about what profit truly means and created a transformative business model.

While every company will establish different goals for profitability, changing the nature of sustainability to be profit-centric will greatly help move the collective agenda forward. By reframing the discussion around "profit forever" we can elevate corporate sustainability above the noise, give it new meaning, and take performance to a higher level.

[Image: Abstract via Shutterstock]

Add New Comment

0 Comments