A Seven Point Plan for Transitioning to Sustainable Business Models

Doing business sustainably is likely to mean more than just tweaking your current business models, and could mean radically rethinking the way that you operate. Marks & Spencer and PepsiCo have both been named as sector leaders in the 2010 Dow Jones Sustainability Index, and they joined us last night to share their experiences of transitioning to sustainable business models.

Last night, at Green Spaces, Forum for the Future hosted a panel discussion featuring Richard Gillies, Director of Plan A at Marks & Spencer, and Dan Bena, Director of Sustainable Development at PepsiCo. Sally Uren, Deputy Chief Executive of Forum for the Future, moderated this discussion and brought lessons of Forum for the Future's work with over 100 leading businesses.

Through collecting expert knowledge from the evening, Uren's plan showcases how to embed sustainability in your company.Based on the presentation and findings, Forum for the Future's own Sally Uren has now drawn up a seven-point plan for transitioning to sustainable business models. And as Gillies said during his talk, "it's possible to have a sustainable business model in an unsustainable world". Just follow these steps:

1. Experiment with new financing mechanisms.  These could include forward purchase agreements for your suppliers to allow them to experiment with new production methods, match funding arrangements with government bodies, and the really effective concept of a sustainable innovation or investment fund - a pot of money held centrally which effectively seed funds new ideas, or provides top-up funding to make something happen which is outside current operating budgets.

2. Aim to profit from sustainability.  Don't view the sustainability programme as a cost, view it as an investment which will yield financial benefits to the business.  A great example here is Marks and Spencer's Plan A.  In year 1 of the plan this was framed as a £200 million investment, in Year 2 the plan was cost-neutral, in Year 3 it generated £50 million net profit from a mixture of resource efficiencies and creation of new products.

3. Integrate sustainability thinking into the DNA of the business.  From incorporating sustainability performance into cash bonus schemes to embarking on full-blown change management programmes, both approaches will bring sustainability into the heart of the business, and not viewed as 'something else to do'.  Fundamentally, this integration means redefining your organisation's view of what internal success looks like.  Reward and recognise your staff for making sustainability work.

4. Recognise the need to change the value proposition.  In our current consumption driven society, value is often associated with volume.  But buying lots and lots of 'stuff', which maybe we don't need and we end up throwing away after one use, isn't the path towards sustainability.  Businesses need to harness the power of their brand and marketers to help consumers equate quality with attributes other than volume.  Quality should also be about where and how something was made (ethically), how it can be used (efficiently) and what happens when we've finished with it (recyclable).  Ultimately, sustainability needs to be an attractive value proposition for everyone.

5. Start to shift your product portfolio.  Either through choice editing (taking the sustainability villains of the shelves) or actively promoting the more sustainable choice (healthier, greener), start to ensure that the product portfolio begins to reflect your sustainability policy aspirations, not business as usual.

6. Be clear about what the journey towards a truly sustainable business model looks like.  Identify those transformational jumps that the business needs to make.  By having a clear road map towards sustainability, the likelihood of shuffling forwards with just small incremental tweaks reduces.

7. Innovate, innovate, innovate.  Everywhere.  From product design, to service delivery, to internal and external communication, to business strategy planning, innovation is key to deliver the holy grail of a sustainable business model - a way of doing business that creates, delivers and captures value in a truly sustainable way.

- Marissa Feinberg

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