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HOW ARE YOU RESPONDING TO ENVIRONMENTAL DISRUPTION?

Wed Dec 12 2019 Michael McQueen

One thing we know about disruption is that it is definitively unpredictable. Perhaps the most unprecedented disruption businesses have faced in recent years has been that of environmental sustainability. As awareness of climate change and its dangers has grown exponentially in the last few years, with student protests filling cities and legislation being passed in many countries, businesses are having to respond to the overwhelming consumer demand for environmental sustainability in products.

According to a 2019 study by Deloitte,[1] 67% of consumers are highly concerned about climate change and their carbon footprint and two thirds of businesses say that their customers are demanding they use renewable sources for their energy. Millennials are the key drivers of this, being the most concerned about the future of the climate and environment on all counts, willing to make personal sacrifices for sustainable purposes.

The key concern of both businesses and consumers is the economic viability of environmental sustainability. Although in regard to consumers, studies have proved that they are willing to pay up to 25% more for sustainable products.[2] A business that does not satisfy its shareholders or maintain its profitability will probably not be a business for much longer. However, if 50 years of putting shareholders first and focussing solely on profits has resulted in widespread environmental degradation, widening social inequality and deep corporate distrust, surely it is time to try something new.[3]  

Contrary to common belief, economic and environmental sustainability do not have to be mutually exclusive. In my most recent book The Case for Character, I talk about just this – businesses that have a purpose beyond their profits are more lucrative, loved and long-lasting.

Beyond altruism, business leaders will be comforted to know that regaining the trust of the market by pursuing purpose above profits actually pays well. According to the Harvard Business Review, over forty academic studies have found a positive correlation between operating with strong social values and financial performance.[4] Assets in US funds that aim to produce social or environmental benefits alongside financial returns grew fourfold to $12T over the past decade.[5]

Regardless, a company that does not respond to the overwhelming demands of the time will not be financially viable for much longer – the changes in our social and environmental climate must be dealt with by businesses.

A great example of a company that has embraced environmental sustainability measures without giving themselves an extreme economic handicap is the major retail clothing store H&M. The fashion industry, in both businesses and consumers, has responded much more slowly to environmental threats compared to others. The pollution and waste generated by the fashion industry is extreme with the average American throwing out 81 pounds of clothing a year.[6]

In the last couple of years H&M has demonstrated its prioritisation of environmental sustainability. Aiming to use only recycled or sustainably sourced materials by 2030, and to be 100% climate positive by 2040, it is responding forcefully to the demands of its consumers.[7] Despite some of its previous activities that have left some customers concerned about the company’s ethics, its commitment to its environmental goals is evident in its current practices - the criticism the company received was taken seriously.[8]

Labelled the ‘2019 Conscious Exclusive collection’, H&M’s recent clothing release features pieces made from sustainable materials, such as recycled brass and zinc.[9] In the last month or so H&M stores have displayed a sign behind their counters stating, “Be a fashion recycler. 95% of all clothes that get thrown away could be reworn, reused or recycled. Bring your unwanted textiles to our cashiers. We’ll make sure they get a new life.” It is not often that you see a store overtly admit the unsustainability of its own products. We as consumers are much more used to seeing businesses bury their mistakes beneath desperate corporate cover-ups and jargon. This act is quite refreshing in comparison and displays true commitment to the environmental cause as the company is taking responsibility for the damage caused by its industry and is attempting to make amends.

Another clothing company responding to the destructive effects of fashion on the earth is Kathmandu, which has recently become a B Corporation, a company that is certified as maintaining a high standard of social and environmental responsibility.[10] Kathmandu scored highly on environmental sustainability counts, displaying its existing and ongoing commitment to the cause.

These recent occurrences in two major fashion corporations demonstrate a deep tidal shift in the industry. It is no longer just the minor retailers attempting to appeal to a niche market of environmentally concerned customers, but major companies dealing with the major issues at stake and appealing to the masses in doing so.

Furthermore, these moves represent a great response to disruption in general. Both companies responded by setting environmental goals for the future and demonstrated an unwavering commitment to achieving them, implementing immediate actions. H&M owned its mistakes, accepted its criticism and changed its behaviour. It displayed transparency and humility which led ultimately to progress, both in its environmental sustainability and in the attention generated for its brand.

Environmental sustainability does not have to equate to economic demise. Disruption does not have to equate to destruction. These examples epitomise the kind of responses to consumer demand and disruption that allow businesses to remain afloat. Transparency, social responsibility and commitment to a purpose beyond profits are paramount for businesses that aim to not only remain viable but to thrive with the unpredictable changes in the social and environmental climate. The key question is this: How are you and your business or brand responding to the environmental disruption of our time?

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Michael McQueen is a trends forecaster, business strategist and award-winning conference speaker.

He features regularly as a commentator on TV and radio and is a bestselling author of 8 books. To order Michael's latest book "The Case for Character", click here.

To see Michael speaking live, click here and for more information on Michael's speaking topics, www.michaelmcqueen.net/programs.

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[1] 2019, ‘Deloitte Resources 2019 Study’, Deloitte Insights.

[2] 2019, ‘CGS Survey Reveals Sustainability Is Driving Demand and Customer Loyalty’, CGS, 10 January.

[3] Edgecliffe-Johnson, A. 2019, ‘Beyond The Bottom Line: Should Business Put Purpose Before Profit?’, Financial Times, 4 January.

[4] Keohane, K. 2016, ‘The Case For Purpose Driven Brands’, Branding Strategy Insider, 9 September.

[5] Edgecliffe-Johnson, A. 2019, ‘Beyond The Bottom Line: Should Business Put Purpose Before Profit?’, Financial Times, 4 January.

[6]2019, ‘CGS Survey Reveals Sustainability Is Driving Demand and Customer Loyalty’, CGS, 10 January.

[7] Farmbrough, H 2018, ‘H&M Is Pushing Sustainability Hard, But Not Everyone Is Convinced’, Forbes, 14 April.

[8] Scharf, L 2019, ‘H &M unveils its sustainable fall and winter 2019 Conscious Exclusive collection’, Los Angeles Times, 17 September.

[9] Ibid.

[10] McIlvaine, H 2019, ‘Kathmandu joins B Corp movement’, Inside Retail Australia, 10 September.

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