Organizational Governance Circular Economy Organizational Governance

In the Face of a Polycrisis, a Transformative Mindset Is Business’ Only Way Forward

Forum for the Future’s latest 'Future of Sustainability' report sets out four plausible trajectories for how companies can respond to current threats and opportunities across markets.

By Tom Idle | Published 1 year ago | About a 9 minute read

Image: Todd Turner

Businesses face a polycrisis. The latest simultaneous occurrence of several catastrophic events — from wildfires in Hawaii and record-breaking heat across Europe to price volatility and inflation everywhere, all underpinned by geopolitical tension — is unprecedented.

So, Forum for the Future’s latest annual Future of Sustainability report, released today, comes at an interesting time. In setting out four plausible trajectories, it analyses how companies are responding to current threats and opportunities across markets. In highlighting those that continue to prioritise shareholder returns above everything else, those making “shallow gestures” with incremental improvements, and those over-reliant on tech to find solutions, the organisation sees only one realistic option for firms trying to build long-term resilience.

“They must have the courage to transform,” says CEO Sally Uren.

She sat down with Sustainable Brands® to discuss the latest report and explain the key shifts companies urgently need to make if they are to innovate and thrive.

Having worked in sustainable business circles for so many years, do you get frustrated at the pace of change and the sometimes incredibly slow nature of watching things unfold?

Sally Uren: I feel both frustrated and also a little bit optimistic.

I’m frustrated because I still see businesses really sticking plasters over the issues and choosing an incremental pathway rather than deep, transformative change — and going for the easiest rather than the harder stuff. There’s lots of reasons for that. And one of them is a very human reason. It’s something we shine a light on in this latest Future of Sustainability report: Individuals in organizations — from people in procurement teams to board-level directors — are not being courageous enough in really addressing the profound crises we face.

I’m also frustrated because there are strong resisting forces for change — including politicians in the US who are fuelling ‘anti-woke’ campaigns and investors clinging onto their dividends in oil and gas.

But you’re still optimistic?

SU: Yes, and my reason for optimism is twofold. What we’re really wanting to see is whole-scale systems change — transforming everything from food to energy. Every system around us right now is in transition; and there are massive sums of capital flowing into sustainable and nature-based solutions. Systems are on the move, and the cause for some optimism is also the cause of frustration — because the closer you get to a system shifting, the harder the resisting forces dig in; because they can actually see that the system might change.

I’ve noticed this firsthand in my career; but I’ve been largely ignored by investors and senior decision-makers because, quite frankly, they just saw me as an irrelevance. But now I’m really annoying some people because they can see that a new food system is emerging — one that’s based on principles of regenerative agriculture, for example.

And the cause for optimism is that these resisting forces are becoming really loud, which means that they’re quite worried. And I do think they’ve got something to be worried about.

Your latest report is a marker in the sand — a snapshot of where we are now — and it draws on the work you’re doing with partners. What would you say is the most surprising thing you’ve found in the last 12 months?

SU: What has been a really pleasant surprise is seeing individuals in organizations, particularly senior managers, shift their mindset. In the report, we talk about five shifts that we think are needed to really maximize the chances of us delivering transformation.

The first is a shift from a risk-mitigation mindset to a transformation mindset. So, where you might have seen risks and problems, you now see potential. Take the food and agricultural system right now as an example: Elements of that system are really at breaking point; so, there is an attempt to mitigate the risk. But if we have a transformation mindset, we would see the potential for improving soil health. If we can restore soil health, that improves the ability of soil to act as a carbon sink — it improves the quality of crops which, in turn, improve returns for farmers. It’s about shifting from ‘here’s a problem that we need to solve through a risk-mitigation mindset’ to thinking, ‘what's the potential here?’

We’ve been partnering with the healthcare company Bupa on their strategy, working closely with their board on how we can begin to see health integrated into climate thinking. Bupa’s strategy has pillars on things like achieving net zero and innovation. But the third pillar is all about driving investment into regenerating nature as a way of improving people’s physical and mental health and wellbeing. Bupa shifted their mindset and saw the links between climate and health: Now, it’s not just simply fixing people when they’re poorly. The goal is keeping people well; and one of the ways we keep people well is to invest in the ecosystems around them — from the cities that they live in through to the natural habitats.

Getting rid of that risk-prevention mindset to go in search of opportunity is really hard. So, what are the tools that businesses need to unlock that?

SU: It is really tough. When you’re faced with real and immediate crises, it’s hard to imagine anything different. So, the first step in the journey is to explore what the future might look like. The future isn’t yet written. There are some dimensions, particularly on climate, that are baked in. But there’s a lot that isn’t — including how governments and civil society responds to the current climate crisis that will determine what happens next.

We help our partners look at different future signals. And that’s what we do in this report. We’ve created four trajectories — different possible pathways from this moment in time. We use the future to understand how we might respond to all of the pressures in the way that create opportunity for both business and the world around us. We use the exploration of the future to look at how drivers of value creation are shifting. The business case is really, really important — and it is built on pathways to value creation. Exploration of the future tells us that those pathways to value creation are shifting.

So, through innovations around sustainable finance, sustainable bonds, nature-based solutions, differential mechanisms and how well you’re doing on net zero, you can start to create more value by doing the right thing.

We also acknowledge that businesses need to run twin tracks. They’ve got to keep the lights on, you need to do payroll, you’ve got to keep your investors happy. But most smart organizations have an eye on the next horizon.

You talk about the need for a transformation mindset in this latest report. But what if transformation is just too hard? Sometimes it’s just too big a jump for some companies to get their heads around; so, they end up not doing anything at all. What do you say to that?

SU: My advice is: Don’t try and eat the elephant — don’t try to transform everything at the same time.

Instead, look at your direct impacts — the big material-impact areas — and focus there. So, if you are a food retailer, it will be how you source your food — not your carrier bags, not your logistics, not the energy used in your stores. Likewise, if you're an apparel brand, again — it won't be any of those things I've just listed; it would be where and how you source cotton, cashmere, raw materials. For other consumer-facing brands, it’s probably the use phase of a product.

I see so many organizations saying, ‘well, our customers just aren’t interested; and they’re not going to shift their behavior.’ You and I both know that brands can make people do pretty much what they want them to do. No one ever asked for the infinite scroll on their mobile phone; Steve Jobs just gave it to us, and we now rely on it.

Do you think brands have put too much emphasis and hope on their consumers helping them to initiate change by being willing to change their buying habits?

SU: Yeah, we can’t wait for consumers to demand sustainability. Mainstream consumer sentiment — aside from the early green adopters and on the other side of the spectrum, a clutch of individuals that will never change — is a lagging indicator. So, the job of an organization is to use its powerful insight tools to be slightly one step ahead of the consumer and give them something that they think is amazing.

Where brands fall down is when they go too far ahead. But if you can judge that point — where you’re building on something that you’re known for, you’re building on trust and credibility, but doing something slightly different — you can shift behaviors and consumer patterns.

Another recommendation you make in the report is for firms to address the root cause of a crisis, rather than simply dealing with the symptoms of it. What are the best examples you’ve come across of companies that are doing just that?

SU: There’s lots of work going on right now to deal with social issues in supply chains — particularly, human rights in complex global supply chains. In agricultural supply chains, lots of smallholder farmers are going out of business. They don’t want to stay in agriculture.

The shallow fix is to slightly tweak the current model. But the root cause is the model, where power is situated in one part of the supply chain and whole tiers of suppliers aren’t being heard. Tackling the root cause involves thinking about a different supply chain structure or contract. Danone in the US has set up a slow loan facility for farmers who need an upfront investment to help transition to regenerative practices. A slow loan, which can be paid back over a much longer period of time at a much lower interest rate, gets to the root cause of why farmers can’t transition — because they don’t have access to finance.

Having the courage to transform demands strong leadership. In EY's latest report, 500 CEOs say they are worried about a dearth of talent in achieving net-zero ambitions. Is that a worry you share?

SU: There’s no shortage of talent coming through really, really quickly. But I see plenty of ‘competency washing’ — individuals within an organization suddenly being given responsibility for sustainability and not being given access to the skills, tools and capability-building that is needed. That’s a risk.

Tom Idle

Content creator extraordinaire.

Tom is founder of storytelling strategy firm Narrative Matters — which helps organizations develop content that truly engages audiences around issues of global social, environmental and economic importance. He also provides strategic editorial insight and support to help organisations – from large corporates, to NGOs – build content strategies that focus on editorial that is accessible, shareable, intelligent and conversation-driving.

Tags:

Forum for the Future