in Business, Economics and Finance

Why do we need new Business Models for a Sustainable Earth?

Eleanor O’Higgins and Laszlo Zsolnai, editors of the forthcoming Progressive Business Models, write about the changing role of business in the “Anthropocene” era, the epoch since human life on Earth began to have an impact on the nature of our planet.

Important indicators show that the state of the Earth (the sum of our planet's interacting human, social, physical, chemical, and biological processes) has deteriorated in the last 50-60 years. We observe harmful rising levels in Earth System toxins (such as carbon dioxide, nitrous oxide, methane, surface temperature, ocean acidification, tropical forest loss, domesticated land, and terrestrial biosphere degradation).

This severe deterioration of the Earth can be tracked to current patterns of production and consumption, as business activities have come to dominate nearly all the life spheres almost everywhere in the world. Big business has been seen to play a crucial role in ecological degradation and human malfunctioning. Inherent features of today’s business archetypes inhibit enterprises from becoming environmentally sustainable and socially responsible. However, we aim to show that a fundamentally new business paradigm can act as a positive influence to reverse the degeneration our planet.

The current mainstream paradigm of business has to be changed radically to achieve a sustainable Earth, or at least to advance toward it. This transformation requires the development of new business models which are ecology-oriented, producing values for society at large, not just for selected stakeholders. The essence of progressive business is defined as ecologically sustainable, future respecting and pro-social enterprise. Truly Progressive business aims to serve nature, future generations and society while maintaining its financial profitability and health in an integrated way. We emphasize that Progressive business is not just the “same old, same old” conventional prototype, with CSR tacked on to it for public relations purposes, the pattern in most enterprises today, as advocated in business books.

Our exemplar Progressive companies include a variety of industries and countries as follows: Triodos Bank (ethical and sustainable banking, The Netherlands/transnational), Béres Pharmaceuticals (preventive and natural medicine and organic wine making, Hungary), illycafé (artisan coffee production and distribution, Italy/international), DKV Integralia (inclusion of disabled people into society and the workplace, Spain), Sonnentor (organic food, Austria), Armor (printer accessories and cartridge recycling, France),  Lumituuli (clean technology, Finland), John Lewis Partnership (co-operative model governance in retailing, UK), Novo Nordisk (human centred pharmaceuticals, Denmark/international), Carlson Rezidor Hotel Group (responsible hospitality, Norway/international), and Unilever (consumer goods, UK/Netherlands/global).

Whilst the business models of Progressive companies differ in their construction, yet they have many features in common which define their progressivity. These include:

  • Exponential – Progressive business models entail radical change from incumbent models, i.e., the ambition should be exponential, rather than simple gradual improvement. The contrast to what exists should be transformative, involving a reframing and even disruption of fundamental beliefs, challenging conventional thinking. This is double-loop learning that forces a transformation in fundamental assumptions to institute change, instead of single-loop learning which confines itself to change within an existing framework.
  • Sustainable/Circular/Frugal – Sustainability in Progressive companies is twofold. On the one hand is the sustainability of the enterprise itself, as it thinks long-term. Complementing this is that Progressive companies integrate the sustainability of the planet into their business models. Companies which discard the traditional quarterly earnings merry-go-round are more likely to be given the breathing space to flourish sustainably. A long-term approach can lead to superior performance for revenue and earnings, investment, market capitalization and job creation.
  • Embracing paradox – Progressive businesses embrace paradox, as they pursue diverse goals simultaneously, some of which may clash with each other, thereby differentiating themselves and achieving competitive advantage. Embracing paradox means that instead of asking themselves whether to implement A or B, managers should be seeking ways to implement both A and B.
  • Integration – Integration means that activities are coordinated harmoniously by invoking systemic thinking. The system is not only the internal company, but also incorporates the external system in which the business is enmeshed. An integrated approach entails balance between three dimensions of environmental, social and economic emphases.
  • Socially oriented – Progressive companies are different to others in putting social impact at the forefront, specifying social profit objectives, and seeking pro-social owners.
  • Stakeholder oriented – Progressive companies portray the features of the “engaged” configuration in their stakeholder model.  They are integrated into social networks with stakeholder management based on fairness, interdependency, relationships, dialogue and trust. Implementation of decisions take place in a context of long-term ongoing developmental partnerships with multiple stakeholders.
  • Committed leadership – Progressive companies are led from the top. This is essential in creating the enterprise in the first place or in sustaining progressivity in an existing company. Progressive leaders have a clear vision and direction, galvanize necessary change and ensure implementation of the progressive measures.

In summary, our Progressive business cases show how to achieve meaningful change in the critical humanity-nature nexus. They demonstrate how to become ecologically conscious, future respecting and pro-social agents in the “Anthropocene” where humanity should operate within the limits of the biosphere and contribute to the richness of life on Earth.

Eleanor O'Higgins is Adjunct Associate Professor at the College of Business at University College Dublin, Ireland, and an Associate at the London School of Economics, UK. 

Laszlo Zsolnai is Professor and Director of the Business Ethics Center at the Corvinus University of Budapest. He is co-chairman of the Future Earth Finance and Economics Knowledge-Action Network in Montreal, as well as president of the European SPES Institute in Leuven, Belgium.