Frank Okoisor (L) CEO Toyota Denmark and Mads Nipper (R) CEO Grundfos at a recent British Chamber Sustainability summit
The SDGS present a radical shift in the traditional partnership between business and society. For the first time businesses can be what they truly are - profit driven, seeking shareholders’ value, innovative, brutally frugal and yet conscious of the world in which they exist. All at the same time. It is the first time that the opportunistic nature of business is not labelled as evil but rather as a quality essential to solving some of the world’s most pressing problems. Because of this new approach, companies the world over have embraced the SDGS framework with Carlsberg, Novo Nordisk, Grundfos and Danish Institutional investors taking the lead. Compared to previous “global good” campaigns, these companies no longer have to hide their intentions to profit from their sustainable actions or wrap their activities in the so called “Corporate Social Responsibilities” (CSR), or be accused of green washing like many of their peers. For them, investing in say healthcare for low income earners, sustainable infrastructure or smart buildings, providing access to clean and safe drinking water, technologies to combat climate change or clean energy is not just the right thing to do, but the “profitable thing” to do. On the back of these investments, new products get launched, new patents filed, better technologies invented, new markets discovered or old ones reinvented, keeping the companies ahead of the game while fending off competitors. Where the world sees problems, these businesses see new opportunities.
Innovating for success and society
Sampo Hietanen (R) CEO MaaS Global and Thomas Henriksen (L) Editor Børsen Newspaper
But tapping into new opportunities requires innovation to meet new market dynamics. Trends such as urban population growth and cities’ congestions, are driving innovation in mobility for Toyota; finite traditional sources of energy underpin Carlsberg’s 100% target for generating its energy from renewable sources and Grundfos is betting on the emerging African middle class to open a new market for its water machinery. What is striking about these trends is they bring a fundamental shift in the innovation pattern in established industries where they were historically conservative and slow. Now they must keep up with new upstarts who are born sustainable and instantly grabbing market share with their products. Take Tesla, it continues to send shock waves through the car industry, just as craft brewers are squeezing the margins of Carlsberg. This drive to survive in the face of stiff competition from non-traditional rivals, is seeing the “fat cats” take bold and ambitious steps. Like we saw with Carlsberg in their “towards Zero” campaign which was launched a few days ago by their CEO Cees Hart amidst much fanfare. Another business man, Paul Polman CEO of Unilever, rightly concluded that “millennials” and now generation Z (people born after 1994) are looking for socially responsible brands. He asserts, “this should be a clear business case for sustainable growth.” He calls it future-proof growth which keeps consumer brands relevant.
Future-proof growth equals Long-term gains.
If European companies always pride themselves on their long-term futuristic outlook, then now is their time to shine. That’s why aligning their strategic goals with the SDGS is not a mismatch and can be effectively used as an entry barrier for their competitors. Another upside for European companies is the availability of “Patient capital” (investors with long term goals) that is in it for the long term and happy to walk the talk with them. Carlsberg’s CEO, acknowledged that, when he stated that their current approach reduces short term gains but increases the long term.