The green giants turning a profit from sustainability

Jan 08, 2016 | written by:

Milton Friedman in a 1970 essay said that a sustainable business can not be profitable and that sustainability and profit are at odds. For years this idea (too hasty) has clouded the minds of many business leaders that, as time goes on, have decided to see clearly. Today, indeed, there are at least nine companies globally that generate a billion dollars or more in annual revenue from products or services that have sustainability and social good at their core. These so-called green giants including Tesla, Chipotle, Ikea, Unilever, Nike, Toyota, Brazilian beauty company Natura, Whole Foods and GE's Ecomagination have succeeded in doing what many thought impossible: they've made sustainability profitable surpassing by 11.7% per year, with their green business lines, the coventional companies' portfolio. But what is the secret of their success?

1. An iconoclastic leader
The journey towards sustainability is undertaken by one person, usually the CEO who must have four common personality traits: conviction, courage, commitment and contrarian streak.

2. A disruptive innovation
The green giants revenue streams are not founded on a slightly greener and more socially conscious version of an existing product, but on an innovation that disrupted a category.

3. A higher purpose         
Businesses with a purpose beyond profits tend to outperform the competition.

4. 'Built-in', not 'bolted on'
In many companies sustainability is a department, but for the green giants it's a value that is fully integrated into the core structures of their business (organizational structure, cost structure and governance structure).

5. Mainstream appeal
Green giants do not appeal only to sustainability lovers but appeal to mainstream customers or consumers.

6. A new behavioral contract
Transparency, responsibility and cooperation are the watchwords of the green giants' business.

 

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