Tag Archives: circular economy

Screw AppleWatch. Give me LYF!

Lordy, is it really 4 months since I last posted? Shame on me!

Well, it’s only fitting that I should break such a prolonged period of radio silence with news from my favourite discovery of 2014: the brilliant LYF Shoes.

If you haven’t come across this little gem before, clear 15 mins in your calendar to watch LYF founder Aly Khalifa’s talk from the Sustainable Brands conference in London last November. Seriously, do it. The design – not only of the product, but also the entire ecosystem and customer experience it spawns – is genuinely breathtaking in its scale and ingenuity and, as you pause and reflect on it, you’ll wonder why shoes would ever be made any other way in this day and age.

That’s why I couldn’t be happier to be one of the lucky few to be involved as an LYF Pioneer, shortly to receive my ‘LYF Fit Kit’ and begin the journey towards my first ever pair of custom-fit, one-of-a-kind, made-to-be-made-again footwear.

This may be the first time in my life that I’ve ever truly been an Early Adopter. I couldn’t give a stuff about all the hype surrounding the latest gadgets, like the AppleWatch, but LYF is different.

You see, I’m a sucker for anything to do with sustainability-inspired innovation, and the chance to play some small part in the development an enterprise with the potential to disrupt an entire industry is simply too good to miss. I also happen to be 6’7″ with size 14 feet, which means I’ve struggled for pretty much all of my adult life to find clothes – and especially shoes – that fit.

LYF, with me at least, has hit the mother of all sweet spots!

I’ll let others rave about the opportunity to design their own uppers and create a truly individual fashion statement (I am, after all, a 42-year old straight white male, which makes me something of a fashion vacuum).

What really intrigues me is the chance, for the first time ever, to own a pair of shoes that has been individually customised to the length and width of each of my feet (that’s right, folks, different sized feet receive different sized shoes!); more than that, to own a pair of shoes that will actually capture biomechanical data on the way I walk, using a device embedded in the heel, so that the design of the next pair I buy will be refined to fit even better; and all serviced by a closed-loop, circular business model that eliminates harmful substances from assembly, uses 100% recyclable materials, and spurs local economic development by encouraging micro-enterprises to spring up and fulfil all parts of the value cycle from Original Equipment Manufacture to assembly and retail.

Normally it’s my missus who has the exclusive preserve on getting excited about a pair of shoes but, on this occasion, I’ll gladly buck the trend.

Yet more evidence that sustainability pays

For anyone who’s ever questioned the business value of sustainability, a new study published by Oxford University and Arabesque Partners (as reported in Forbes on Monday) should make for thought-provoking reading…

How sustainability drives financial outperformance

‘From the Stockholder to the Stakeholder’ (a full copy of which can be downloaded from Arabesque’s website) is a meta-study of more than 190 academic papers, industry reports, newspaper articles and books, and it provides some of the strongest evidence yet of the positive correlation between good sustainability practices and corporate performance. For example:

  • 90% of studies show that sound ESG (Environmental, Social and Governance) standards lower the cost of capital
  • 88% show that they also result in better operational performance
  • 80% indicate that stock price performance is positively influenced by good sustainability practices

Short-termism is the enemy

The numbers above offer empirical proof of what most of us already know in our gut – that doing good is great for business – and their importance can’t be understated, especially in the context of four more very telling statistics quoted in the report:

  • 80% of CEOs view sustainability as a means to gain competitive advantages relative to competitors, and yet…
  • Only 33% of them think that business is making sufficient efforts to address global sustainability challenges; this is at least in part because…
  • 79% of them feel under pressure to deliver financial results in two years or less, and…
  • 86% say this is in contrast to their innate convictions

In other words, the vast majority of CEOs want to make business decisions over a longer time horizon and integrate sustainability more fully into their businesses, but feel hamstrung by markets’ narrow focus on maximizing short-term shareholder returns (an insight, by the way, that casts a very interesting light on Unilever’s abandonment of earnings guidance and quarterly reporting).

Sustainable growth: changing the frame

Therein (as the Bard once wrote) lies the rub and, as a growing number of influential business leaders are arguing with considerable passion and conviction (notably the likes of Richard Branson, Paul Polman and Arianna Huffington, under the auspices of The B Team), it’s precisely this narrow definition of value that needs to change if business is to succeed in building a better working world.

  • From share value to shared value – leaders make it their business to be a force for good in the world, not just through philanthropy, but by delivering core products and services that tangibly contribute to the wellbeing of people and communities. They do so on the understanding that businesses with ideals of improving lives at their core are substantially outperforming the general market (by 120% according to Havas Media’s Meaningful Brand Index).
  • From next quarter to next generation – what it means to be a successful business is judged by the capacity to create and sustain value over the long-term, including innovating new business models that decouple growth from environmental degradation. This is on the understanding that, among other things, there’s an estimated US$1tn in economic value to be unlocked by transition to a circular economy.
  • From financial accounting to true accounting – businesses illustrate their capacity to create value in a way that reflects the commercial, social and environmental context within which they operate, i.e. fully accounting for their impact on (and stewardship of) not only financial but also human, social and natural capital. They do so on the understanding that a business gets the investors it deserves and that, if they want to attract long-term investors, then they need to offer a more systemic view in order to build trust and confidence in their ability to create and sustain value over the long-term.

Purposeful. Enduring. Real. These are the watchwords that, for me, define sustainable growth.

Generation Jobless: How do you make a dent on youth unemployment?

Add together not only those officially classed as ‘unemployed’, but also those who have simply given up looking for work and those who are part of the ‘working poor’ (i.e. earning less than $2/day), and the number of young people between the ages of 15 and 24 without productive employment apparently reaches an eye-watering 600 million.

That’s one in two of the total global population of 15-24 year olds. If they were citizens of a country, it would be the third most populous in the world, behind only China and India.

Gross oversimplification though it is (we are, after all, talking about the product of a major collision of demographics and global economic recession), my inner MBA can’t resist the temptation to categorise possible interventions using the time-honoured 2×2 matrix…

tackling youth unemployment 2x2

Boxes 1 and 2

Looking through the lens of sustaining innovation (improvements within the current paradigm), and seeing youth employment as predominantly a supply-side problem (an insufficiency of appropriate skills), would suggest interventions to improve young people’s readiness for the world of work.

That might include anything and everything from improving access to a quality education for people from disadvantaged backgrounds (creating equity of opportunity), to greater availability of internships and apprenticeships (providing more practical work experience), to better careers advice and guidance on things like CV writing and interview technique (improving chances of converting opportunities).

[A brief aside: equity of opportunity and richer work experience are where initiatives like the Akasa Young Pioneers program – which also happens to be linked to sustainable development – are to be wholeheartedly welcomed and supported, IMHO.]

Viewed as predominantly a demand-side problem (an insufficiency of appropriate jobs) might direct one towards equipping young people with the requisite skills and knowledge to consider setting up their own business, as an alternative to the ‘traditional’ corporate career path.

Indeed, development of a more entrepreneurial mindset might well be a bridge between supply and demand-side views of the problem. As EY Chairman and CEO, Mark Weinberger, alluded to in a recent piece for Forbes, studies suggest that the sorts of skills and behaviours typified by entrepreneurs – e.g. initiative and self-direction, flexibility and adaptability, communication and collaboration, and critical thinking and problem solving – are precisely those that employers currently deem most lacking among millennials.

All of the above are definitely areas where, as Mark says, business can and should be looking to lead and make a tangible contribution. That said…

Boxes 3 and 4

I can’t shake the feeling that the biggest inroads will only be made with systemic change – tackling profound questions like ‘Are we even teaching our kids the right stuff in the first place?’ and ‘Do our tax and economic policies really incentivise job creation?’

Admittedly I’m no expert, but I’ve unsurprisingly found myself nodding in vigorous agreement with a couple of passages that I’d like to share with you, the first of which comes from Metaskills: Five Talents for the Robotic Age – yet another outstanding and profoundly thought-provoking book from the brilliant Marty Neumeier (@MARTYneumeier):

“With the exception of language and math basics, the subjects we now teach at school are the wrong subjects. The right subjects – the ones that will matter in the 21st century – are metaskills. Students today should be learning social intelligence, systemic logic, creative thinking, how to make things, how to learn. What we now think of as subjects – sociology, trigonometry, physics, art, psychology and scores of others – should become ‘drill-downs’ from these metaskills – specific disciplines, designed to explore the higher order subjects…

Today we find ourselves caught between two paradigms – the linear, reductionist past and the spiraling, mutli-valent future. The old world turned on the axis of knowledge and material goods. The new one will turn on the axis of creativity and social responsibility. To cross the gap we’ll need a generation of thinkers and makers who can reframe problems and design surprising, elegant solutions. We’ll need fearless, self-directed learners who embrace adventure. We’ll need teachers, mentors and leaders who understand that mind shaping is world shaping – who give learners the tools they’ll need to continually reinvent their minds in response to future challenges.”

The second passage comes from Walter Stahel, founder director of The Product-Life Institute, in a contribution to A New Dynamic: Effective Business in a Circular Economy, published by the Ellen MacArthur Foundation:

“Sustainable taxation should reward desired developments and discourage unwanted effects of activities. In a sustainable economy, taxes on renewable resources, including work – human labour – are counterproductive and should be abandoned. The resulting loss of state revenue could be compensated by taxing the consumption of non-renewable resources in the form of materials and energies, and of undesired wastes and emissions. Such a shift in taxation would reward a circular economy with its low-carbon and low-resource solutions.”

Having always felt that the tax system would provide a far more effective tool to incentivise the right behaviours than the blunt instrument of regulation, that makes intuitive sense to me. What do you think?

Sustainable growth: an oxymoron?

If you haven’t come across Mike Townsend (CEO of Earthshine), before, then look him up (@mike_earthshine on Twitter). Recently, I’ve read a couple of great pieces by him, which have inspired me to write this post – an attempt to get to the nub of whether there is such a thing as ‘sustainable growth’?

We all know the problem, right? In our bones, we know that continuous, conspicuous consumption and the economists’ nirvana of infinite growth just isn’t possible in a world of real physical limits. On our current trajectory, reports estimate that not even two planets’ worth of natural resources would be sufficient to meet our material needs by 2030.

As Mike suggests, there can only really be two answers to this dilemma: either to make growth sustainable, or to make de-growth stable. For business, the preferred answer is naturally the former. But what exactly does that entail?

For starters, it has to mean distinguishing between good and harmful growth and, in my book, growth that pays no heed to the people and resources impacted by its generation is harmful growth. In this scenario, business is the enemy, continuing to exploit and deplete those resources in the narrow pursuit of maximising short-term shareholder returns.

By contrast, growth that focuses on real, life-enhancing and truly value-adding goods and services – conceived and delivered in recognition of finite ecological limits – is good growth. In this scenario, business views acceptable, long-term returns as the by-product of serving a higher purpose and, rather than being the enemy, is potentially the saviour – the only institution pervasive enough to be capable of concerted, cross-border action to deliver social progress and preserve the environment.

Only good growth, IMHO, can create long-term value for all stakeholders. Only good growth is socially meaningful. And only good growth is capable of being supported by natural systems.

So how do we get more businesses to cotton on to this and change the way they operate?

Show them the size of the pot of gold at the end of the good growth rainbow!

Show them the mounting evidence from multiple studies, like Havas Media’s Meaningful Brand Index and the Stengel 50, for example, which correlate the pursuit of shared value with superior financial performance (superior to the tune of 120-400% versus the general market, depending on which study you look at). Regale them with real-life case studies that demonstrate, as Jim Stengel brilliantly puts it, that “maximum growth and high ideals are not incompatible, they’re inseparable.”

Show them, too, the research conducted by McKinsey and the Ellen MacArthur Foundation, which calculates that there’s more than US$1tn of value (and 100,000 new jobs) to be created by 2025 by adopting the principles of the circular economy. Regale them with real-life examples of these principles in practice – for example how the combination of biomimicry-inspired innovation and reverse logistics developed over the first decade of Interface’s Mission Zero strategy not only cut greenhouse gas emissions by 94% but, over the same time period, helped to increase sales by two-thirds and double profits.

Companies like Interface – well on the way to eliminating any negative impact on the environment by 2020, while substantially growing their business and increasing its resilience (through decoupling that growth from the wellhead) – clearly show that sustainable growth needn’t be a contradiction in terms. But they also show that the activities of the vast majority of companies still falls woefully short of what is required to achieve it.

As ever, it’s worthwhile remembering the sage words of Paul Polman with which he launched Unilever’s Sustainable Living Plan, explicitly framing it, “not as a project to celebrate, but a new business model to implement.”

Sustainable growth is possible. It just won’t be achieved by tinkering with existing business models to make them a little bit less bad. It requires businesses to do more and, if research into the potential of the circular economy is accurate, there are more than a trillion reasons for them to want to.

 

Bringing biology to the design table

I’ve posted on this blog before about the brilliant Janine Benyus and her pioneering work in biomimicry – innovation inspired by models, systems and elements in the natural world. I even devoted a chapter to it in the second edition of Live Long and Prosper.

If you’re not familiar with her work (and, frankly, even if you are), then you can do a lot worse than watch this – one of a number of videos taken at the latest Circular Economy (CE100) summit organized by the Ellen MacArthur Foundation:

Get down to the nub of her talk, and she’s pretty much laying down the blueprint for the future of the manufacturing industry – a root and branch transformation from a wasteful ‘subtractive’ model (whittling an end product from big lumps of material by cutting, grinding etc.) to a zero-waste ‘additive’ one, enabled by the advent of 3D printing.

Listen to her examples – the sheer scale of functionality that can be achieved solely through structure and the layering of materials – and it becomes clear that the opportunities that lay within this technology are simply mind-boggling.

Manufacturers and the product/industrial design consultancies that support you: the time has very definitely come for you to go forth and hug a biologist!