Sustainability through the market

The World Business Council for Sustainable Development (WBCSD) is a coalition of 160 international companies united by a shared commitment to sustainable development via the three pillars of economic growth, ecological balance and social progress. WBCSD publishes a number of reports, including the following (excerpted from the Web) report, Sustainability through the market: seven keys to success.

In its drive toward sustainable development to date, business has focused primarily on the supply side of the market. Actions have successfully led to improvements in process and product design through tools such as eco-efficiency.

The demand side of the market has not, however, undergone the same scrutiny, despite the fact that significant change is needed in this area to advance sustainability.

After completing significant research on the issue, the WBCSD believes that by taking a holistic approach to the marketplaceso that supply and demand are viewed as part of a system instead of being treated separatelythe market can enhance sustainability.

The business case

There are tremendous opportunities for companies to drive profitable growth by providing products and services that improve people's lives in both the developed and especially in the developing countries. The WBCSD believes companies that find ways to do this will generate higher shareholder and societal value.

By engaging early in this debate, companies can better anticipate the future needs of the market as demand for more innovative products and services increases. These companies will be ready as consumers, retailers, governments, and business itself demand more sustainable products. Pursuing such a sustainability strategy can thus reward companies in two basic ways: they can save money and they can make money.

The combination of both bottom-line incentives and top-line growth possibilities provides good reason for business to seize the opportunities presented by the sustainability success model.

What are we doing (an overview)?

Four years ago, the WBCSD launched a project focused on developing a better understanding of the concept of sustainable consumption. At that time, the international NGO community had calculated that extrapolation of the consumption rates in developed countries to the rest of the world would require the equivalent of three earths.

In addition, the only option then being promoted to combat unsustainable consumption, was to limit choice and access to products. For business, such an option would destroy the very premise for its existenceto create goods and services that improve quality of life.

The WBCSD challenged itself to create a more inspirational visiona business case for sustainable development. After four years and a great deal of dialogue around the world, the organization believes it has that vision.

In a report, Sustainability through the market: seven keys to success, released in April 2001, the WBCSD argues that by taking a holistic approach, in which supply and demand are viewed as being part of a single system rather than separate entities, the market can work to advance sustainability.

Many interpretations of sustainability and the market focus too narrowly on either production or consumption, or on supply or demand, ignoring the holistic, integrated nature of the market.

Seven 'keys' for progress toward sustainable development within the market system are identified in the report. All seven are necessary and none is sufficient alone. Making this seven-point vision a reality may require business to act on opportunities and responsibilities that have sometimes been considered outside the traditional realm of the market. The WBCSD has also compiled an STM to-do list for company managers to help businesses format actions after understanding the message of the STM project.

Seven keys to sustainability through the market

1. InnovateTechnological and social innovation can do much to improve people's quality of life and tackle the depletion of resources and the build-up of pollution. But any innovation process must be open and sensitive to the interests of the public.

2. Practice eco-efficiencyEco-efficiency means creating more value with less impact. It can open up significant business opportunities and its predominant goal is to help economies grow qualitatively, not quantitatively.

3. Move from stakeholder dialogues to partnerships for progressIt is now time to move beyond talking to one another to acting together for the purpose of sustainable development. Partnerships for progress are built on common goals, empathy, open feedback, flexibility, ability to compromise, and sharing rewards. Alliances can offer business, government, and civil society new solutions to common concerns facing us all.

4. Provide and inform consumer choiceIndividuals will change their consumption practices when they realize that they can gain financial benefits, better quality of life and security, from sustainable behavior. Consumer choice helps achieve sustainability via a triple-win: by improving quality of life, reducing adverse environmental and social impacts, and increasing the market share of sustainability-minded companies. The media and advertising can be used to promote sustainability messages but there is no point in advertising eco-efficient living if eco-efficient products and services are not there to sustain it.

5. Improve market framework conditionsSustainability is hindered by monopolies, corruption, perverse subsidies, and prices which do not reflect real economic, social and environmental costs. Legislation and regulations should promote competition, effective intellectual and physical property rights, reliable contractual terms, fair and transparent accounting standards, accountability for government intervention, freedom and democracy, and full-cost pricing of goods and services.

6. Establish the worth of the EarthThe market system needs accurate and timely price signals so that resources are not wasted and future opportunities squandered. Markets need to reflect the true environmental and social costs of goods and services. Proper valuation will help maintain the diversity of species, habitats and ecosystems, conserve natural resources, preserve the integrity of natural cycles, and prevent the build-up of toxic substances in the environment.

7. Make the market work for everyonePoverty is one of the single largest barriers to achieving sustainability through the market. The market does create enterprises and jobs but there will be rewards for companies which deliberately create more opportunities for the poorest. Protectionism makes it harder for business to seize such opportunities. Making the market work for everyone involves two basic measures: enabling access to effective markets and spreading consumer purchasing power. Many successes are based on partnerships between businesses and government or civil society organizationsor often on alliances involving all three.

An STM to-do list for company managers

• Set eco-efficiency measurements and targets for your current operations and products according to the practical WBCSD guidelines.
• Understand the full life cycle of your products.
• Pay particular attention to places where you may be vulnerable because of impacts to the ecosystem.
• Establish eco-efficiency as a prominent target and evaluation screen in your innovation process.
• Start a campaign that brings eco-efficiency ideas and tangible savings to your customers and suppliers.
• Test your key technologies and markets against changing trends in societal acceptance.
• Form a stakeholder advisory panel in the communities around your primary operations.
• Set up a stakeholder advisory panel focused on your main products or markets.
• Dialogue with local NGOs, UN agencies, and foundations to focus on places where traditional business models do not work.
• Establish partnerships to seed and incubate products and services for the poor.
• Evaluate which of your business lines are benefiting from subsidies.
• Challenge the business to think beyond the current economic situation and develop new solutions.
• Use your stakeholder advisory panel to help create a strategy for implementation.
• Evaluate which business lines would benefit from planned resource-based economic instruments.
• Explore how you could mitigate negative impacts through new product and process design.
• Determine who would be ideal business partners to constitute a large pool for resource efficiency solutions exchange.
• Brief your management team on carbon permits trading and evaluate the balance of threats and opportunities on your value chain.
• Understand how suppliers, particularly from developing countries, are performing on an eco-efficiency basis.
• Create programs to improve performance and share rewards.
• Form a "Growth Opportunities in Poverty Alleviation" (GOPA) business development team. With the right mix of skills, this team can evaluate where and how your company could meet the needs of the poor while growing the bottom line.

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Taking a holistic approach to the marketplaceso that supply and demand are viewed as part of a system instead of being treated separatelythe market can enhance sustainability