Friday, February 15, 2013

Making Sustainability Profitable: Lessons from Emerging Markets

HAANAES Knut, MICHAEL David, JURGENS Jeremy, RANGAN Subramanian
Making Sustainability Profitable: Lessons from Emerging Markets Harvard Business Review 91, 3 (2013)132-135

Emerging economies are often thought of as environmental laggards; they’re perceived to be focused more on addressing poverty than on protecting the planet. But when the Boston Consulting Group and the World Economic Forum went looking for the best sustainable business practices in the developing world, their researchers uncovered many visionary enterprises that defied that stereotype. These organizations show that in markets where resource depletion is most keenly felt, conservation efforts can be a wellspring of innovation—and a source of competitive advantage.

Some of these enterprises pursue sustainability out of pragmatism; some out of idealism. But all have consistently generated above- average (and in some cases, astounding) growth rates and profit margins. They’ve achieved them by following one or more of three general approaches: (1) taking a long view and investing in initially more-expensive sustainable operating methods that eventually lead to dramatically lower costs and higher yields; (2) bootstrapping—making small adjustments that generate big savings, which then fund purchases of advanced technologies; and (3) extending their sustainability efforts to the operations of their customers and suppliers (and in the process, devising new business models).

Collectively, these companies demonstrate that there need be no trade-off between sustainability and financial performance. Rather, the pursuit of sustainability can be a powerful path to reinvention for all.