Executive Perspectives: How today’s leaders make sustainability a part of their organizations.
By Andy Wales | 22 November 2012
Trust and sustainability are two of the most important words in the lexicon of modern businesses. Businesses thrive when their customers trust and have confidence in the products and services they provide; and businesses endure because they maintain a consumer base that keeps returning year after year.
Increasingly, these consumers recognize the importance of sustainability in the way in which they live and in the products they choose to purchase. There are currently two billion middle-class consumers in the world and the number is projected to reach five billion by 2030. Much of the increase will come from developing markets and SABMiller sees this trend as one of the main drivers of future growth. This half year, two of our fastest-growing regions have been Africa and Latin America which saw EBITA growth on an organic constant currency basis by 19% and 14% respectively. This growth is an exciting opportunity, but it will place further demands on the world’s finite resources, leading to potential tension and conflict as countries seek to maximize their opportunity for growth, and only serve to further emphasize the importance of sustainability as a driving factor for public and private sector decision-makers.
The role that business can play in resolving these tensions is not always clear. What is the legitimate role of the private sector in delivering and driving sustainable economic development; and how has business responded to the scrutiny applied following the global financial crisis? At Rio+20 earlier this year there was clear demonstration of the extent to which progressive elements of the private sector are actively leading the drive to address the resource challenge. The Natural Capital Leadership Compact, launched at Rio by 15 consumer goods companies, has helped to sharpen private sector focus to increase the understanding and appropriate valuation of natural resources to allow for their better allocation.
Many companies are also realising the huge opportunity to reduce the resources they use. For example SABMiller will become 25% more water efficient by 2015 and 50% more carbon efficient by 2020. The more water efficient we become as we brew and package beer, the less liquid we have to alternatively heat and cool – which means we need less energy. The more we can use waste materials such as spent grains and wastewater to generate renewable energy, the less fossil energy we need to use.
However, it’s not just about protecting natural resources – sustainable growth is also about driving economic and social development in local markets. Where it makes sense, we source agricultural raw materials locally – as do other multinationals. This enables us to reduce our import and distribution costs whilst maximising local economic benefit by guaranteeing markets for crops and helping farmers to improve agricultural productivity and expertise.
To do all of these things though, we need help to build multilateral partnerships to develop practical, local solutions that generate growth and drive development. And we need governments to help with this whilst appropriately valuing, managing and understanding the interconnected nature of precious natural resources – what some call the water-food-energy ‘nexus’. Rather than work in silos, as is often the case – with water, food and energy policy set with no or little regard to each other – we need government departments to be more connected and to make policies which use the nexus to help manage trade-offs between scarce resources and which account for their real value.
Back in 2008 SABMiller’s CEO, Graham Mackay, said that Sustainable Development is not discretionary, but rather a core part of business and a critical enabler of commercial success. This is more true than ever and I do not see now how we could remain competitive if, during difficult economic times, we side-lined those activities which are key to the development and success of some of our most exciting and vibrant regions.