What’s Your Climate Era Strategy?
We are living in the shrinking window of time when our awareness of climate change can still be matched by our ability to act. How can we shape our businesses to live up to the challenges of the Climate Era?
That’s a big question, but right-sized for this moment. Like the digital and industrial eras before it, the Climate Era will shift industry and enterprise. It will also change our day-to-day lives—the way we work, live, and relate to one another—in a profound way.
This era calls for us to think regeneratively. If we are to heal the human and environmental costs we’ve incurred over the past 250 years, we need to take the sum of what we’ve learned—from every era—to redesign energy, transport, finance, agriculture, retail, travel, fashion, construction, and yes, even sustainability itself.
We believe this is the biggest design challenge we face as a species. It’s work that simply can’t wait.
With that urgency in mind, we invited executives and sustainability leaders from across sectors to a series of events in our European outposts to talk about how businesses are thinking about sustainability.
Aside from the necessary efforts to decarbonize business operations, we drew our attention to how organizations must evolve if they are to boldly innovate their way into this new era. Here are five takeaways that emerged:
1. Bring sustainability to the design stage
What we heard from leaders is that the mindset around corporate sustainability efforts has shifted from "Why should we do this" to "How do we do this?".
That’s good news, as 80 percent of sustainability-related challenges go back to the design stage. Today, the majority of energy and investment is still spent cleaning up the mess downstream. That prevents businesses from seeing sustainability as a driver of regenerative growth.
What we know from our work with Ford and many other companies is that sustainable design choices are not at odds with growth. Producing an electric version of the best selling vehicle in America—the F-150—meant, first and foremost, designing a better truck. The point wasn’t to convince their customers to go electric. It was to design vehicles that drivers love that also happened to be better for the planet.
The F-150 Lightning was so popular, Ford had to shut down its preorders. By building Climate Era decision-making into its earliest design decisions, Ford was able to deliver upon their sustainability goals and deliver shareholder value.
Such success stories prove that we can do well in business by doing good for people and the planet. But only if climate-friendly decisions are made at the design stage. It’s time to think about making your chief sustainability officer your chief innovation officer. Or vice versa. All innovation going forward has to be fit for the Climate Era.
This raised the questions:
- “How might businesses invite sustainability teams to participate in their most strategic decisions? And what would have to change about those teams for them to be invited to sit at those tables?”
- “What skills are necessary in a Climate Era executive team and how might we build those capabilities?”
2. Start small and scale fast
Among the executives who felt their businesses were already making a positive impact, one theme emerged: start small.
Redesigning smaller brands or introducing smaller product lines is a low-risk way to challenge key assumptions without disrupting the core business—yet. Once you have a few small wins, it’s easier to persuade executives that Climate Era innovation pays off.
Catharina Frankander and Hanna Lumikero from the H&M design studio described how they started by testing out new sustainable packaging. Taking a customer-centric, iterative approach, they introduced paper packaging concepts to customers even before they understood whether or not the packaging was feasible at scale. The project’s overwhelming success helped clear a path to adopt the approach across the organization.
This raised the questions:
- “How might we select the right starting point to show the business value of sustainability?”
- “How might we translate smaller wins to platform- or system-wide innovation?”
3. Focus on human solutions
Humans caused this problem. We’re also the ones who need to fix it.
There was consensus amongst this group that climate change is not just an environmental crisis, but a crisis of human behavior. If we continue to promise short-term exponential growth to shareholders and unlimited consumption to customers, we’ll never be able to reign in extractive practices.
But aside from assigning a strict regimen of behavioral therapy, how can businesses break the perverse cycle of short-term gratification?
The circular economy offers a paradigm shift that, combined with regulation, can help us start uncoupling extraction from growth. That’s not just a technical challenge. To help organizations become more circular, we must look through a broader human lens—one that considers the collective and longer-term desires of customers, employees, and shareholders without ignoring short-term rewards.
Companies like On, a Swiss-based athletic apparel brand, are taking that approach with sub brands (starting small as advised!). They’ve introduced a running shoe made from beans. To make sure the sneakers don’t enter the waste stream, On offers a monthly magazine-like subscription model. Runners use the shoe until they’re worn out, send them back for recycling, and receive a replacement pair. Such circular models reward consumers with the short-term pleasure of enjoying something trendy and new, while upholding the longer-term shared value of a product that won’t end up in landfill.
Balancing long- and short-term thinking is a key behavior shift in the b-to-b world as well. A publishing executive shared the story of a client who would only sign a large contract to produce its books if the publisher could report on its environmental footprint at every stage of production, down to how paper scraps were recycled at the printer station. Requiring that level of accountability helped the publisher to examine its own behavior and invest in long-term change—even if it meant incurring a short-term cost.
This raised the questions:
- “How do we embrace collective, long-term thinking to become fitter for the Climate Era?”
- “How do we build sustainability into more of our workstreams, knowing they’re the most creative and exciting projects for our teams to work on?”
4. Collaborate or die alone
Connecting the right people to drive green solutions is already difficult. When we broached the idea of collaborating with competitors and regulatory bodies, there was a loud cry of almost impossible.
Companies that are built to compete for market share are not set up for collaboration, so when it happens it is often underfunded and clumsy. And yet, we know that systemic Climate Era problems can not be solved by any one business alone.
One recent partnership designed to break the paradigm is Beyond the Bag, an effort to address the problem of the millions of plastic shopping bags that end up in our streets and waterways.
Closed Loop Partners, a circular-economy-focused investment firm and innovation center, convened a Consortium with IDEO and a group of America’s largest chains including CVS Health, Target, and Walmart. The Consortium worked with a select group of startups who are taking an innovative approach to replacing plastic bags. Those teams were able to pilot in mass retail environments where our designers worked with them to iterate their ideas to get to market faster.
CVS Health, Target, and Walmart typically compete with one another. But to tackle a challenge as large-scale as plastic bag waste, they knew they’d have to join forces.
This raised the questions:
- “How do we incentivize and fund more cross-industry innovation? Could the public sector play a bigger role here?”
- “We have developed operational excellence in vertical, extractive processes. How do we develop operational excellence in cross-business collaboration?”
5. Attract talent who give a damn
Many senior leaders described a major crisis in retention, and without smart, passionate talent, no transformative work can be done. Everyone agreed: We must engage and retain the best and brightest.
A recent survey done by the Pew Research Center points out that students and young professionals are more sensitive to the climate crisis than previous generations.
One executive described how working on sustainability projects across functions has led to unseen levels of motivation amongst employees. Companies that can clearly show they have a purpose and a plan for climate action will find it easier to recruit and retain those who can help us address the challenges at hand.
This raised the questions:
- “Can sustainability teams partner with HR to attract top talent?”
- “How do we make climate challenges a platform to activate talent across the organization?”
This work can’t wait
These conversations, which felt less varnished than the typical business roundtable, were revealing. While leaders are committed to becoming more sustainable, they often feel stymied and unable to make substantial progress. My conclusion is that we need more of these forums to share progress and speak candidly about what’s holding us back.
How is your organization designing itself for the Climate Era? I’d love to hear from you.
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