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Business as the engine for social change

The world can no longer afford business as usual. Our global economy faces unprecedented challenges, whether from climate change, ever-increasing food and water shortages, surging populations, or myopic financial markets obsessed with short-term gains and growth at all costs.
by Mindy S. LubberMcKinsey and Company - What Matters Blog Posted on Apr 13, 2010

The world can no longer afford business as usual. Our global economy faces unprecedented challenges, whether from climate change, ever-increasing food and water shortages, surging populations, or myopic financial markets obsessed with short-term gains and growth at all costs.

Social entrepreneurs—by definition—provide the vision for accelerating bigger, more systemic solutions to today’s most pressing threats. But we cannot do it alone. The business community and the world’s capital markets are urgently needed as partners to transform vision into tangible impact. Companies and investors must lead the way by turning these challenges into opportunities. Integrating sustainability is not just good for business; it is essential if we are to continue to grow economies and create jobs in a world of increasingly constrained resources.

For 20 years, Ceres has created key strategies for weaving sustainable environmental and social practices into core business practices globally. We do this by leveraging a powerful force for systemic economic change—a growing network of 90 investors with more than $9.5 trillion in collective assets along with 80-plus network companies, dozens of them in the Fortune 500, all committed to continuous sustainability performance improvements. As we grow, our successes get bigger and solutions bolder.

We began with the Ceres Principles, a ten-point code of conduct drafted in the wake of the 1989 Exxon Valdez oil spill. We launched the Global Reporting Initiative, which has become the international standard for sustainability reporting used by over 1,500 companies worldwide. Ceres introduced the concept of “climate risk“—now deeply imbedded in the corporate and financial lexicon and a driving concept behind our 90-member Investor Network on Climate Risk, which focuses on the financial impacts of climate change.

While these actions have moved us forward—the Skoll Foundation recognized Ceres with a prestigious Skoll Award for Social Entrepreneurship in 2006—incremental progress is not enough.

What’s needed is change that’s both more comprehensive and more pervasive. Business innovation that can scale sustainable solutions—across entire business models and throughout investors’ portfolios and practices—is crucial to putting our global economy on a genuinely sustainable path. Half-measures and one-off sustainability projects will not be nearly enough.

Last year, Ceres unveiled a bold new vision for achieving a sustainable global economy by 2020. Ceres 20*20 reflects the somber reality that companies and investors must do significantly more to align their business models and investment strategies with the bold solutions needed to ensure a sustainable global economy.

Ceres 20*20 lays out four key pillars to achieve global sustainability: ensuring honest accounting to reflect pollution’s true costs; setting new standards and expectations for business and investor leadership; accelerating green investment; and changing the rules of the game with policies that reward sustainable business practices such as clean energy and energy efficiency.

Sustainability cannot be viewed by companies and investors as a side project. It’s not something that can be relegated to the HR team, or one or two sustainability managers. Sustainability needs to be integrated across entire business models — from the boardroom to the copy room, across supply chains and throughout products, to customers and beyond.

Our newest initiative—The 21st Century Corporation: The Ceres Roadmap for Sustainability—outlines the vision, urgency, and competitive advantages for companies that fully embrace sustainability in their business.

The Roadmap’s foundational insight is that the companies that are the most sustainable will be the most successful. Consider the example of climate change: reducing greenhouse-gas emissions to the levels scientists say are needed will require a massive shift to clean, energy-saving technologies in the coming decades. Businesses that put themselves in front of this trend—whether in their operations and supply chains, or products and services they offer—will benefit the most.

The Roadmap provides a detailed guide for companies moving toward comprehensive sustainability and corporate best practices in the coming years—practices that must come to represent the new norm. The Roadmap’s 20 key expectations guide governance, stakeholder engagement, disclosure and—most importantly—performance. Performance will be the ultimate measure of a company’s progress toward achieving sustainability in the low-carbon, resource-constrained global economy now upon us that will dominate at least the opening decades of this century.

“We expect our portfolio companies to do what is necessary to position themselves for a sustainable economy,” says Anne Stausboll, who oversees more than $200 billion of investments at the nation’s largest public pension fund, the California Public Employees’ Retirement System (Calpers). “Environmental and social issues are core to business performance in the 21st century. We are looking for companies that are managing these risks and developing opportunities.”

The best performing companies—and investors—of this century will be those that recognize this by investing and acting now. Enormous opportunities for leadership, customer recognition, and market share await those who step forward with products, services, and portfolios attuned to the 21st century’s economic realities.

Social entrepreneurs are more vital than ever in catalyzing this new business and investor leadership and pointing the way to a sustainable global economy.

Read the post at McKinsey and Company - What Matters Blog

Meet the Expert

Sharlene Leurig

Sharlene directs the Sustainable Water Infrastructure Program at Ceres, a national nonprofit helping institutional investors to integrate sustainability into the capital markets. With Ceres, she works with water service providers to build business models that are resilient to weather extremes, climate change and resource depletion.

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