Not enough room for profitability and sustainability
Everybody wants more for less out of everything. But increasingly the 'less' includes lesser 'carbon' and all the other negative impacts on ecosystems and environments. That puts pressure on enterprises to cut costs and make space for sustainability while leaving room for profit. The pressure increases with a raft of new regulations requiring enterprises to disclose double materiality i.e. a company’s impact on the environment and society, and the impact on the business from sustainability-related actions in the market. And, given the hyper-connected nature of our worlds, no enterprise will be spared the task of making structural changes to its operations.
The problem is, the relentless drive for efficiency over the past decades has left little room for adjustment. All these years, if customers or suppliers would not absorb a cost, enterprises could simply dump it into an ecosystem or environment. But heightened scrutiny is making that difficult, as regulators force externalities back into supply chains. We have already seen, for example, flight caps on airports to reduce air and noise pollution; restrictions on short-term rentals to maintain adequate stocks of affordable housing; and extension of employee rights and benefits to gig economy workers.
The problem cannot be ignored. Under pressure and scrutiny, enterprises will end up reporting each other in materiality assessments, not unlike reporting value added tax. We have thus entered an era in which the annoying cliché of constant change is an irritating reality. But with so many contracts taut and tense, how will thousands of enterprises find room for profitability and sustainability? Then how can they full participate in efforts to slow down climate change without economic stress? How can they keep promising more for less?