John Elkington is an author, entrepreneur and world authority on corporate responsibility and sustainable development. He is also the Founding Partner, Chairman, and Chief Pollinator at Volans, as well as co-founder, now Honorary Chairman, of SustainAbility and of Environmental Data Services.
In this interview Mr. Elkington talks about his reexamination of the phrase “triple bottom line”, implementing CSR and sustainability into strategies and operations, and the future of the business world.
1) Why did you feel that after 25 years a fundamental reexamination of your triple bottom line theory was warranted? What has changed in your mind?
Since the 1990s, the sustainability sector has grown rapidly, though at around $1 billion in annual revenues globally it is no giant. Still, market research suggests that future markets for its products and services could be huge — with the U.N. Sustainable Development Goals forecast to generate market opportunities of over $12 trillion a year by 2030 (and that’s considered a conservative estimate).
But success or failure on sustainability goals cannot be measured only in terms of profit and loss. It must also be measured in terms of the wellbeing of billions of people and the health of our planet, and the sustainability sector’s record in moving the needle on those goals has been decidedly mixed. While there have been successes, our climate, water resources, oceans, forests, soils and biodiversity are all increasingly threatened. It is time to either step up — or to get out of the way.
As I wrote in the Harvard Business Review:
Fundamentally, we have a hard-wired cultural problem in business, finance and markets. Whereas CEOs, CFOs, and other corporate leaders move heaven and earth to ensure that they hit their profit targets, the same is very rarely true of their people and planet targets. Clearly, the Triple Bottom Line has failed to bury the single bottom line paradigm.
Critically, too, TBL’s stated goal from the outset was system change — pushing toward the transformation of capitalism. It was never supposed to be just an accounting system. It was originally intended as a genetic code, a triple helix of change for tomorrow’s capitalism, with a focus was on breakthrough change, disruption, asymmetric growth (with unsustainable sectors actively sidelined), and the scaling of next-generation market solutions.
To be fair, some companies did move in this direction, among them Denmark’s Novo Nordisk (which rechartered itself around the TBL in 2004), Anglo-Dutch Unilever, and Germany’s Covestro. The latter company’s recently retired CEO, Patrick Thomas, has stressed that the proper use of the TBL involves, at minimum, progress on two dimensions while the third remains unaffected. It is time for this interpretation to become the default setting not just for a handful of leading businesses, but for all business leaders.
I see a bright ray of hope coming from the high-energy world of B Corporations. There’s a lot of momentum there; around 2,500 businesses worldwide are now certified as B Corps. All are configured around the TBL — dedicated to be not just “best in the world,” but “best for the world.” Major companies like Brazil’s Natura and Danone’s North American operation are now B Corps, with other multinational corporations considering how to follow suit.
To truly shift the needle, however, we need a new wave of TBL innovation and deployment. But even though my company, Volans, consults with companies on TBL implementation, frankly, I’m not sure it’s going to be enough. Indeed, none of these sustainability frameworks will be enough, as long as they lack the suitable pace and scale — the necessary radical intent — needed to stop us all overshooting our planetary boundaries.
Hence the need for a “recall.” I hope that in another 25 years we can look back and point to this as the moment started working toward a triple helix for value creation, a genetic code for tomorrow’s capitalism, spurring the regeneration of our economies, societies, and biosphere.
*For some background on the recall process itself, see here:
2) Following up on that question, do you feel that we have reached an inflection point regarding the acceptance of CSR and sustainability as viable strategic approaches by mainstream business in 2018, given Larry Fink’s open letter to CEOs, or are we not quite there yet?
BlackRock are a passive investor, which means that they are not going to rock the corporate boat that much. Welcome, but not quite the manifesto for changing capitalism that some have seen it to be.
3) Given the fact that most managers and executives, at least in the West, have been long taught to believe that there is a fundamental trade-off between profit and social responsibility, how should they best go about holistically incorporating CSR and sustainability into their strategic and operational thinking?
In the same way that we encouraged them to pay attention to what NGOs were saying a few decades ago and then more recently to what social innovators, social entrepreneurs and impact investors are doing, they now need to pay a lot more attention to what exponential innovators, entrepreneurs and investors (from Elon Musk to Josh Tetrick) are now doing to disrupt one sector after another. More sustainable outcomes are not guaranteed on these trajectories, indeed far from it, but the combination of disruption with new values is a powerful one.
4) It is, understandably, a herculean task to fundamentally reexamine the entire way in which one does business, in which specific areas do you foresee businesses having trouble with the integration of these concepts?
There is much talk currently of corporate purpose, which is all well and good. But I’m skeptical. If Patagonia talks about purpose, I know what I’m dealing with; if ExxonMobil does, it’s a different matter entirely.
Business leaders need to lobby much more actively for the sort of market incentives that will push and pull their industries in the right directions – and at the right scale and pace.
5) In your opinion, what does the future of business look like? Will companies still be able to get away with negatively impacting society in favor of profit and growth? Or will investors begin to realize that such rabid short termism is ultimately unsustainable, and begin to reward companies that prioritize long term growth, and thus sustainability, over quarterly returns, or I am giving wall street too much credit?
Some companies will always get away with murder – because we haven’t yet woken up to what they’re doing, because we don’t (yet) have enough political leverage on them, or because we don’t care.
But major brands are finding it increasingly hard to hide – and, indeed, their younger employees are bringing a very different value set to work.
Wall Street will struggle to take all of this on board for quite some time yet, but I do see the Larry Fink CEO letter as an encouraging sign that our change agenda is finally starting to percolate at the top of some pretty major financial institutions.