There’s one supplier that all businesses have in common.
It may not be one of your direct suppliers. But it definitely provides the inputs to products that your business consumes.
It’s the environment.
For thousands of years, it was possible for us to extract resources and the Earth would recover. But the environmental bank account is running low and the loans we took out to fund unsustainable growth over the past century need to be paid back. Or the planet won’t be able to provide the same level of resources in the future.
Protecting and restoring the environment aren’t nice-to-have charity or volunteering projects. As sustainability advisor, Andrew Winston highlights in his book “The Big Pivot,” addressing issues from climate change to dwindling natural resources is a strategic business strategy. Especially for companies looking to survive and thrive over the next century.
Environmental projects can lower costs, reduce risk, protect future supply, and increase a company’s market share. The external returns to clean air, fresh water, healthy food, and thriving ecosystems are a great bonus to an already strong business case for taking action.
In the first article in this series on implementing a betterness portfolio, we talked about creating financial wealth. Another valuable area to focus on is building environmental wealth. That means protecting and improving natural assets. From conserving existing resources to restoring and supporting thriving ecosystems.
Plants, animals, air, water, minerals all are natural assets that we derive benefits from. Some are renewable, others aren’t, and some could be recovered with proper management.
Some ways to create environmental wealth with your betterness portfolio
- Design a zero-waste production process where all by-products are reused instead of sent to landfill, waterways, or pumped into the air.
- Purchase clean energy or install your own alternative energy sources and potentially sell excess back to the grid.
- Incorporate funding toward environmental projects in your business model (ex. buy one/gift one, % donation, or selling products and services that restore ecosystems).
- Invest in a LEED-certified building for your new office space.
- Look for opportunities to be greener within your current infrastructure (ex. more efficient appliances, plumbing, gardens, or alternative energy sources).
- Support local environmental efforts by providing money, time, materials, or other resources like pro bono or discounted services.
- Fulfill the requirements to obtain a relevant sustainability certification for your products (ex. Forest Stewardship Council, Rainforest Alliance).
- Swap out your default apps and software to give back while getting work done (ex. Tab for a Cause, Ecosia search engine).
- For business travel, pick hotels and airlines with sustainability programs.
- When choosing a caterer for your next meeting, look for vendors offering coffee and food produced sustainably.
- Help your suppliers reach sustainability goals by leveraging your brand, funds, or setting high partnership standards.
- Explore alternative ways to add and capture value without feeding the consumption -> landfill cycle (ex. Patagonia’s Worn Wear program, X-as a service business models, shifting to high-quality heirloom products, product recycling programs, remote updates, modular design).
How to incorporate environmental wealth generation into your portfolio process
You can fold an environmental perspective into each of the portfolio essentials with a few tweaks.
Current State
When reviewing the current state of your business, pay special attention to the materials and energy used throughout the product lifecycle. Don’t forget to include the environmental impact of the products you receive from suppliers, the additional environmental costs as the customer uses the product, plus what happens when the customer no longer finds it useful. An environmental impact analysis is a good tool to pull out to examine your starting point.
Future State
Scan environmental trends within and outside of your industry. From new technologies and processes to up-and-coming suppliers and different business models. With a constant stream of new ideas for inspiration, it will be easier to find options that fit your business, add value, and work with your budget. Don’t forget to explore ideas from both a local and international perspective. Maybe you could clean up local waterways or invest in restoring our planet’s weakest ecosystems.
If you’re working in a very large organization (some multinationals have larger income and emissions than whole countries), check out setting Science-Based Targets for clear carbon reduction milestones your organization needs to hit to help slow down global warming.
Value Framework
One of the best-known criteria for environmental impact is assessing carbon footprints. With this framework, the lower the footprint a solution creates, the higher it should rise on your list. And if something has a negative footprint, like planting trees, then those projects would be valued the highest. Alternatively, you could set a company price for carbon to include in all cost estimates.
It’s also possible to incorporate other environmental impacts into your value framework. Check out the Natural Capital Protocol and a corresponding toolkit for more guidance on how to value natural capital and incorporate it into decision making.
Portfolio Allocation
There are a couple of ways to handle environmental projects in your portfolio. One could be to have an environmental impact threshold for new investments. If a project scores below that threshold then it won’t move forward. You could also try bundling a couple of environmental projects together and treat them as one larger investment in your portfolio. Another option is to set aside a % of funds that go to environmental projects or to bonuses for people moving the needle on sustainability indicators.
Execution Support
If your staff isn’t familiar with how to evaluate the environmental impact of ideas it might be helpful to provide some training or an in-house resource to support them and answer questions. Consider shifting your incentive structures to encourage individuals to focus on building environmental wealth.
Research & Experimentation
Prototypes, lab experiments, and trials are all good ways to test the environmental impact of something before you scale up. For example, making more efficient solutions seems like a no-brainer. But one common issue is that making a technology more efficient can cause people to use more of it, effectively negating the positive impact. If your impact depends on other people changing their behavior, then try testing out how they’ll react before your main launch.
Intake Process
Besides engaging employees and customers to identify opportunities, it could be very helpful to work with environmental groups. Consider ones that are either local or that focus on issues related to your business model. These groups could be great collaborators, providing feedback on your impact and plans, plus resources and new ideas. This approach could be especially helpful for organizations without a lot of in-house environmental expertise yet.
Dynamic Views
You could create reports showing the environmental impact of initiatives. Such as trees planted, energy saved, or dollars invested. These dynamic views can be motivating internally but also inspiring for potential customers and partners.
Imagine that you had only one supplier and no other options. Your business fate is tied to the success or failure of that supplier. When our lives and businesses are reliant on one major supplier (like the natural world) it makes sense to treat it as a major stakeholder in our business decisions. With these portfolio tweaks, it’s easy to keep that perspective at the forefront.
Over the course of this series on implementing a betterness portfolio, we’ll continue to discuss other sources of wealth to fold into your portfolio process.
How will you incorporate these ideas into your business? Do you have other ideas of how to build environmental wealth with an enterprise portfolio?