What do you get if you cross a shipping firm, an NGO and a bank? Or a mobile phone company, a government department and a community of farmers?
Or perhaps a carpet manufacturer and some fishermen? The answer: more sustainable business models, finds David Burrows.
With dwindling resources, a changing climate, demanding consumers, economic crises and challenging emissions targets, business life in 2012 isn’t easy. In fact, it’s bloody difficult, and will only get more so if companies don’t work together.
Collaboration between businesses is nothing new, of course. As Mike Barry, head of sustainable business at Marks and Spencer points out, the retail sector is already working together on big environmental challenges like palm oil through multi-stakeholder roundtables.
However, there’s a different attitude emerging, he says; “an awakening” in the business world that radical change is required and, in time, some pretty interesting cross-sector collaborations will emerge.
James Vaccaro, head of corporate and market development at Triodos Bank, agrees.
“We’re definitely still in the foothills, but the direction is towards greater collaboration and cooperation rather than the mindless competition which has been the zeitgeist until now.”
Some are further ahead than others. Vodafone, for instance, has a “number of different projects” underway in which the mobile phone company is addressing sustainability issues not just outside the four walls of its own business operations, but well outside the sector too.
The Turkish Farmers’ Club, for example, is a project between Vodafone, the Turkish Ministry of Food and Agriculture and about 600,000 of the country’s farmers. Launched in 2009, the service provides farmers with free information on everything from market prices and changing weather patterns to disease threats and optimal water use. In 2011/12 it helped boost farmer productivity by 100m euros.
“The bottom line is that we need to produce food from less land,” explains a spokeswoman, “and we can play a positive role in helping farmers to meet that challenge.”
It’s an unlikely link-up – a mobile phone company stepping in where, to date, a food retailer or manufacturer may well have been the obvious partner. But Vodafone sees this as both a social responsibility and a commercial opportunity. Mobile network operators are well-positioned to act as a “catalyst for action”, explains sustainability director Christele Delbe.
“We have the technology, the distribution channels and the customer relationships to drive these initiatives forward. However, NGOs, private enterprises and governments must also agree to contribute their knowledge and expertise in order to ensure the delivery of the benefits to their full potential.”
Two of the NGOs playing a key role in encouraging more cross-sector collaboration are WWF and Forum for the Future. Both, for example, are involved in the Sustainable Shipping Initiative (SSI) – which started with the main players in the shipping industry, but now includes IT companies, FMCG giants and banks.
This means there’s real potential to overcome some of the traditional hurdles that have caused the sector’s sustainability drive to stall, says Signe Bruun Jensen, environmental partnership and policy manager at Maersk Line, one of the SSI founders.
She explains: “If you look at our business, we operate 600+ ships, but we only own around 200 of them – the rest are chartered in. As the operator typically pays for the fuel bill, we have a keen interest in the installation of technologies to improve vessel performance – the owner less so. That’s a great shame because there is so much new existing technology out there to improve ship efficiency and reduce emissions.
“The challenge is to overcome this split incentive structure to financing investments.”
That’s where the SSI comes in, having brought together the main players in shipping with the banks and insurers to “see if we can come up with new finance models that encourage technology uptake. That could be lower loan rates for green investments, sharing the burden of upfront investments or lower insurance premiums for more efficient container ships,” Bruun Jensen adds.
The SSI is still in the early stages of development and will take time to deliver. Vodafone is also under no illusions that its collaborative work in agriculture will take time to come to fruition: collaboration across sector borders doesn’t happen overnight.
In fact, it can take years, as carpet manufacturer Interface found out. Its new ‘Net-Works’ project, which involves buying thousands of miles of old fishing nets from remote communities in the Philippines and turning them into carpet tiles, is the result of almost eight years’ work. The initiative, which also includes a fibre manufacturer and the Zoological Society of London, is an example of so-called ‘industrial symbiosis’ – a concept based on one man’s trash being another’s treasure.
“We’re six or seven months into a pilot, but the journey started back in 2004 when we first started looking at how we could make our business more socially as well as environmentally responsible,” explains Interface global chief innovation officer, Nigel Stansfield. “We wouldn’t have been looking at the fishing industry as a source [for materials] if we hadn’t started on that path.”
Stansfield admits that Interface’s reputation as a green pioneer helped “open doors” and enabled him to bring together a “collection of odd bods” including PhD students and government advisors to get the project up and running. “It takes a long time to get people enthused,” he admits.
Nevertheless, there are plenty of other opportunities out there. According to Marks and Spencer’s Barry, businesses should be considering “the strategic assets you have that others want, or those that others have that you want”. An example is the retailer’s ‘shwopping’ collaboration with Oxfam: “They had the recycling asset and we had the clothes.”
Barry says the project is an example of doing business that is largely in the company’s comfort zone and with the usual suspects, but perhaps working in slightly different ways – in this case rather than just buying and selling clothes, Marks and Spencer is also moving into the textile recycling sector.
Again, there are commercial benefits: “The recycled ‘Shwop coat’ we’ve just introduced retails as £89 – if we’d used virgin material it would cost £150.”
Such linear collaborations, says Barry, are setting the foundations for what, in time, will become the “blockbuster collaborations” – big collaborations between big businesses from very different sectors. These might seem scary now, he adds, which is all the more reason to ensure “you start developing the culture change now so you’re ready to deal with them”.
David Burrows is a freelance journalist.