While the morality of the profit motive is an argument often used to rail against a system putting money and shareholder satisfaction at the forefront, sustainable business models show how such profiteering, when taken in its social, economic and environmental context, can provide for positive outcomes without the need for government coercion. The difference between corporate social investment and profit is that self-interest, and not altruistic giving, is the underlying motivation.
Sustainable business models and practices implement operations to minimise negative impacts of business activities on the economy, society and environment in which they operate. This is often referred to as managing the triple bottom line (profits, people and planet). Furthermore, due to the logistical and geographic dominance of larger corporates, they are in a unique position to effect positive change. Such models are often facilitated by advances in technology and provide examples of how markets can provide profitable and innovative solutions to increase human wellbeing.
The issue of these contexts is by no means a new phenomenon but has been receiving more attention as we live in increasingly globalised world with freer flows of information both between the business and the public and the public itself. Businesses have always had to take environmental, social and economic circumstances in which they operate into account, in terms of how brands and companies are viewed down to product selection and creation. In the age of social media ‘twitch mobs’ and digital boycotting, business sustainability can act as a mitigating factor as far as public relations are concerned. This is not the focus of this piece, however.
Due to the variable nature of sustainable business, it may be easier to explain through practically implemented sustainable business models and practices. For this purpose, I will highlight a few examples.
In addition to being the main ingredient of Coca-Cola, water is vital to manufacturing and indispensable in the farming of other ingredients. Safe, accessible water is also essential to the health of people, communities and ecosystems. Furthermore, water is indispensable for ‘economic prosperity—all things critical for the business’.
For Coca-Cola, water stewardship is an imperative:
“We have a special interest in protecting local water sources that sustain communities because we share those very sources with the communities where we operate…our water stewardship program is grounded in responsibility, but we also have a vested business interest. If communities stay strong, our business will stay strong; if the watersheds we share with them are conserved, those communities, and our business, can thrive.”
Coca-Cola’s water stewardship efforts focus on areas where they can have the greatest impact, such as improving efficiency, protection plans for source water, and replenishing water used back to communities or nature. By quarter 1 of 2014, the Replenish Africa Initiative had provided clean sustainable water to over a million Africans. With nearly 2 billion litres of water replenished to nature and local communities, 65% of Africa’s watersheds being positively impacted.
FrieslandCampina is one of the largest businesses in the world of dairy farming. They use the knowledge gained over 140 years to further develop dairy farms in specific countries in Asia, Africa and Eastern Europe through the Dairy Development Programme.
The program focuses on training, knowledge partnerships and initiating and supporting projects improving dairy farming infrastructure. This program contributes to food security and quality as well as a more sustainable production of milk along with raising the standards of living for both dairy farmers and consumers.
These benefits come alongside the growth in profits. The program pairs well with the businesses cooperative model, as better production and higher quality products help to increase market share as well as the programme insuring the viability of new cooperative members. This is true especially in the ‘small-scale’ markets targeted by the initiative.
In 2017, more than 55,000 local farmers in nine countries in Africa, Asia and Eastern Europe were part of the Dairy Development Programme, and it has reached over 250,000 farmers since its 1980 inception.
Launched by Vodafone in Kenya in 2007, M-Pesa is a mobile phone-based money transfer, financing and microfinancing service. Designed to benefit customers who have no access to banks, transactions are made via mobile handsets allowing customers who are unbanked or are far from banking facilities to perform transactions anywhere there is cellular signal.
M-Pesa offers customers fast and cost-effective banking and financing solutions, and as every transaction is protected by a PIN, it is safer than transacting with cash.
The ease, speed and safety of transactions make it an ideal tool for rural entrepreneurs and farmers. Such micro-banking helps formalise and develop economies in such communities as well as in informal urban settings. According to a recent press release, “A recent study estimated that M-Pesa has lifted 2% of Kenyan households out of poverty”.
M-Pesa has over 25 million customers in Kenya alone, and in neighbouring Tanzania, 8 million. Such services provide access to the formal financial system with ‘formal financial inclusion in Tanzania last year was 65%, up from just 44% in 2009’.
For those of us with a less statist bent, sustainable business models and practices are good examples of the power of market feedback to provide social, economic and environmental solutions.
Graham McTaggart is a University of KwaZulu Natal BSocSc (Honours) graduate having previously worked in the sustainability field for Regency Foundation Networx.