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The EFMD business magazine

Make it Happen, Better Business, Better Tomorrow

Better Business
The adoption of more circular business models by private sector companies has become increasingly important. With mounting concerns over climate change and the depletion of natural resources, businesses are acknowledging the need for sustainable practices. However, the transition towards sustainability and circularity is not without its challenges. We will explore these challenges and the opportunities presented in the journey towards the adoption of sustainability and more circular business models. The time for procrastination is over.

In recent years, the adoption of more circular business models by private sector companies has become increasingly important. With mounting concerns over climate change and the depletion of natural resources, businesses are acknowledging the need for sustainable practices that balance economic growth with social and environmental responsibilities. However, the transition towards sustainability and circularity has its challenges. This article explores these challenges and the opportunities faced by private sector companies in their journey towards adopting sustainability and more circular business models. The time for greenwashing and continuous procrastination is over.

We have to rethink and reimagine our current financial and linear business models. The time of unlimited growth and creating waste is over. It questions our current shareholder-driven profit model and requires a stakeholder-driven model, creating value and prosperity for all stakeholders.

Challenges: from the linear mindset

1. Changing mindsets:

One of the primary challenges faced by private sector companies is the need to change mindsets and the prevailing business model. Embracing sustainability requires a shift in thinking from short-term profits to long-term gains, which can be met with resistance from employees and management. Overcoming this challenge involves raising awareness of the benefits of sustainability and creating a culture that values social and environmental goals alongside financial ones. Sustainability is not a cost but a source of different and improved profits.

2. Financial implications:

For many companies, investing in sustainability comes with financial implications. Adopting sustainable practices may require significant capital investments or changes to existing business and financial models, which can pose short-term challenges for investment and costs. However, research has shown that companies that prioritise sustainability tend to experience long-term benefits, such as cost savings through resource efficiency and enhanced brand reputation, thereby offsetting any initial financial outlays.

3. Supply chain complexity:

Private sector companies often face challenges when it comes to implementing sustainable practices across their supply chains. Ensuring that suppliers and partners adhere to sustainability standards can be a complex task, particularly for multinational corporations with a vast network of suppliers. Collaborative efforts, such as setting up codes of conduct or certification programmes, can help address this challenge by encouraging sustainable practices throughout the supply chain. Clearly, we need to question current linear-driven supply chains.

4. Regulatory compliance:

Following ever-changing environmental regulations is a challenge faced by companies in their sustainability journey. The complexity of navigating various regulatory frameworks across different regions can be daunting. However, companies that proactively address compliance issues and adopt sustainable practices ahead of regulatory requirements can gain a competitive advantage and prove their commitment to sustainability to stakeholders.

It is about the survival of your business in the long term; if you have a short-term focus and don’t bother, you will become a dinosaur.

Opportunities: to a circular mindset

1. Enhanced reputation:

Adopting sustainability practices offers businesses the opportunity to enhance their reputation and differentiate themselves. Consumers are increasingly seeking out environmentally and socially responsible products and services and companies that align with these values are more likely to attract and keep customers. Additionally, sustainability-focused initiatives help attract top talent and build strong relationships with stakeholders.

2. Innovation and competitive advantage:

Sustainability challenges companies to find innovative solutions that reduce environmental impacts, drive cost efficiencies and enhance product differentiation. This commitment to innovation can lead to significant competitive advantages, such as the development of new green products and services or the implementation of sustainable manufacturing processes, reducing waste and improving resource efficiency. Sustainability is synonymous with continuous innovation and improvement in your supply chain, products and services.

3. Long-term profitability:

While financial investments may be needed, adopting sustainable practices can ultimately lead to significant cost savings and improved profits. Energy-efficient technologies, waste reduction initiatives, and sustainable supply chain management can all contribute to reducing operational costs over the long term. Moreover, as the world shifts towards sustainable practices, fossil fuels, minerals and rare raw materials become increasingly scarce and more costly. Companies that invest in renewable energy sources can better insulate themselves from future price shocks and gain independence from supply chains.

4. New opportunities/sustainability embedded in the DNA:

Sustainability practices can help companies mitigate risks associated with climate change, resource scarcity, and increasing stakeholder expectations. By assessing and addressing potential environmental and social risks, companies can proactively manage their operations in a way that reduces vulnerabilities and increases resilience to changing conditions. Companies which make sustainability part of their DNA can help safeguard their long-term viability.

Examples of good practice

SMEs serve as good examples that illustrate what we have aimed to articulate. Here are three SME companies from different countries that have delivered successful and credible sustainability initiatives and one more detailed case study:

1. Patagonia (United States):

Patagonia, an outdoor apparel company, is well-known for its commitment to environmental sustainability. They have implemented initiatives such as using recycled materials in their products, advocated for sustainable practices in the fashion industry, and donated a portion of their sales to environmental organisations.

2. Ecover (Belgium):

Ecover is a Belgian company that produces eco-friendly cleaning and laundry products. They have achieved sustainability by using plant-based and biodegradable ingredients in their formulations, reducing their carbon footprint during production, and promoting waste reduction and recycling.

3. Coco Veda (Thailand):

Coco Veda is a Thai company that specialises in organic coconut-based products. They promote sustainability by working directly with local coconut farmers, ensuring fair trade practices, and using every part of the coconut to minimise waste. Additionally, they support community development projects and actively engage in environmental conservation.

Case Study: GreenTech Solutions, based in North Carolina

GreenTech Solutions is a small-to-medium-sized enterprise (SME) based in the renewable energy sector; it operates in 40 countries. The company was founded in 2009 with a mission to make sustainable energy solutions accessible and affordable to a wide range of consumers. It specialises in the design, development and installation of solar panels, wind turbines, and other renewable energy systems.

Sustainability initiatives:

1. Renewable Energy Production:

GreenTech Solutions actively promotes the generation of clean energy by designing and installing renewable energy systems for commercial and residential properties. It has successfully implemented solar panel installations for numerous clients, helping them reduce their carbon footprint and reliance on traditional energy sources.

2. Energy Efficiency Consulting:

In addition, GreenTech Solutions offers energy efficiency consulting services to its clients. It conducts energy audits to find areas of improvement and provide recommendations to refine energy usage. It has helped many businesses minimise energy wastage and reduce operational costs.

3. Waste Reduction and Recycling:

GreenTech Solutions practices what it preaches by supporting environmentally friendly operations. It has implemented waste reduction and recycling initiatives throughout its manufacturing and installation processes. By using recycled materials and responsible waste management practices, it has minimised its ecological footprint and promoted sustainability within the industry.

Creditable actions:

1. Certifications and Accreditation:

GreenTech Solutions has obtained various certifications and accreditations that prove its commitment to sustainability. It is certified by the Clean Energy Council, which verifies its technical ability and adherence to industry best practices. Its products and installations meet stringent quality standards, giving customers confidence in its offerings.

2. Partnerships and Collaborations:

GreenTech Solutions actively collaborates with other reputable organisations and industry experts to further advance sustainability within their operations. They partner with academic institutions for research and development and work closely with local and national government agencies to advocate for renewable energy incentives and policies.

3. Track Record and Customer Testimonials:

GreenTech Solutions boasts a solid track record of successful renewable energy installations and satisfied customers. Its portfolio includes several notable projects, both large-scale and residential, which further exemplify its commitment to sustainability. Positive customer reviews and testimonials attest to its reliability and ability to deliver sustainable solutions.

In summary, GreenTech Solutions is an SME that has excelled in delivering on sustainability in its plans and actions. Through its focus on renewable energy production, energy efficiency consulting, waste reduction, and responsible practices, it has contributed significantly to the transition to a greener future. Its certifications, partnerships, record, and satisfied customers further confirm its credibility as a leader in the industry. By championing sustainability, GreenTech Solutions sets an inspiring example for other SMEs that aspire to make a positive environmental impact.

The adoption of sustainability practices in private sector companies is not without its challenges. However, the opportunities presented by sustainability, such as enhanced reputation, innovation, cost savings, and risk mitigation, make it a worthwhile endeavour. By recognising and addressing these challenges head-on, companies can position themselves as leaders in sustainable business practices, driving positive change while ensuring long-term economic success.

Creating a ‘Better business, better tomorrow. Make it happen!’ should be necessary and not an afterthought or a desirable thing to do. This is not about a charity model but for you to question your current financial and business model and look towards a circular-driven business model.

Make it happen, better business, better tomorrow

Senior Executive with more than 30 years experience in Executive Education, Leadership and Management Development, Sustainable Strategy, Finance and Leadership Consulting. Recognized as an exceptionally results and people orientated executive in the Executive Education and Leadership Consulting industry, someone who is creative, take calculated risks and acts and thinks strategically.

Paul Boulos is the CEO and founder of Antworks Consulting, an international consortium of business management companies and experts. He is a certified executive business coach, a professional business consultant, and a board advisor with over 20 years of experience in leading fast-paced, blue-chip global and regional corporations across multiple sectors.

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