Search
Strategic integration starts with the business model
23 May 2022

When a company seeks strategic integration of ESG, they are aligning ESG practices with their efforts to:

  1. Protect their current business model; and
  2. Increase value creation.

This means working out which ESG impacts (inside-out), trends and pressures (outside-in) pose risks to the way they do business and which might offer opportunities for new products, enhanced processes and ecosystem improvement. This might be a novel idea for many business leaders but, let’s be clear, it is not radical. It is entirely compatible with capitalism-as-usual – requiring only a deviation from the assumption that negative social or environmental impacts delivered by the business can be externalised – i.e. borne by society or nature – in perpetuity

Radical prospects beckon once strategic integration is well underway. During this process, companies have learnt about scaling positive impacts and how to do this along the most energy-efficient pathways possible (by energy, I mean focussed effort in general not low carbon emissions). Because they are ‘surfing the waves’ on the ESG capability spectrum, they have a good vantage point on regenerative opportunities and on how they might collaborate to address the seriously big challenges. This means they have expanded their ESG capability to enable value for the whole market ecosystem: they are starting to live up to their potential – like bees, ants and mycelial networks – as superorganisms. But I digress.

The starting point for any informed discussion on strategic ESG integration is the business model. How we create value. Business models get depicted in various ways and it makes sense to use the one with which you are most familiar. Here’s the framework we use which is based on Clayton Christensen’s basic four elements.

We make a point of highlighting the differentiators within the model. What makes you different from your competitors? If your business seeks competitive advantage, you know already what these are and have been channelling investment into these areas. If you can find a link between any of these areas and the potential for positive ESG impact, you have greater prospect of scaling your sustainable proposition. This is about going with the flow – assuming it has measurable ESG impact potential – and expanded awareness of this fact should reveal the tweaks and nudges needed to get the initiatives onto a more solid ESG footing.

Our general advice here is: “Don’t look for new ESG opportunities until you have tried to work with where and what you are”. Your best chance of making a difference lies in what you do well already. Your business – not its philanthropic foundation. Once you’ve climbed the learning curve in this respect, you’ll be in a better position to explore the ESG innovations that will make a genuine difference.

__

Banner photo by Slidebean on Unsplash

No comments yet.

Leave a Reply

* Please note that comments must be approved before displaying