Dalian, China – The big “green” global brands are well known for their sustainability efforts, but they are by no means the only companies that go beyond regulatory compliance to operate in environmentally responsible ways. A new World Economic Forum report, produced in collaboration with The Boston Consulting Group and released on September 15, identifies 16 fast-growing, high-performing companies from the emerging markets that also shine in terms of their environmental and social initiatives.
The report, titled “Redefining the Future of Growth: The New Sustainability Champions”, provides a welcome counterpoint to regular reports of mankind’s continuing pressure on the Earth’s natural resources – from fresh water and fossil fuels to fish stocks and arable land. It demonstrates that innovation of all kinds is burgeoning in emerging markets – the very regions where the pressures of resource depletion will be felt most keenly.
That finding is doubly interesting given the challenges faced by emerging market companies, which often have to deal with multiple problems – from sub-standard infrastructure and weak environmental regulatory regimes to acute talent shortages and under-developed governance practices.
The report highlights businesses in emerging markets that create innovative and profitable solutions for driving growth while positively influencing their regions’ sustainability. Together, the two organizations analyzed more than 1,000 companies – from around the world and in a wide variety of industries – on the basis of criteria that gauge sustainability, innovation, and scalability. They also interviewed 200 regional, industry, and topic experts and directly engaged chief executives and chairpersons of some 50 top-performing emerging-market enterprises.
The study yielded 16 fast-growth organizations with revenues under $ 5 billion that share a unique mindset and set of practices. The companies – labeled the “New Sustainability Champions” – are based in nations as diverse as Costa Rica, Egypt and South Africa.
Why the New Sustainability Champions Matter Now
The New Sustainability Champions are more than just symbols. Their overall performance matters because emerging markets in total are set to contribute more than three-quarters of global growth by 2012 – and because those markets will likely feel resource scarcity the most. By 2050, the world’s population is expected to be about 30 percent greater than it is today. By 2025, Brazil, China, India, Indonesia, the Russian Federation, and South Korea together will account for more than 50 percent of the world’s growth.
These companies are in the vanguard of the businesses working to solve fundamental environmental and social challenges and to reshape business landscapes. Kenya’s Equity Bank, for example, has pioneered mobile banking to reach farmers in its nation’s rural areas. Manila Water, a utility in the Philippines, is using community partnerships, water-shed management, and flexible payment options to boost access to clean water.
Collectively and individually, they are becoming inspirational models not only for their emerging market peers but also for companies worldwide.
“While demonstrating superior industry performance and operational efficiency, the New Sustainability Champions innovate to overcome the very real constraints that they face,” says Knut Haanæs, a BCG partner and global leader of the firm’s Sustainability Initiative of the report. “They proactively engage with all stakeholder groups and positively influence their environments. As a result, they generate steady profitable growth and are role models for their regions and industries.”
The report highlights three broad sets of characteristics shared by the New Sustainability Champions:
They continually invest in innovation to turn constraints into opportunities. The Champions typically eschew expensive research into new technologies in favor of exploring how to make current products cheaper, more widely available, or better suited to local production processes. They also stand out for their ability to turn constraints in delivery channels into opportunities. For instance, they may identify alternative production methods to get products to market more directly.
They embed sustainability in their company culture. The Champions are aware that deep and sustained impact requires demonstrable commitment from the entire organization – not from the top management team alone and certainly not solely from the chief executive. The best intentions can flounder or be subverted if they are being implemented by a skeptical or indifferent team. Conversely, an engaged and proactive staff can be a constant source of new ideas for products, services, delivery mechanisms, talent development, and supply sources.
They work to shape their own business environments. The champions recognize that maximum impact cannot be achieved only within the boundaries of their own organizations. They understand that it requires engagement with the wider business ecosystem of regulators, competitors, suppliers, customers, and other stakeholders.
‘Redefining the Future of Growth: The New Sustainability Champions’ contains actionable insights that can help business leaders better balance economic growth with responsible stewardship of the earth’s resources.
Source: BCG.
