Sustainable innovation: Potential and Benefits

Any business, to survive, grow or thrive needs demand. Innovation is one of the best tools available to achieve organizational and economic growth as it provides key differentiators to answer or create a need and compete in the market. From simple upgrades of the customer service to new-market disruption, innovation takes many forms. The challenge for innovation is to keep up with the market. The global market has followed a blistering pace over the last decades having organizations constantly exploring new horizons. However, the development of any and every innovation has had a devastating toll on all parties involved in the global market (buyers, sellers, innovators, policymakers, citizens, industries, etc.). By incrementally exploiting innovation, the market (businesses and users alike) has caused an “unsustainable development,” harmful in more ways than anyone can think of.

Innovation, Growth, and Sustainability: tremors and shifts in the global market

On July 28th, 2022, the General Assembly of the United Nations, the main policy-making organ of the UN, recognized the right to a clean, healthy and sustainable environment as a human right by adopting the resolution 76/300. International policymakers and state representatives recognized that environmental degradation, climate change, biodiversity loss, and desertification are consequences of an unsustainable development threatening both present and future generations.

This topic is not only considered a priority by intangible international organizations, but it is also an important part of the relationship newer generations have with society. Studies of Millennials and Gen Z populations have shown a devoted attachment to their values and the impact they have on others and the planet. This fringe of the population seeks action and holds themselves, politics, and businesses accountable for positive social change, especially when the environment is at stake.

This trend can also be observed in the 2021 Deloitte report. Deloitte solicited the view of 14,655 millennials and 8,273 Gen Zs from 45 countries across North America, Latin America, Western Europe, Eastern Europe, the Middle East, Africa, and the Asia Pacific. The following statements have been issued:

Continuing a steady decline over the last few years, less than half of millennials (47%) and Gen Zs (48%) think business is delivering a positive impact on society.
44% of millennials and 49% of Gen Zs say they have made choices over the type of work they are prepared to do and the organizations they are willing to work for, based on their personal ethics over the past two years.

Benefits of Sustainable Innovation (and, costs of unsustainable innovation)

If there is always the choice to not care about these burning issues, net zero commitments are being made across society and will leave behind those unable to avoid the added costs that accompany unsustainable and wasteful habits.

In Quebec, the owner of a dry cleaning business pleaded guilty to four counts of violating the Tetrachloroethylene (Use in Dry Cleaning and Reporting Requirements) Regulation under CEPA. In addition to the $77,000 fine, the owner was ordered to publish an article on the facts relating to the offense in Fabricare Canada magazine.

Still in Quebec, an investigation by Environment and Climate Change Canada (ECCC) revealed a company had imported, offered for sale, and sold automotive finishing products containing volatile organic compounds above the allowable limit. The company received two fines of $125,000 for importing and selling, respectively; and a fine of $150,000 for failing to comply with an environmental protection order. An additional fine of $164,000 related to financial gains ensured the Company did not profit from the sale of the non-compliant automotive finishing products.

Many sectors of today’s world such as manufacturing, transportation, marketing, HR, and even energy producers are working on finding ways to survive, grow, and thrive in new and sustainable ways. Innovative and sustainable products, services, or processes will support their business and society and every company at its own pace. The Network for Business Sustainability described three steps to achieve a green business model:

“Do the same things better”
“Doing good by doing new things”
“Do good by doing new things with others”

The Sustainable Innovation School of Thought does not think of innovation and growth as the enemy as long as fast-paced innovation is paired with sustainability. Sustainable innovation is quite similar to innovation: companies need to continually watch the market, nurture highly risked projects and fuel the market with a balance of breakthrough and incremental innovation.

There are plenty of profitable opportunities for businesses in the pursuit of sustainable innovation. The Green Savings Calculator from O2 found an average potential annual saving on reducing carbon emissions of £2.6m (CAD$ 4m) for a company of 1,000 employees in the UK. Canadian projections could reach an overall higher amount of savings for companies. Starting with modest projects such as performing audits to change irrelevant, time and energy-consuming internal processes. In addition, if such audits are inclusive enough, they are known to renew the interest of employees in their work and positions. There is also the possibility to engage in ground-breaking challenges that are known to attract the most brilliant minds available. In addition, the successful completion of such challenges gives the company legitimacy to sell and create new markets.

Companies engaging in sustainable innovation go beyond immediate revenues to invest in technologies and people for the future as innovation no longer remains a question of R&D only specialists, but an investigation led by multiple stakeholders (communities, patients, scientists, legal advisors, etc.). According to research by Caroline Flammer and Aleksandra Kacperczyk; involving multiple shareholders encourages experimentation and thus, innovative productivity. According to this study, inclusive and sustainable innovation has a larger positive effect in consumer-focused and less eco-friendly industries. Investments in sustainable innovation, if well managed, create a swift return on investment for not-yet eco-friendly industries.

Want to take the next steps to implement a green business model? In our next article, we’ll discuss how to become a sustainable, innovative, and profitable business and obtain the capital to successfully fund these projects. Eager to learn more? Contact one of our experts today!

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