No conflict between sustainability and profitability, say Aussie entrepreneurs

Sustainability

Making good environmental and social decisions doesn’t have to be at the expense of business success or profitability, according to a panel of sustainability-minded Aussie entrepreneurs.

Speaking at Pause Fest in Melbourne yesterday, Patagonia’s environmental and social initiatives manager Shannon Bourke said the global company’s founders still viewed the whole thing as something of an experiment. And, clearly, it’s working.

“They saw it as an opportunity to try and demonstrate to the business community that making environmentally and socially responsible decisions could make good business sense as well. And they’ve been able to demonstrate that so far,” she said.

“We haven’t really seen that trade-off.”

Ben Jefferys, chief of social enterprise startup ATEC* Biodigesters, noted that because of its strong environmental and social goals, the business has historically had a tendency to put sustainability before sustainable business.

ATEC* produces and distributes biodigester systems, processing farm waste to create gas for cooking as well as fertiliser. Primarily, the startup works with small-scale farmers in developing countries.

Jefferys and the team have almost had to work profitability into the business model, increasing their prices over time, he said.

“We’re working with lots of farmers who are very income-poor,” he explained.

“We were predominantly looking at the impact rather than the profitability of the business,” he said.

“It then created a problem: we were constantly cash-poor.

“Then we realised the farmers were generating so much value out of the systems they can actually pay more.”

Ultimately, Jefferys realised by putting just a little bit more of a focus on making money, he would be able to both serve his customers better, and meet the company’s ethical goals in the long run.

“That balances out us being more sustainable, to suit them better … it means we’re able to cover our costs much more effectively, as well as provide better service to customers and provide flexibility.”

Lily Dempster, founder and chief of The Neighbourhood Effect, noted that some of the most successful businesses of the past decade have been sustainable, almost by accident.

She pointed to giants such as Uber and Airbnb, which are “collaborative consumption” companies, making better use of existing resources that are going unused.

“They’ve unlocked a huge amount of value from those poly-utilised resources,” she said.

“There’s huge profitability in better resource efficiency, and a big part of environmental sustainability is about using resources more efficiently.

“I don’t think there’s any conflict between profitability and sustainability.”

However, when it comes to larger incumbent businesses, particularly listed companies, things get more complicated, she said.

“Certainly when you look at companies and how they’re legally structured … you have a fiduciary duty to maximise value.

“And in an economy where a lot of the environmental degradation that occurs is externalised — it’s not a cost that the company wears — you’re going to have decisions that are pushing to counter good environmental practice because it does maximise profit.”

In terms of legal and economic structuring of companies, there is work to be done to truly ingrain an environmentally friendly ethos, she noted.

“But if your purpose is to increase resource efficiency, or your focus is on creating some positive environmental benefit, it absolutely is possible to be very profitable.”

Still, even if environmental benefit isn’t your main purpose, there are a few things small businesses and startups can do to reduce their impact as much as possible.

Simon Smallchua, the moderator of the panel and co-founder of impact-focused marketing strategy business Harvey, is currently going through the process of becoming certified as a B-Corp – or a company that provides benefit to the community in some way.

It’s a process that has taught him a lot about both what’s required in the running of a business, and the small differences that can add up to big impact, he said.

For example, “by going through the B-Corp process you have to evaluate your suppliers”, he explained.

The buying power a business has can be surprisingly powerful.

“There are certain products you have to buy.

“But you also buy from certain cafes, how sustainable are they? What bank do you bank with?

“Suppliers are a very easy thing to change, and they’re often not even considered.”

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