Sustainability incentives work better than deterrents

Innovation was a popular topic at last week’s Responsible Business Summit in London.

More and more companies are taking a positive, proactive approach to environmental and societal challenges through innovation.

Previously major multinationals were approaching issues such as climate change and community engagement purely as business and reputational risks.

Now, companies such as Marks and Spencer, Vodafone and H&M realise that they can have a bigger impact by creating a work environment that is open to pioneering product ideas and revolutionary approaches to daily operations.

Innovation requires the establishment of positive incentives for employees. Thanks to this approach, the three companies above have realised cost-saving, environmentally-friendly and socially supportive technologies and programmes such as mobile phone banking, packaging with reduced emissions, and more transparent and efficient supply chains.

Peter Unsworth, the CEO of Tata Beverage Group, also discussed their application of R&D technology to ‘disruptive product innovation’. Tata’s innovation-enabling ethos and organisational structure encourages all employees to consider sustainability improvements in all of their products and services.

Starbucks is another example. The company is reaching out to customors for their ideas on reducing the number of non-recyclable cups by creating a convenient alternative. Read about their betacup challenge here.

Sustainability professional’s interest in innovation is tied to their company’s overall approach to innovation.

A recent survey by the global consulting firm McKinsey finds that companies are spending more money on innovation, post-recession: “Four in ten respondents report that both R&D budgets and activity levels are up this year relative to 2009. What’s more, executives are remarkably optimistic that the R&D moves their companies made during the downturn will serve them well in the coming three to five years.”

Two other popular themes were trust and embedding corporate sustainability. These will be the topics of my next blogs.