Business Reborn: How to Prepare for the Coming Sustainability Transformation

CSR/ECO/ESG


Demands from customers and investors are driving a sustainability transformation in global business.

A recent survey from Gartner found that 87% of business leaders are increasing their company’s sustainability measures, with 80% citing pressure from customers as a key motive. In addition, 60% of surveyed companies said investors are pushing them on sustainability and 55% said regulatory compliance was motivating sustainability efforts.

Most companies face seismic changes in 2023 and beyond. Recession would add pressure to an already challenging business environment. Sustainability often cuts costs by reducing energy consumption, calming consumers frustrated with the climate crisis.

How can business leaders prepare for the future and a world where sustainability is no longer optional?

Keep it (eco) friendly

Climate change will be the most acute challenge for humanity in the coming years, bringing consequences such as hurricanes, heat waves, and rising sea levels. So it’s no surprise that consumers are giving special consideration to the eco-friendliness” of the products they buy, and this trend will continue in the future.

According to a McKinsey survey, 66% of all respondents, and 75% of millennial respondents, said they consider sustainability when making a purchase. And a new global report from the Economist Intelligence Unit commissioned by the WWF, found a staggering 71% rise in online searches for sustainable goods globally over the past five years.

Many corporations are working to decrease CO2 in the atmosphere under the Paris agreement, issuing sustainability reports and implementing ESG practices. However, only 49% of family businesses say sustainability is at the heart of what they do. In the coming years, they will have to adjust to a new reality.

Environmental challenges also present new opportunities for businesses: more and more startups are being created in this space. In the future, leaders can expect to see the rapid development of sustainability-oriented companies.

Develop a sustainability transformation mindset

The ongoing generational shift among employees and consumers calls for the transformation of companies’ cultures and leadership. Strict hierarchies are no longer popular, and the successful leadership model is now the one of communicator, not commander. Companies need to ensure that all professionals feel empowered to speak up and drive change within their workplaces.

For a board of directors, diversity is the key. The main decision-making body of a company has to involve people who are similar to the growing Gen Z market. More than half of the worlds population is now under the age of 30. To succeed, companies have to know how younger consumers think, as shown by this graphic from The Deloitte Global 2022 Gen Z and Millennial Survey.

For family-owned businesses, where different generations are involved, it will be crucial to formally develop processes for solving disagreements. Although 77% of them indicated that they have to deal with conflicts, just 13% have conflict resolution protocols, according to the survey. Also, just 23% have rules for family employment in place.

To prevent further misunderstandings between family members, it might be worth considering bringing in external help and establishing official internal governance procedures.

Ride the wave of innovation

Every company passes through the same development stages, leveraging its products and services. Eventually, the business leaders come to a “critical visionary point” at which they are running out of options to support growth. Here the way forward is to ride the wave of innovation to find new revenue streams.

Business leaders should analyze different development options in advance. By developing new approaches to their traditional models and constantly innovating products and services, companies can find new opportunities and clients. Teams and leaders also get more motivation and inspiration when they are excited about what the future holds.

Family businesses, an important part of the global market that makes up more than half the worlds GDP, will also have to innovate, although many are still struggling with the consequences of the pandemic.

Almost 70% of family businesses interviewed by KPMG reported that their revenues experienced an initial decline due to COVID-19. But companies with a good digital infrastructure found the transition to remote work easier. In the future, innovation will have a significant impact on the sustainable growth of family businesses.

Look beyond for innovation options

Innovation is an essential part of a company’s growth, but there are different approaches. Developing new technology within a company doesn’t just take time and effort. Leaders have to restructure all the processes, from budgeting to decision-making. But the transformation of traditional approaches can sometimes be impeded by resistance from employees.

To help companies innovate and make an impact, our investment firm is launching Amadeo IQ, a platform connecting businesses to solutions. It will allow corporations to find startups to invest in and offset their emissions by purchasing carbon credits generated by vetted startup companies.

The platform will also provide data intelligence and insights allowing startups, angel investors, investment firms and corporations to make better and more sustainable investment decisions.

Taking innovation beyond the company and investing in startups allows for more flexibility. You just need to look outside of your box to realize that someone is already building what your business needs.

Terry Choi is a partner and investment principal at Amadeo Global, a New York-based investment firm focused on private and public companies. Amadeo Global invests through both fundamental and opportunistic approaches. Mr. Choi is in charge of investment strategies and oversees portfolios at his firm.



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