The rules of sustainability success are changing. Here’s what companies need to know now in order to remain leaders in the next era.

For the past several years “sustainability” has been a buzz word that has entered the business lexicon.  And like “strategy,” sustainability means many things to many people. But most business executives recognize now that sustainability is more than a fad.  They understand that sustainability unites cost savings, revenue, innovation, customer demand, employee values and stakeholder requirements, while benefiting the planet and society at the same time.  They also understand that over the next five years sustainability will become increasingly more important to business.

Today, many companies are looking at their peers for cues about what constitutes sound sustainability strategy today. However, this copycat strategy is dangerously short-sighted.

The “winning” sustainability strategy of tomorrow will be much different than that of today. Remember the beginning of the Internet era in the mid-1990s? At first, any company with a Web site looked like they were able to compete online. Benchmarking the competition meant counting clicks and pursuing revenues. But executives who rested on their laurels with the slick online marketing brochures and a basic e-commerce offering on their website received a rude awakening in just a few short years.    The real winners, like Apple and Amazon.com, leveraged the Internet to deploy entirely new business models and reshaped the future of business.

The next phase of evolution in sustainability strategy will be as disruptive as that of the Internet. New benchmarks will separate the winners and losers.  We see five sustainability developments that will shape the concept of winning at sustainability tomorrow:

1. Danger – an ever-increasing severity of critical environmental challenges surrounding  greenhouse gases, water, biodiversity, toxics, population  and so on
2. Awareness – rising concerns from consumers and citizens (number of citizen organizations now exceeds 1 million worldwide)
3. Transparency – a radical increase in the magnitude of efforts to understand, measure, and create accountability for impacts including the Walmart-initiated index and the Good Guide
4. Collaboration –greater efforts to collectively address key challenges by government, advocates, academia, business, and more
5. Economics – monetary value being applied to things not valued today, including carbon, waste, and  ecosystem markets

What do these developments mean for your company?  If your company is essentially managing risk and receiving positive PR for things you would have done anyway or only deploying initiatives that are easy to achieve and provide high visibility, then you are “in the pack” today.  Tomorrow, however, you will most likely be scrambling to meet higher standards at higher cost.

What will tomorrow’s winners look like?  We believe they will exhibit the following six characteristics:

1. Sustainability is fully integrated into the business and the culture
2. Collaborating with value chain partners and key societal stakeholders to change the “rules of the game”—what is “good for the world” becomes “good for business”
3. Shifting supply chain and supplier strategies from a “compliance mentality” to a “race to the top”
4. Sustainability will be built into all products/services – not just niche ones – in order to create less waste and more value
5. Engaging in green innovation with a wide range of external partners
6. Scaling “next practice” innovations across operations and the value chain by developing wholly new business models, many of which replace products with services and solve the end-of-life dilemma

Is your company on the path to winning tomorrow?  To find out ask yourself how well you are doing in building the four critical competencies needed for sustainability success tomorrow:

1. Leadership Mindset – Are your executives working to drive both financial AND sustainability results?
2. Sustainability Intelligence – Are you learning to understand key sustainability trends and what they mean to your stakeholders?
3. Engaged Innovation – Are you learning to create win-win green solutions in partnership with stakeholders?
4. Scaling Solutions – Are you beginning to maximize the impact of sustainable innovations across your business system?

If your company is one of a small number of winners today that is making money through sustainability and preparing for the future, then you are well positioned to prosper tomorrow where you will anticipate and exceed tomorrow’s higher standards AND create business value in the next era.

If you are not on the path to winning tomorrow then increasingly you are setting yourself up for a rude awakening.  As happened during the Internet era, there will be winners and losers in the coming age of sustainability. Those who position themselves today stand to reap enormous benefits tomorrow – and can achieve a competitive advantage along the way.

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