“Beyond the Triple Bottom Line” – An Interview with John Elkington
John Elkington is a world authority on corporate responsibility and sustainable development. He is currently Founding Partner and Executive Chairman of Volans, a future-focused business working at the intersection of the sustainability, entrepreneurship and innovation movements. Back in 2004, BusinessWeek called John “a dean of the corporate responsibility movement for three decades.” In 2008, The Evening Standard named him among the ‘1000 Most Influential People’ in London, describing him as “a true green business guru,” and as “an evangelist for corporate social and environmental responsibility long before it was fashionable.” He is author or co-author of 19 books, the latest being The Breakthrough Challenge: 10 Ways to Connect Today’s Profits with Tomorrow’s Bottom Line, co-authored with former PUMA CEO Jochen Zeitz. He is a Visiting Professor at the Doughty Centre for Corporate Responsibility/Cranfield University, Imperial College and UCL.
After 25 years you’ve “recalled” the Triple-Bottom Line (TBL) – the sustainability framework you brought to the world to examine a company’s social, environment, and economic impact. Tell us why and what this means going forward.
As I said in the Harvard Business Review article, this is probably the first management concept subjected to a recall by the person who invented it.
So why recall it now? The Triple Bottom Line has failed to bury the single bottom line paradigm.
From the outset, the goal was system change— pushing toward the transformation of capitalism. It was never supposed to be just an accounting system. It was originally intended as a genetic code, a triple helix of change for tomorrow’s capitalism, with a focus on breakthrough change, disruption, asymmetric growth (with unsustainable sectors actively sidelined), and the scaling of next-generation market solutions. Some businesses did move in this direction, as I point out, among them Denmark’s Novo Nordisk, Anglo-Dutch Unilever, and Germany’s Covestro.
But we have a hard-wired cultural problem in business, finance and markets. Too many companies understood the concept as a balancing act, adopting a trade-off mentality. Profit first, then people and planet. Whilst CEOs, CFOs, and other corporate leaders move heaven and earth to ensure that they hit their profit targets, the same is very rarely true of their people and planet targets.
A much more comprehensive approach will be needed that involves a wide range of stakeholders and coordinates across many areas of government policy, including tax policy, technology policy, economic development policy, labour policy, security policy, corporate reporting policy and so on.
Developing this comprehensive approach to sustainable development and environmental protection will be a central governance challenge – and, even more critically, a market challenge – through the 21st century.
How are B-corporations changing the equation. What can be done to get widespread adoption? What can be done with zombie management leading zombie companies?
They are a bright ray of hope. 2,500 businesses worldwide are now certified as B Corps. All are configured around the TBL — dedicated to be not just “best in the world,” but “best for the world.”
Companies like Brazil’s Natura and Danone’s North American operation are now B Corps, with other multinational corporations considering how to follow suit. But it’s slow going. We are running out of time.
In some countries, we see growing concern about ‘zombie businesses,’ propped up by government loans and spending all their cash on servicing debt— rather than investing in growth. But what if climate change created zombie economies? The 2013 World Economic Forum global risk report noted that the world economy is at growing risk as “persistent economic weakness saps our ability to tackle environmental challenges.” Worst of all, is zombie leadership– leadership in business and government that is cynical about change – they have given up in a very practical sense. Business leaders can and must do much more to change the political status quo.
What is the Breakthrough Manifesto 1.0?
As WBCSD President and CEO Peter Bakker says, we need a revolution of capitalism. The Breakthrough Manifesto says that we are now at the make-or-break in rebooting capitalism.
There are 7 points:
- Breakdown is coming
- Economic stimulus packages have skirted today’s disasters
- It’s time to do the breakthrough politics
- Business leadership is make-or-break
- Financial markets are almost willfully blind to future risks—and opportunities
- Disruptive change is needed
- Join us
The time is almost past for going it alone. The nature and scale of the challenges now dictate that we work together.
Is capitalism, as it is practiced today, destroying the world? What are the barriers to breakthrough change?
“Extreme is the new normal,” we are told, and this is an issue across all aspects and dimensions of our world. Key barriers include lobbying by those invested in the old order, ignorance (some of it willful), the complexity of the issues and responsibilities, the uncertainty that this complexity can induce, and the pervasive lack of political will. We have data on the barriers. Based on a survey of 1,660 experts in 117 countries, here’s the list in order of priority:
- Lack of political will
- Vested interests in current approaches
- Complexity of issues/ solutions/responsibilities
- Failure of markets to recognize future risks
- Misdirected financial incentives
- Regulatory gaps/ constraints
- Poor economic performance of broad economy
- Inadequate knowledge
- Lack of action by private sector
- Limitations of trade/ international agreements
- Inadequate technologies
We have to build bridges, not walls. Business champions of breakthrough believe in capitalism, arguing that tomorrow’s capitalism is the best cure for the ills of today and tomorrow. The problem is that we are seeing a deep-rooted shift in the nature and complexity of the challenges we face. One crucial tool in all of this, and one the World Economic Forum is developing is system mapping. This can help identify the key ‘acupressure points’ or levers of change.
You’ve described three scenarios for the future – system collapse, change-as-usual, and breakthrough. What must the C-level executive do to rise to the challenge?
System collapse comes in many forms. Some impending failures are easy to spot; others, involving systemic weaknesses, are harder to see coming. Breakdown mindsets often favour the 1% in the wealth spectrum over the 99%. At the same time, when we try to meet the needs of the 99%, we may also ignore crucial system conditions, like strains on resources or the natural environment, triggering different forms of breakdown.
Many Change-as-Usual approaches were semi- revolutionary when they began—including corporate social responsibility, socially responsible investment and sustainability reporting. Where they succeed in being adopted by companies and industry sectors, however, they often become diluted by wider priorities. There is a clear risk that CSR and even SRI leaders become too closely embroiled with those they support in the business world. The focus is often on rolling out current tools rather than on stretching towards tomorrow’s breakthrough solutions.
The breakthrough scenario is an uncomfortable, high-risk zone. As Jeff Bezos of Amazon put it, “If you’re inventing and pioneering, you have to be willing to be misunderstood for long periods of time.” Most CEOs are not prepared to take that risk.
Unsurprisingly, then, incumbents don’t make good insurgents, so the best place to look for the future is often at the fringes of the current system. But don’t rule out all incumbents. The more nimble among them will find ways to link with insurgents to bring disruptive breakthrough solutions to scale.
Innovators, entrepreneurs, intrapreneurs, investors and—crucially— policy-makers work together to build a new economic and governance order, fit for purpose in a world of 7-going-on-9-billion neighbors. Progress is achieved through ventures that set ambitious targets and drive them through to change the market and political systems within which they operate.
What institutional innovations are required now to face the future?
The business of business is more than business. Increasingly, it is change. The focus must shift from short term profit to the long-term public interest. So our business models are flawed – they are part of the problem.
How do we get to a critical mass of Big Companies that act on this? The question now is whether CEOs and other business leaders will be content to remain part of the problem—or whether they have the will and the audacity to ride the rising breakthrough wave. It must be our business to ensure they have little choice in the matter.
What are you working on right now?
We’re pursuing several breakthrough trajectories. They include the promotion of zero-based targeting in business and public policy, with our agenda outlined in The Zeronauts: Breaking the Sustainability Barrier; our involvement in initiatives pushing the boundary of science and technology, among them Biomimicry 3.8, founded by Janine Benyus, and cleantech venture fund Zouk Capital; plus C-Suite-focused platforms like The B Team, whose co-presidents are Sir Richard Branson and Jochen Zeitz, former CEO of PUMA. Jochen and I co-authored a book, The Breakthrough Challenge: 10 Ways to Connect Today’s Profits with Tomorrow’s Bottom Line, exploring key dimensions of the system change agenda.
Is there a question you want to answer I haven’t asked?
No. Great questions. Thank you. So perhaps less of a question and more of an observation. While we are working with corporations and businesses and governments to conceptualize and enact change, the world outside is taking matters into its own hands. The Earth’s sixth major extinction is underway. Today livestock make up 60% of the biomass of all mammals on earth, followed by humans (36%) and wild mammals (4%). Our grandchildren will not see the world we saw.
Thanks for what you are doing, and for your time.
INTERVIEW by Christian Sarkar