Sustainability has rocketed up the agenda of policymakers and investors over the last five years, but the general enthusiasm has not been matched by explicit and discernible changes in decision making or investment priorities, so the suspicion persists that we are in the midst of a wave of ‘green-washing’ rather than meaningful change.
Part of this sluggish response can be explained by a number of real challenges:
Most approaches are still shaped by corporate strategies driven by the expected returns for shareholders which favour financial criteria at the expense of social and environmental factors
The overall ontology and metrics associated with sustainability have not yet exhibited the level of coherence and consistency which enables this financial orthodoxy to be challenged
What progress there has been is reflected in general debate about the need to ‘re-wire’ our economies - powerful exhortations but they lack detailed data-driven arguments.
The Triple Chasm Model provides the missing data driven approach for putting sustainability at the heart of tackling innovation-enabled growth, rather than treating sustainability considerations as optional add-ons.
This integrated approach builds on the three key elements of the Triple Chasm Model:
To this we add four new sustainability constructs which build on the Triple Chasm Model to address the following areas explicitly:
Ideological Stance: articulated using the 12 meso-economic vectors, this allows us to recognise and define the ideological back-drop which governs investment criteria, where the intent is set out clearly and not hidden behind obtuse terms such as impact investment. Our work has revealed that there are five main ideological stances behind most investment:
Philanthropic funding, where commercial returns are not relevant
Self-funding enterprises, where inputs and outputs are ‘matched’
Social Enterprises where all profits are re-invested
‘Mission-driven’ enterprises where investors are prepared to accept reduced financial returns because they value social and environmental returns
Traditional commercial Enterprises where the focus in maximising financial returns
No amount of rhetoric can mask these investor priorities, so companies need to be clear about their own priorities.
Sustainability Lens: We use the sustainability lens to tackle the first two external meso-economic vectors: market-space-centric value chains and proposition framing, based on explicitly understanding the sustainability impact on each component of the value chain. This depends on explicitly defining appropriate sustainability criteria, for example, the impact of pollutants or CO2 on each component of the value chain (this impact can be positive or negative); this approach also enables us to understand the aggregate impact, which may be positive, although the impact on anyone component may be negative.
Sustainability-conscious consumers: the new customer typology in the Triple Chasm Approach enables us to explicitly examine the behaviour of consumers by looking at the relative importance of behavioural attributes (in particular, usage behaviour, purchase behaviour and benefits sought), psychographic attributes, and socio-demographic descriptors. This, in turn, can be used to make the case for specific sustainability biases in product design or pricing.
Sustainability Bias: in addition to this treatment of the three external vectors, we explicitly apply a sustainability bias to all the vectors which can be affected by management decision-making. This is done by explicitly adjusting the impact scores for each vector (and sub-vector where appropriate) by adding an additional weighting factor based on the explicit sustainability bias.
Companies can use this integrated approach to build sustainability into the heart of their propositions in an explicit way which can then be discussed and agreed with policymakers, investors, and customers.