ETI report launch: Business Models and Labour Standards

ETI today launched a report on business models and labour standards (see ETI’s blog on https://www.ethicaltrade.org/blog/improving-company-business-models for more information), highlighting the importance of reviewing business models in order to realise value from sustainability policies and strategies. 

While this is hardly a new or revelatory perspective, it is heartening that the ETI is bringing it to the forefront of the discussion and I hope that it could add a more business-oriented track to the CSR conversation. Whether it can attract a non-CSR audience to subsequent events remains to be seen. The ETI has a solid reputation in its field but would benefit from a strategic partnership with actors that can bring credibility and also a provide a critical voice to ensure that sessions are tailored to an audience of commercial decision-makers. Also, while CSR teams are used to the relative openness of pre-competitive gatherings, this is something that does not come naturally to those involved in business strategy decisions.

The report, which is definitely worth a read, makes a number of recommendations in four areas (“levels” in the report), focusing on investors, consumers, market competition, and model of production. Depending on what theory of change and market adaptation you subscribe to, some of these might appear somewhat fanciful. For any organisation to change the consumer mindset to one of “slow consumption” seems unrealistic, though new entrants (Nudie Jeans being held up as an example) have been able to identify and capture a large enough segment of consumers to create a profitable business. If indeed slow consumption, placing a higher value on keeping products longer and accepting paying more for quality that would allow this, turns out to have mass appeal such brands would have first-mover advantage. That would, however, depend less on an integration of existing sustainability policies and goals. Rather, it would be the result of having successfully identified a consumer value proposition that can be realised with a more sustainable business model.

And here is where the real crux lies. Would a sustainable business model grow out of the integration of an existing sustainability strategy or instead from a wholly new approach to business with an ambitious and practical attempt to measure the positive and negative impact of the business across a range of stakeholders to end up with a more holistic approach to business? It is worth bearing in mind that attempt to fundamentally change business plans is potentially a perilous endeavour and one that inevitably would have many internal detractors and obstacles–regardless of its viability or degree of conformity with traditional business norms. A model to consider is the way some companies have tried out different concepts in an isolated part of the business before rolling them out in the wider organisation.

Clearly, without a sustainable business plan sustainability plans will create limited impact. However, the sustainability teams need to lay the groundwork to build confidence in the value proposition for the business and to earn the right to be listened to in an area not traditionally seen under their purview. An iterative process of developing understandable and actionable indicators with credible and demonstrable links to underlying risk and impact is key if commercial managers are to see value in integration. Secondly, clearly defining sustainability teams as facilitators as opposed to implementors might appear to reduce impact in the short term, but will build credibility in the long-term as only the teams directly involved in operations will be scaled and funded sufficiently to manage them.

With this in mind, I hope that the ETI (and strategic partners, perhaps) will find a way of bringing the subject of business plans and sustainability to a wider audience, but also to support sustainability teams in preparing the ground for that step within their organisations.