There are many comic movie scenes where two people fight over paying the bill in a restaurant, neither actually wanting to pay, but both wanting to put on a show of trying to pay. For me, there are many parallels with some corporate positions on sustainability, companies want to be seen as doing the right thing and actively marketing their policies, but the reality is a reluctance to impact profitability.
Before exploring the topic further, I think it is important to point out that this article is written from the point of view that the requirement for businesses and wider society to improve our approach to sustainability is a given, there will be no climate change denial here. The point of the article is that doing the right thing isn’t always free, and if it’s not free then who’s responsibility is it to pay?
One solution some businesses have adopted in the B2C world is to get your customers to pay for you, for example, many airlines give you the option of paying to offset your carbon footprint when you buy your ticket. Similarly, some coffee shops will sell you a reusable cup instead of using wasteful paper versions. In both these examples, and many more, companies are promoting a green agenda and getting their customers to pay.
It’s interesting to consider the ethics here, on the one hand, companies are influencing consumer behaviour to achieve green goals, but on the other, why should consumers bear the cost? Is this another form of large corporate tax avoidance, in this case, a social responsibility tax?
Of course, this couldn’t happen in the B2B world, could it?
In fact, in B2B the opposite dynamic exists. Many companies, especially large ones, have high-profile ESG (environmental, social and governance) policies. By their very definition, these reach beyond the company itself, into areas such as its supply chains, and it is increasingly common to see requests for information on sustainability in procurement processes. However, the reality today is that in most cases this information isn’t given the same weight as functional compliance and commercial terms, and therefore isn’t critical purchasing criteria that the supplier needs to focus on. I’m sure over time sustainability credentials will become increasingly important as purchasing criteria, so any costs associated with compliance of sustainability policies will be imposed on the supplier by the customer.
In the media technology industry, the supply side is dominated by an unusually high volume of small suppliers, just consider the number of small booths at the major tradeshows. Is the trend of the typically much larger media business customers requiring sustainability credentials from their suppliers a case of David having to pay Goliath’s bill? With many smaller businesses focused on survival after the recent economic turmoil of the pandemic, and the subsequent rise in interest rates and inflation, sustainability is unlikely to be their focus.
Fortunately, another characteristic of the media technology industry is that over many years there has been a drive for greater efficiency, the old broadcast models not scaling for the mass streaming world. More recently connectivity, cloud, and increasingly software-based solutions have enabled more remote operations, requiring fewer people and equipment to be transported to venues. This is a great carbon footprint reduction story, and even if the reality is that it was almost all due to economic drivers, not a drive for sustainability, the net result is that many suppliers in the industry have a strong sustainability story even without having an overt policy. Quantifying the positive impact of more efficient technologies they develop, and the operational efficiencies they enable, will be important data for a supplier to leverage and provide true competitive differentiation.
The other mitigating factor for small businesses is their inherent agility. Large corporations can suffer from inertia in how they operate and that can mean the cost of change is high. This sometimes leads to actions such as outsourcing the problem, for example, paying another business to plant trees to offset carbon footprints rather than taking direct action to reduce carbon impact in the first place. Conversely, for small businesses, policy changes can be much easier to implement, such as remote working to reduce real estate and commuting carbon footprints. Done correctly and with an alignment of company culture it can have a hugely positive impact on their brand as an employer. It can be hard to attract top technical talent when you’re a small employer, but strong business ethics are attractive to prospective employees.
Who pays the bill? Well, the question is arguably looking at the issue through the wrong lens. The benefits of doing the right thing can make your business more attractive to customers and employees, and this should easily outweigh the costs.
