02/13/2020 | Press release | Distributed by Public on 02/13/2020 10:09
'On one hand, there are of course things that are a bit depressing. Look at the lack of results in the recent Madrid Climate Talks (COP25). No agreement was achieved on carbon pricing, there are deep splits both due to regional and local concerns as well as egos that get in the way.'
'Companies are chipping away at the issues, some more generally just rolling with the times, but more and more is happening and we have come to see some truly genuine actors in this space.'
'What keeps me going, what gives me hope', she continued, 'is that some viewpoints that were seen as extreme and outlandish 10 to 16 years ago, are now what we are actually doing and discussing on a global level. That is huge.'
So we have come far in terms of the discussion, but what about concrete action?
'People are today interested in the brands that are different and want to make a difference, that are doing something more, and that are authentic and genuine at it. And the brands that want to make a difference are really serious, so there is certainly hope. And these consumers and these brands keep multiplying. So, in the end there is hope!'
But one of the most surprising things she tells me is who has the biggest clout and are undergoing very rapid, deep and fundamental transformation. It is not the Patagonia, Greta Thunberg or such an actor…
'Look at investment banking. Over 80% of global assets are invested by institutional actors, the ones who handle retirement funds and the like. They can't just take a three year perspective on things - after all they will need to be able to do payouts in 20, 30 or even 50 years! Hence, they must think about how to fulfill their commitments over a really long run. This has for instance made it increasingly hard to run - never mind build - coal power plants today. And the largest insurers do not want to insure these plants anymore. Too high risk.
'Add to that that more and more corporate boards are discovering this. Perhaps because of questions from precisely those investors - who want to know that companies they invest in can remain in business for a long time. It used to be that management and boards just went quarter by quarter, maybe a couple of years ahead at the best. But it is becoming clear now that some business models are doomed to fail as they are unsustainable (in every sense of the word), and pressure mounts to include much longer time horizons to ensure a company's survival in these changing times.'
Think about the latest range of corporate bankruptcies on the one hand, and the high-fliers on the other. Traditional retail-based models - in essence information access traders - are being killed off by the dozens. Take as example the travel industry's 'Thomas Cook, the package travel company.' Thomas Cook, one of the largest trip organizers in the world went into bankruptcy during the fall of 2019. 'In earlier times, most people could not arrange their own trip, from booking tickets to finding somewhere to stay. So industrial travel was the thing, reducing cost but at the same reducing the experience to eating, sunbathing and getting drunk for a week.'
'But closer to our own industry there are other examples, that are based on the same challenges. Take Forever21, the US fast fashion retailer that had experienced huge international expansion over the years, and who filed for Chapter 11 (bankruptcy) in September 2019. It failed to understand the new young generation and its shopping habits - as well as the reputational damage it had accrued over many years' consequence of a lack of control over its supply chain, product quality and design processes.'
'Therefore, if you look at the individual component parts, each of these examples carried a backlog of uncovered responsibilities with real-life impact: just being a middle man, adding cost and risk without a clear value add - particularly in sustainability, quality, transparency and accountability terms - is just no longer a recipe to success, but an open door to disaster.'
It is for a reason that particularly in textiles, middle men - agents as they are being called in the industry - are struggling to justify their existence as their trade boasts a history of non-transparency, mismanagement, labor abuse, overly tight cost calculations, unfair incentive and kick-back systems to just name a few. It is changing, but it is a race against the clock.
Her point, she continues, is that sustainable business models are often disruptive models. Models that function fundamentally differently than those existent today, and not a step-wise upgrade of what we have already.
Take the example of Thomas Cook above: 'People have always wanted to travel! Historically, in medieval times, German carpenters traveled the world based on their skill. Today people can share their houses on AirBnB or couch surfing, and it is almost like old and new coming together - custom-made experiences based on trading what you have and actually travelling to meet people and interact with them. That's a completely new model.'