1 Jun 2025
Sustainability is everywhere – but what does it really mean for a business to be sustainable? And who gets to define it? To get some answers, we spoke to Ed Gillespie, whose credentials involve nearly three decades at the forefront of sustainability.
How would you define sustainability in business?
It’s about what can you continue to do in perpetuity. A sustainable way of doing business doesn’t fundamentally undermine the ecological life support systems on which we depend, and enhances and promotes social cohesion, but also flourishes commercially and economically. In colloquial terms, it’s about treating the world as if we intend to stay.
Can it be commercially beneficial for businesses to operate sustainably?
There is not always a business case for sustainability because of the way our system currently runs. For example, because we often fail to internalise external costs in our decision making, sustainability can seem more expensive because you’ve got to change the way you do business. This is not always commercially beneficial. That said, the early stages of most organisations’ sustainability journeys usually do save money. That’s because they are operating more efficiently, reducing energy costs, reducing waste costs, becoming leaner and more agile. This improves the performance of an organisation, which usually has commercial benefits.
That sounds positive. So why don’t more companies operate sustainably?
After picking all the low hanging fruit and gaining all the easy wins, organisations then tend to bump up against ‘the big trap of sustainability’. They can’t squeeze any more efficiency out of their operations. That’s when they have to think about doing different things, not just doing the same things better. This is when it becomes challenging. With this in mind, sustainability is the stepping stone between, for example, the efficiency savings of cutting waste and carbon emissions and the end goal of regenerative business. This is when we start to develop business models which actually restore and replenish ecological systems, build societal resilience, and also perform commercially.
What happens to investor confidence after a company has gained all the ‘easy wins’ and things start to get more difficult?
Investor confidence has been a massive challenge for the sustainable business world. This is because organisations are trying to make decisions on longer term timescales, but some investors base their decisions on quarterly results. This creates tension between short term and longer term thinking.
Who has the power in the ‘company-investor’ relationship?
Investors have more power than the company; they can have a massive influence on how far and how fast a company is prepared to go. And I think that’s a problem. Even the most enlightened company can be hogtied by the conservatism of their investor base.
How do sustainable operations affect brand image and customer loyalty?
In terms of the brand image, the vast majority of people want to do the right thing. Therefore, if an organisation can position itself as an effective, honest and authentic sustainable brand, there is loads of evidence that shows it helps attract the right type of employee. It does the same thing with customers: when people start to buy an ethical product or service, they feel a symbolic self-completion. It becomes part of their identity. When organisations get it right, it can be brilliant in terms of consolidating customer loyalty and helping to build your organisation.
Once again, that sounds positive. But is there anything we need to watch out for?
There can be risks here. This is why some companies engage in greenwashing: to make themselves look better than they actually are by making overambitious claims about their sustainability efforts. They do it because they know customers want it.
How can companies make the strategic shift to operate more sustainably?
Sometimes it’s easier to start a new company with ethical and sustainable principles baked into the organisation than it is to try and turn around a ship that’s already at sea. Looking at Dutch companies, Tony's Chocolonely is a good example, started by a person who wanted to tackle modern slavery in the cocoa supply chain. Fairphone is the same, addressing the issues of consumer and electronics waste, and the lack of a circular economy. These are very smart businesses. And, from the healthcare sector, I need to mention Buurtzorg, which represents a complete re-think of community-based nursing care. This model is now used in more than 20 countries around the world.
But starting a new company isn’t an option for everyone. What happens then?
There are some high profile examples of businesses that have achieved the full transition and transformation. Danish Oil and Natural Gas – DONG Energy – for instance, rebranded itself ORSTOM and pivoted from being about 90 per cent fossil fuel based to around 90 per cent renewables. This was due to the vision and long term plan of the CEO and the board, and taking their investors with them. If you can do a 180 degree turn in a sector as difficult as that, I think you can do it anywhere.
We’ve talked about short-term gains and long-term strategies. Are there any medium-term issues that companies need to consider?
Organisations need to understand how emerging legislation and regulations are going to change the way they work. In the energy space, that might impact the carbon emissions and responsibilities of your business. So the legislation might not be there yet, but that doesn’t mean it’s not just over the horizon. So I think every organisation has to be cognisant of those potentially emergent risks which could be existential if they’re not addressed.
How is responsible leadership connected to sustainable business operations? In other words, how much can one CEO accomplish?
Activist CEOs get taken out all the time. So they have got to take the board, the investors, the team and the customers with them. They have to have the ingenuity and creativity to take people into that new space; responsible leadership is a team sport. We talk about this at the Forward Institute in terms of three elements: context, character and company. The context is the rapidly changing landscape. The character is what you stand for, the values you hold as a leader, the purpose that drives you. The company is actually the critical part, because most people at senior levels of organisations are quite isolationist. They tend to only spend time with people within their own organisation at a similar peer level, or perhaps within their sector. So I think a diversity of perspectives, both intergenerational and people beyond your own organisation, are absolutely essential for delivering any meaningful change.
Join the upcoming Sustainability committee meeting on 30 June | Amsterdam
Join ESG Making it happen, Financing the change 1st July | Den Haag