When it comes to sustainable business, one attribute that marks out the leaders from the followers is the courage to push boundaries. The organisations that are committed to forging a course through uncharted territory are those which are beginning to reap the rewards to be found beyond ‘business as usual’. This is, I hope, set to become an increasing trend throughout 2012 and beyond as businesses recognise the scope for sustainable business practice to enhance profitability and provide long-term security in every sense.
One fundamental facet of this shift is the law; yet its complex and ever-changing network of narrow pathways, shortcuts and barriers often does more to stifle sustainable business innovation than it does support it. For example, the regulatory burden in respect of waste processing is heavy and can prevent, or at least discourage, businesses from finding innovative commercial uses for waste materials. If we are ever to reach a fully sustainable, or restorative, economy this must change and, indeed, there is good work already being done by industry in partnership with others to bring the necessary legislative and regulatory change to bear.
In the meantime, businesses that want to create more sustainable ways of working face a choice. In staring down the barrel of legal challenges and uncertainties, do they engage to find a way forward or do they back away and settle for familiar ground? All too often the latter choice is made, but this can be due more to a perception of the law being in the way than a reality. A good example that is currently being debated around the GSB website is collaboration and cooperation. Many are of the view that this is vital to innovation and the evolution of sustainable business trends. However, faced with the risk of falling foul of current competition laws, some are backing away from potentially fruitful discussions.
The recent example of Unilever and Proctor & Gamble, who were fined £281million between them after collaborating on the reduction of packaging in the detergent industry, is a sobering warning. According to the EU Competition Commission’s report, the companies had agreed not to decrease prices when making their packages smaller and even agreed later to raise prices. It therefore held that they were colluding on the price of washing powder. Giants such as these would have no shortage of access to legal advice to mitigate the risks of falling foul of the legislation. This example indicates the fine line that needs to be trodden even where the intention of the collaboration is to move an industry towards more sustainable goals.
Getting advice from lawyers who understand sustainability issues will be the key to unlocking these opportunities.
We have been working with David Bent, Deputy Director - Sustainable Business at Forum for the Future, who is of the view that, amongst businesses, the in-house legal team will have a key role to play. Currently, the feedback he is getting from the businesses he advises is that in-house legal advisers tend to act as a brake on anything innovative. Instead, they will need to enable innovation by being clear to those tasked with sustainability where they are safe to proceed, what they must avoid, and where they may need to make sure they get further legal advice. Bent agrees with us that the legal advisors themselves need to make sure their understanding of sustainability is up to date. In pursuing cutting-edge sustainability goals, leading companies are creating commercial advantage and managing risk, not just focusing on ethics or philanthropy.
For lawyers this represents the next step in the evolution of commerciality. Recent years have seen lawyers – particularly those in private practice – appreciate that it is not enough to simply know their area of law, but that their advice becomes far more valuable when combined with a deep understanding of their client’s business and industry. With a genuine understanding of what sustainability means for businesses, lawyers have an opportunity to shake off their sometimes negative image as the ‘no-police’ and realise a more positive role as ‘strategic enablers’ of an organisation’s growth. We are already seeing this both in the work that we are doing with clients but also the role that in-house counsel are being asked to fulfil. For example, we were recently successful in securing changes to the Environment Agency's approach to waste for a client who processes waste into materials capable of competing with synthetic and virgin resources, This meant that our client's customers were not themselves required to have environmental permits or register exemptions in order to use the recycled material - leveling the regulatory playing field for recycled materials and providing the client with a commercial edge.
In fact, lawyers have more to contribute to the progress of sustainable business than they might think. Corporate and commercial law touches business across the triple bottom line, from employment and corporate governance issues, to energy and waste management, to tax and financing models, and has a fundamental influence on the development of key sustainability themes such as collaboration in the supply chain or on intellectual property. Lawyers that do not put sustainability in a box marked ‘someone else’s problem’, but understand how it connects with the bigger picture, have a genuine opportunity to help unlock sustainable business opportunities for organisations with an ambition to lead change and the appetite to see what is possible.
We have a vision for lawyers to make a valuable contribution to the future of sustainability within the business world, and is working with clients and other leading institutions to make this a reality.
As first appeared in the Guardian Sustainable Business Blog.