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WEFAfrica 2015: Sustainable business can unlock $350bn

WEFAfrica 2015: Sustainable business can unlock $350bn

Jun 5, 2015

“Businesses in African have to change and innovate in order to capture a tantalising prize of $350-billion across the continent,” says Peter Lacy, global MD Accenture Strategy in the UK.

The opportunity exists to provide products and services sustainably, manage cost bases by using resources more efficiently, building trust with stakeholders and also to build business models focused on the concept of achieving shared value for stakeholders, communities and customers.

A report from Accenture and the National Business Initiative (NBI) on the sustainable business opportunity in Africa, launched at the World Economic Forum, maps out the innovation opportunity for executives on the continent.

While there have been major improvements on the continent, Africa remains one of the world’s least developed, most indebted, most food-insecure and most marginalised.

By driving social and environmental performance into their business models, African businesses can realise significant growth through innovative solutions that address market failures, according to the report.

In doing so, a material change is required to deliver progress at a larger scale and greater speed than current sustainable business practices have managed.

Four high-priority areas of innovation were identified in discussions with African CEOs. These are: to capture new consumption opportunities; to create collaborative operating models; to drive resource efficiency; and to build trust through transparency.

The report authors conclude that these new opportunities can deliver over $350-billion per year in extra revenue and cost savings, while reducing risk, building trust and driving dramatic social and environmental value to the continent.

“There is good news,” Lacy says. “There are many companies that are prepared to think differently about how they structure their business. And there are companies in Africa that are already deriving significant revenues is social impact.

“But CEOs told us repeatedly that progress isn’t fast enough, and that not enough is being done. We’ve been talking about the opportunity for too long and it’s time for CEOs and businesses to act.”

While 98% of CEOs think sustainability is vital to their business in terms of revenue growth and value, only 24% of CEOs thought their business was on track to meet the growth and prosperity goals of the region in a sustainable way.

“The issues are here now: water scarcity, poverty and climate shifts,” Lacy says. “We also heard consistently that if you fast forward to 2050, there will be 1-billion people on the continent. This is an enormous opportunity and also an enormous risk is terms of providing the products and services that will make companies successful.

“There is this enormous opportunity, but enormous transformation is required.”

Importantly, Lacy stresses that sustainability can no longer be marginalised in organisations, made the responsibility of CSI, philanthropy or corporate affairs. “It needs to be in the company strategy, in human resource, supply chains and operating models, creating shared value.”

Joanne Yawitch, CEO of the National Business Initiative in South Africa, says that her organisation’s work with about 100 companies has demonstrated that being a good business is good for business.

She points to the case studies in the report that demonstrate how companies across the continent have achieved better bottom lines while being environmentally-friendly.

“This is a huge source of potential for the continent and for business, as well as for developing new products and generating new business.”

The opportunity extends beyond large business, embracing small companies, entrepreneurs and people at the bottom of the economic pyramid, she adds.

“There is a growing understanding that sustainability is core to business and needs to be core to strategy.”

Cas Coovadia, MD of the Banking Association of South Africa, comments that business is beginning to appreciate that the line between the workplace and society is no longer there.

“Long-term sustainability is critically important. It’s not a nice to have or CSI. Those are important, but this is about the long term sustainability of your business  so it needs to be mainstream.”

He points out that social business can have unintended benefits. For instance, South African banks were obliged to provide funding for low-income housing as a social imperative, and contrary to their normal business practices.

“What we have learnt is that markets that we did not see as viable have become viable, and also contributed to an improvement in the condition of people. This should be the general view in business, that the upliftment and development of society ensures that you have a sustainable market.”

William Mzimba, CEO of Accenture South Africa, stresses that the $35-billion opportunity is real, but it involves a new business model based on trust.

“We talk about trust and transparency. We have qualified it and with this report are able to quantify it in terms of value. There is an opportunity to build  significant business on the reputation companies have built over the years,” he says.

Technology is a big player in the sustainable business model, he adds.

“There is a real opportunity to do things that are good, and convert that into profitable business. In this respect social is critical, technology is critical and the fact that you can codify trust is critical.”

Lacy agrees that technology has a big role to play. “The CEOs we spoke to and my own experience, I would say that the biggest opportunity for Africa on the sustainable business front is to leverage the digital revolution, aligning it with the concept of shared value and better outcomes.

“We are seeing extraordinary opportunities to reinvent business models; and there is a real opportunity to harness that for commercial gain but also for the greater good.”

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