Sustainable or extinct? What African enterprises need to know about the next 10 years
Greenhouse gas emissions will continue to grow unless there is a change in policy and business practices
Are African enterprises at risk of extinction, just as millions of natural species face extinction due to the impact of climate change? Businesses and countries across the continent are attempting to rebuild after the devastation caused by the pandemic. It is perhaps an opportune time to take stock of whether we are rebuilding in a way that will ensure our sustainability in the long term, economically and environmentally.
When economic activity tapered down in 2020 due to the Covid-19 lockdowns, researchers noted a drop in global emissions. For a moment it appeared that the pandemic would be a catalyst for a more sustainable and less environmentally harmful global economy. However, our modern lifestyle — in many cases the very basis of global economic activity — is undermining progress made during the quieter periods of 2020. Environmentalists decried a sharp increase in deforestation last year, despite the slowdown in overall economic activity. New research also found that the average meat-eating, coffee-drinking Westerner is responsible for the loss of four trees annually as forests are cleared for cattle and high-profit crops.
Recent data indicates that the volume of greenhouse gas emissions will continue to grow unless there is a change in policy and business practices. So far, we have not risen to the occasion with commendable urgency. A recent Oxford study found that only $368bn of the $14.6-trillion in recovery spending during 2020 was green, with one study author saying the findings are “a wake-up call”.
Africa is expected to be one of the hardest-hit continents in terms of climate change. Our reliance on agriculture, outdated or lack of infrastructure and low levels of development leave us more vulnerable than many more developed regions.
Our business sector is also at risk. In the mid-2000s, as digital technologies and social media started entering the mainstream, analysts and industry experts dedicated vast column centimetres to predicting which products and business models would not survive the digital revolution.
One article from 2007 predicted the demise of several types of businesses, including record stores and newspapers. Many of the predictions were correct: record stores were first disrupted by iTunes and then, more recently, by streaming services. Most have shut doors. Newspapers, though still very much around, look vastly different, with most of newsroom efforts going into digital platforms. Many other types of businesses have had to either reinvent themselves or close down.
The point of the predictions was that, barring some miracle intervention, these business models would go extinct due to a combination of technology, innovation and changing consumer habits.
These predictions were made during a period of relative calm, before the global financial crisis of 2008. Fast-forward to now and I would argue you could list hundreds, even thousands, of business models facing extinction. The accelerated pace of technological progress, the rise of the data-empowered consumer, the proliferation of smartphones, the changing climate and, recently, the unprecedented impact of the coronavirus pandemic have created a storm of disruption and uncertainty.
As we collectively try to build back after the devastation of the pandemic, do we risk losing sight of our longer-term priorities, and could we be sacrificing sustainability at the altar of short-term profit? In short, yes. But there is time to course correct, albeit very little time. How can we as a business community respond to the dual challenge of economic and environmental sustainability? Start by acknowledging that the opposite of extinction is sustainability, and build sustainability into the fabric of the business.
Business leaders should define a clear purpose and ensure that the purpose transcends narrow, short-term interest in favour of longer-term success. Develop a compelling vision — or reason to believe — about the purpose and bring it to life in all aspects of the business. Reframe your business objectives away from short-term wins and towards more sustainable, long-term outcomes. Realise that this requires a fundamental culture change and strong, visionary leadership.
For example, sales teams should look beyond quarterly sales targets and instead focus on developing closer relationships with customers with the aim of establishing constant exchanges of value over longer periods.
Instead of slavishly working to generate shareholder value, take a more balanced view and strive for success across social, environmental and financial metrics, the so-called triple bottom line. This may mean sacrifices in the short term, but will lead to greater success in future and help foster closer collaboration between organisations and their customers. It requires that managers and business leaders support their teams in achieving longer-term targets, which in most cases depend on a shift in organisational culture.
Evaluate supply chains and ensure every partner, supplier and provider places the same premium on sustainability. Where possible, work with and support the growth of social enterprises, which are businesses built from the ground up with purpose and sustainability at their core.
Consider the role of technology in aligning everyday decisions to sustainable outcomes. Building intelligent enterprise capabilities that allow for the seamless integration of new technologies to a powerful digital core also gives organisations the flexibility and adaptability to overcome new challenges and act on business priorities quicker and with greater accuracy.
Driven by purpose and with greater agility and adaptability enabled by technology, African enterprises can switch from survival mode to long-term success while bringing the continent — and the world — closer to a more sustainable society, one that works for all. But time is running out.
• Smith is MD at SAP Africa.
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