Four com­mon fea­tures of sustain­ability-driv­en com­pan­ies

Once a month, researchers at Copenhagen Business School provide Børsen readers with a current and research-based perspective on the challenges facing leaders.

This month, a research group consisting of Jonathan Feddersen, Miriam Feuls, Tor Hernes, Sunny Mosangzi Xu, Majken Schultz and Kasper Thy Søndberg write about four common features between three otherwise very different companies' efforts to achieve ambitious climate goals.

One of the biggest challenges companies currently face is investing in solutions and technologies for a future that is radically different from what we know today. In a few decades, or even years in some cases, new ways of living will emerge, requiring solutions and technologies that we currently have limited knowledge of. For example, dietary habits may change drastically, and the use and production of energy will also evolve. Climate challenges are one of several “drivers” propelling this development into the future.

While individuals can gradually adapt to changes, companies are forced to develop solutions that are ahead of the changes while also meeting current market needs. This creates a dilemma for companies: How can they continue to maintain solutions that work in the short term while developing long-term strategies for a sustainable future?

This dilemma is the focus of the project “Making Distant Futures Actionable – How Companies Act into the Distant Future,” funded by the Novo Nordisk Foundation.

Through the project, we have worked with three leading Danish companies, each developing advanced solutions for a sustainable future based on ambitious climate goals.

We have followed selected processes in these three companies: Novo Nordisk’s work on developing life-science solutions for a circular economy in everything from production to new return systems, Arla’s work on solutions for biodiversity and regenerative agriculture, and Ørsted’s work on solutions for net-zero energy that also positively contribute to the marine environment.

Through this work, we have identified four common characteristics among the three otherwise very different companies.

Similar Challenges Across Industries

The three companies encounter distinct challenges regarding a sustainable future. They operate in diverse industries, function in varied markets, and utilise different technologies. The tasks are also different. Some need to deliver green solutions to other sectors, while others primarily need to solve their own industry’s problems. Despite the differences, they all balance increasingly ambitious future goals, yet-to-be-realised or scalable solutions, and the need to act now. Our research points to some common characteristics of how the three companies systematically work with this balancing act towards a sustainable future.

Feature One: Developing Future Scenarios

The first common feature is that these companies work with future scenarios. These take the form of realisable “narratives” that link relevant factors: using possible materials, technologies, alliances, business models, and legislation to outline future realisable solutions. Establishing realisable narratives requires the ability to balance between the realistic and the imaginative. Here, the development of imagination is crucial because it allows companies to see the contours of a future that is very different from the present.

Feature Two: Balancing Known Solutions with New Developments

The second common feature is that these companies continue to stretch realisable solutions into imagined futures, such as 2050. All three companies use various forms of pilot projects to explore how far into the future they can project their solutions and what might happen when they meet the distant future. This involves a delicate balance. If the solutions are too uncertain or too far from today’s reality, the company risks having them dismissed as mere fantasy. But if they are too close to being realisable, there is a risk that the solutions will not pull the company far enough into the future and will fall short of future climate goals. For example, improving current energy production will enable the company to compete in the future, but only if that energy form remains in demand in the future. Conversely, plans to develop a different energy form may meet future needs, but it may prove too difficult or costly to scale up in the short term.

Feature Three: Building “Paths” of Solutions

The third common feature is that these organisations link solutions together as paths or “trails” into the future. Companies recognise that standalone solutions are not enough to move towards a sustainable future. Instead, they operate on the premise that solutions must be connected over time. This way, companies get a picture of how near-term solutions can enable future solutions. For example, if one understands how a particular solution can result in multiple possible solutions in the future, it becomes safer to invest in that type of solution in the short term. We also see examples of how companies sometimes turn to the past to further develop previous solutions in a completely different direction.

Feature Four: Keeping Up with Global Developments

The fourth common feature is that these companies monitor global developments in relevant climate goals and timelines concerning market developments, legislation, new technologies, etc. This means that investment timelines change frequently and affect which key processes companies base their activities on. For example, Arla has expanded its focus from CO2 to include biodiversity over the past four years. This affects which realisable solutions Arla is working on to prepare for a sustainable future.

Leading the Future Between Reality and Imagination

Many Danish organisations have come a long way in calculating the climate effects of known solutions. And they are getting better at identifying the areas where new solutions need to be developed. But for it to succeed, organisations must create better connections between what we can call the “maybe-future” and the “planned future.” Leaders must practice working concretely with future imaginations and balancing between realism and imaginative climate-positive solutions. This will make it possible not only to survive as a company in the future but also to actively contribute to shaping how the future will be.