Sustainability and social impact for the business of the future

Here's how to develop circular economy initiatives. But not only that

Welcome back to our weekly series of courses entitled  The Winning Entrepreneur: Your Weekly Guide to Success,  a program designed for ambitious entrepreneurs and people who want to turn their ideas into successful businesses. Last week we talked about how to expand into the world without losing your identity . Today we talk about Sustainability and Social Impact: A New Business Model for Ambitious Companies.

In today's economic and social context, companies are called to redefine their business model, embracing sustainability and social impact as key elements of their strategy. It is not only a matter of responding to a growing demand from consumers for responsible products and services, but also of anticipating future regulations and responding to a new wave of expectations from investors, governments and local communities. ESG (environmental, social and governance) practices are now not only an ethical but also an economic imperative. For ambitious companies, sustainability is no longer an expensive add-on, but a key competitive lever to thrive in a global market that rewards the most responsible companies. It is also important to highlight that ESG regulation will soon be mandatory throughout Europe, giving a competitive boost to companies that have already created a climate and social strategy.

Integrating ESG practices into the business model

Integrating ESG practices is a fundamental step for any company that intends to build a resilient business that can respond to future challenges. The adoption of ESG principles involves a long-term vision that aims to reduce environmental impacts, improve social management of resources and ensure transparent and inclusive governance. It is no longer an option, but a strategic need.

Companies that integrate effective ESG practices are able to achieve numerous benefits. For example, they improve operational efficiency, reduce legal and reputational risks, and increase consumer trust. A prime example is retailer Patagonia, which built its brand around principles of sustainability and social justice. Not only did it significantly reduce the environmental impact of its operations, but it also donated a portion of its profits to conservation causes. This approach helped build a loyal, conscious customer base and allowed the company to thrive, proving that ethics can be a driver of business success.

A text that offers practical insights on how to structure and measure the impact of ESG practices is Measure What Matters by John Doerr. The book explores how companies can use the OKR (Objective and Key Results) system to define clear and measurable strategic objectives, which also include environmental and social dimensions. Companies can then track their progress transparently and report the results to their stakeholders. The OKR approach has been used successfully by giants such as Google, but it is also applicable to small and medium-sized companies that want to measure their ESG impact in a precise and result-oriented way.

Measuring and communicating social impact

One of the most critical aspects of adopting ESG practices is measuring social and environmental impact. Companies must not only commit to responsible actions, but also demonstrate, with concrete data, how their actions are actually contributing to reducing negative impacts on the environment and generating social benefits. Measurement and communication are essential to ensure transparency and accountability to investors, consumers and authorities.

In this regard, another book that helps to understand the dynamics of sustainable economics and how to structure detailed and accurate reports is Doughnut Economics: Seven Ways to Think Like a 21st-Century Economist by Kate Raworth. In this book, the author proposes a new economic model that integrates planetary limits with social needs, arguing that companies must learn to operate within a “ring” that guarantees social equity and environmental sustainability. Raworth challenges the traditional paradigm of infinite growth and invites companies to think long-term, to develop projects that not only generate profit but respect ecological limits and promote the socio-economic well-being of all.

Developing circular economy initiatives

The circular economy is one of the most effective responses to global environmental issues, as it reduces the need to extract new resources, promotes reuse and recycling, and reduces waste production. For businesses, adopting a circular economy model not only helps reduce environmental impact, but can also open up new business opportunities by reducing costs and improving operational efficiency.

A significant example of circular economy is  IKEA , which has developed the Circular Hub program. Thanks to this initiative, the company promotes the reconditioning of furniture and the reuse of resources, thus reducing waste. IKEA is also working to make its products completely recyclable, reducing the consumption of raw materials and contributing to the sustainability of the planet. This approach allows the company to differentiate itself in the market, responding to the needs of consumers who are increasingly oriented towards more sustainable choices.

For those who want to delve deeper into the dynamics of the circular economy, Ken Webster in his book  The Circular Economy: A Wealth of Flows explores the shift from a linear to a circular economic model. Webster outlines how companies can design products that are self-sustaining, minimize waste, and create an economic system in which the value of resources is not lost, but continuously reused. A key point of the book is how companies can review their production models to transform themselves into sustainable and resilient entities, creating new flows of economic value.

Decarbonisation: opportunities for medium-sized companies

A decarbonization strategy is another fundamental step for companies that want to reduce their environmental impact and, at the same time, generate economic value. Even medium-sized companies, often perceived as not being able to adopt complex solutions, can start paths to reduce their emissions. Not only do CO₂ reductions improve energy efficiency and reduce operating costs, but they can also generate carbon credits, which can be sold in the carbon credit market.

The carbon credit market is divided into two categories: voluntary and mandatory. Companies that measure and certify their emissions reductions can participate in the voluntary market, selling their credits to those who want to offset their emissions. In addition, some philanthropic foundations offer non-repayable grants to companies that can demonstrate that their businesses are participating in the reduction of emissions through their production activities. In the United States, programs such as those supported by Bill Gates or Michael Bloomberg and thousands of other philanthropists incentivize companies, even small and medium-sized ones, to adopt green technologies and to systematically document their results through annual reports, carbon tracking and ESG scores.

Balancing Profit and Social Responsibility

Balancing profit and social responsibility is one of the biggest challenges for modern businesses. However, a growing number of companies are proving that it is possible to be ethical and responsible without sacrificing profitability. Companies that manage to balance these two aspects not only enhance their reputation, but also build a solid foundation for long-term growth.

A significant example of success in this area is the American ice cream manufacturer Ben & Jerry's, which has always integrated social justice into its business model. The company has continued to grow despite its strong political and social positions, thanks to its ability to balance ethical values ​​and economic performance. This approach has created a community of loyal consumers who appreciate its social commitments, contributing to the success of the brand.

Sustainability and social impact as drivers of success for the business of the future

The path to sustainability and the integration of a positive social impact represent challenges but also extraordinary opportunities for companies that wish not only to prosper but also to contribute to collective well-being. The growing attention of consumers, investors and authorities towards ESG practices is not a passing phenomenon, but a profound transformation that redefines the rules of the market. Companies that understand and embrace this revolution not only respond to an ethical need, but also manage to gain a lasting competitive advantage, as demonstrated by the success stories of Patagonia, IKEA, and Ben & Jerry's.

Essential readings for embarking on this journey, such as John Doerr’s  Measure What Matters , Kate Raworth’s Doughnut Economics , and Ken Webster’s The Circular Economy: A Wealth of Flows , offer crucial theoretical and practical insights for measuring impact and rethinking business models for sustainability and circularity. In particular, the ability to track and communicate the social and environmental impact of one’s actions has become one of the hallmarks of modern businesses. Transparency in reporting, the creation of circular economy models, and commitment to decarbonization are not only effective tools for reducing risks, but also opportunities to generate new sources of economic value.