In recent months, many sustainable businesses have struggled at a time when there has never been so much talk about the need to transform our economy. Is there a “paradox of the green economy”? Interview with Marek Hudon, professor at the Solvay Brussels School of Economics and Management.
The spearheads of the sustainable economy are accusing the blow. Coprosain, an emblematic player in local food, is looking for a buyer. In the financial sector, NewB is struggling to get started and Triodos is in difficulty. Should we see a black series for the “green economy”?
What is happening is not nothing, but you have to put these difficulties in relation to the size of the sector and the sustainable companies. And you have to qualify. Behind a company that is doing badly and which is sometimes very visible or emblematic, others are doing well. I am thinking of Permafunghi, which bounced back after difficulties. By even turning to a new sector, construction. I would mostly a clear difference between established businesses and those just starting out.
The situation is also complex. In terms of disruptions in supply chains, natural resources, biodiversity. Entrepreneurs who want to be consistent today have many points of attention – which involve costs.
Doesn’t that just mean that sustainable small businesses can’t take the hits?
You should be careful. What is true is that in a green growth model, we often hear that sustainability and financial profitability go hand in hand. However, this is not at all obvious. Combining the two is not easy. Coherently combining the dimensions of sustainability and performance involves real organizational, human resources and management challenges.
Do the complications faced by some players, such as NewB, reinforce a lack of legitimacy for sustainable entrepreneurs?
We see surprising words appear in the lexical field. “Activist”, for example. However, to see an entrepreneur presented as an activist brings, by effect of language; to give it less legitimacy. We must put an end to this term “militant entrepreneur”.
For some, there is obviously a commitment, strong values. But that’s not activism, that’s business. In the business world, or part of it, the word “militant” is discrediting and conveys an image of lack of seriousness.
In a period of 10% inflation, shouldn’t sustainable companies put their values aside a bit and give greater priority to financial objectives?
We must keep an eye on the financial dimension, that’s for sure. Sustainable companies must make room to invest, innovate, evolve their products, and remain profitable. This does not mean that he must abandon his values, but there is a real tendency today to look for the five-legged sheep.
“It’s the small start-ups that go the furthest in sustainability that move traditional players.”
To imagine that we are going to unearth a company which, in a totally coherent way, is going to articulate its social, environmental and financial performance, while being as profitable as a traditional player, is dream of a fantastic creature. Or there is a sectoral specificity of generous margins. In general, sustainability is likely to lead to a lower level of profitability.
In a market economy, then, is a “green unicorn” unimaginable?
Very few will truly combine all dimensions. If there has, they will remain exceptions. Because combining exceptional performance on all fronts is extremely complicated.
There are pioneering actorslike Coprosain, who showed the way, suffered the plasters – for example of the local – and were dubbed by classic actors, with stronger kidneyswho have been able to develop a more far-reaching communication and commercial strategy.
The changes underway remain exceptional and on a scale that is by no means sufficient, given the environmental and social challenges.
Are we not at the point where we should let a “small” Coprosain go bankrupt and concentrate on the activities of the big players, such as Delhaize, Carrefour or Colruyt?
It’s hard for me to tell you that it has to be one or the other. Focusing only on small players does not make sensejust in terms of consumption volumes.
We must not forget that most traditional businesses take inspiration from small sustainability players. Small start-ups go furthest in sustainability and which set the bar as high as possible in terms of environmental requirements, that move traditional players. More than we suspect. There are already a lot, but it is still very insufficient. We lack urgency. We lack disruptive, sustainable and coherent projects.
In food, competition is indeed raging, in the semantic field of “sustainable”…
Traditional actors have such abundant communication on the theme of sustainability, that it has become difficult for the consumer to make sense of things – apart from the most engaged and informed. This proliferation puts committed small businesses in difficulty. There is a lack of analyzes and relevant indicators for the consumer.
“What’s holding back scaling up in sustainability are announcements of carbon neutral plans from companies that don’t have a solid strategy to get there.”
In the sector, margins are extremely low. The phenomenal growth of the short circuit during the first confinements has largely fallen. Demand and production are currently in crisis for small players. To the point that some players are wondering: hasn’t demand been overestimated?
Ditto in the financial sector. When everyone claims to be sustainable or responsible, any customer of a traditional bank can have the misleading impression that their savings contribute to the “sustainable” values put forward..
Do we need more labels to guide consumers and investors?
No, definitely not! There are so many private labels that everyone gets lost. In this respect, the work done on the taxonomy at the European level was particularly interesting. Lhe integration of gas and nuclear as green products is undoubtedly the worst that could have happened. We can tell ourselves that we need gas, or nuclear. But a taxonomy that mixes immediate need and sustainability, it does not hold up.
What hinders scaling up in terms of sustainability are announcements of carbon neutral plans from companies that don’t have a solid strategy to get there. The general lack of clarity on the requirements may well take us from “it’s in a long time” to “it’s too late”.
The key phrases:
- “It’s necessary forget the romantic image of sustainability. Having several objectives at the same time is complex for a company to manage.”
- “Those are small players, who go the furthest in environmental requirements, who move traditional players.”
- “The abundant communication of traditional players on the theme of sustainability challenges small businesses committed.”
- “If green unicorns emerge, they will remain exceptions.“
- “Let’s stop calling social entrepreneurs activists.”
- “What happened with taxonomy is the worst that could happen.”