In recent months, many sustainable businesses have struggled at a time when there has never been more talk of the need to transform our economy. Is there a “paradox in the green economy”? Interview with Marek Hudon, professor at the Solvay Brussels School of Economics and Management.
The key phrases:
- “It is necessary forget the romantic image of sustainability. Having multiple goals at the same time is complex for a company to manage.”
- “They are small players who go the furthest in environmental requirements, who displace traditional players.”
- “Abundant communication by traditional players on the theme of sustainability challenges small businesses engaged.”
- “If green unicorns emerge, they will remain exceptions.“
- “Let’s stop calling social entrepreneurs activists.”
- “What happened to taxonomy is the worst thing that can happen.”
The spearheads of the sustainable economy charge the battle. Coprosain, an emblematic player in local food, is looking for a buyer. In the financial sector, NewB is struggling to get going, and Triodos is in trouble. Will we see a black series for “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 poorly and is sometimes very visible or emblematic, others are doing well. I think of Permafunghi, who came back after difficulties. By turning itself to a new sector, construction. I mostly wanted to a clear difference between established companies 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 come with costs.
Doesn’t that just mean sustainable small businesses can’t take hits?
You have to 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. A coherent combination of the dimensions of sustainability and performance involves real organizational, human resource and management challenges.
Do the complications for some actors, such as NewB, reinforce a lack of legitimacy for sustainable entrepreneurs?
We see surprising words appear in the lexical field. “Activist” for example. But seeing an entrepreneur presented as an activist brings, by the 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 business, or part of it, the word “militant” is discrediting and gives an image of a lack of seriousness.
In a period of 10% inflation, shouldn’t sustainable companies put their values aside and prioritize financial goals more?
We have to keep an eye on the financial dimension, that’s for sure. Sustainable companies must make room to invest, innovate, develop their products and remain profitable. This does not mean that he has to give up 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, displacing traditional players.”
To imagine that we have to uncover a company that will in a completely coherent way articulate its social, environmental and economic performance, while being as profitable as a traditional player, is dream of a fantastic creature. Or there is a sector-specific nature of generous margins. In general, sustainability is likely to lead to a lower level of profitability.
In a market economy, a “green unicorn” is so unthinkable?
Very few will truly combine all dimensions. If there are they will remain exceptions. Because combining exceptional performance on all fronts is extremely complicated.
There is groundbreaking actorslike Coprosain, who showed the way, the patches suffered – for example from the locals – and was dubbed by classical actors with stronger kidneyswhich has been able to develop a more far-reaching communication and commercial strategy.
The ongoing changes are still extraordinary 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 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 companies draw inspiration from small sustainability actors. Small start-up companies go the furthest in sustainability and which sets the bar as high as possible in terms of environmental requirements, that moves traditional actors. More than we suspect. There are already many, but it is still very insufficient. We lack urgency. We lack disruptive, sustainable and coherent projects.
In food, competition is raging in the semantic field of “sustainable”…
Traditional players have so much communication on the topic of sustainability that it has become difficult for the consumer to find out – except for the most engaged and informed. This dispersion puts committed small businesses in a difficult position. Analyzes and relevant indicators for the consumer are lacking.
“What’s holding back sustainability upscaling are announcements of carbon neutral plans from companies that don’t have a solid strategy to get there.”
In the sector, the margins are extremely low. The phenomenal growth of the short circuit during the first inclusions has largely subsided. Demand and production are currently in crisis for small players. To the point that some players are wondering: hasn’t the demand been overstated?
Ditto in the financial sector. When everyone claims to be sustainable or responsible, any customer of a traditional bank can get the misleading impression that their savings contribute to the stated “sustainable” values..
Do we need more brands to guide consumers and investors?
No, definitely not! There are so many private labels that everyone gets lost. In this respect, the work on the taxonomy at the European level was particularly interesting. Lthe integration of gas and nuclear power as green products is undoubtedly the worst thing that could have happened. We can tell ourselves we need gas or nuclear power. But a taxonomy that conflates immediate need and sustainability does not hold water.
What hinders scaling up in relation to sustainability is announcements of carbon neutral plans from companies that do not have a solid strategy to get there. The general lack of clarity around the requirements may well take us from “it’s too late” to “it’s too late”.