Bookmark and Share

Emerging Markets Find Sustainability Pays Off, And Isn't Monopoly of More Developed Countries

Organic products were a luxury with little market to speak of when Ibrahim Abouleish founded Sekem, Egypt’s first organic farm, in Cairo in 1977. The years Sekem spent honing sustainable cultivation practices paid off, though, in 1990, when it moved into growing organic cotton. Organic produce was entering mainstream Western stores then, and worldwide demand for all things organic began to surge.

There were other advantages to the organic approach as well: Sekem’s farming techniques helped reclaim arable land from the Sahara, which had been spreading into the Nile delta. With them, the soil absorbed more carbon dioxide from the atmosphere, decreasing greenhouse gases, and cotton crops needed 20 percent to 40 percent less water.

In the bargain, organic techniques lowered the farm’s costs, improved average yields by almost 30 percent, and produced a raw cotton that was more elastic than its conventionally grown counterpart. So, far from being an expensive indulgence, organic cotton offered Sekem a business model that was more sustainable—not just environmentally but financially. In recent years that model has generated healthy revenue growth: From 2006 until the disruptions of the Arab Spring in 2011, the business posted 14-percent annual increases, and Sekem is now one of Egypt’s largest organic food producers.

Rapidly developing economies are often portrayed as sustainability laggards—focused more on raising their citizens out of poverty than on protecting the environment. It’s true that their regulatory bodies can be weak, hesitant to impose restrictions on newly liberalized markets, or resentful of pressure from industrialized nations. But the developed world has never had a monopoly on visionaries, as Sekem’s story illustrates. And in markets where the pressures of resource depletion are felt most keenly, corporate sustainability efforts have become a wellspring of innovation.

That’s what we found in 2010, when The Boston Consulting Group joined forces with the World Economic Forum to identify companies with the most effective sustainability practices in the developing world. The study involved reviews of more than 1,000 companies ranging in size from $25m to $5bn, from a wide array of markets and industry sectors, and included interviews with almost 200 executives. From the pool of companies studied, we identified more than a dozen “champions,” whose sustainability practices were highly effective, innovative, and scalable.

These organizations are located in countries across Latin America, Africa, the Middle East, Asia, and the South Pacific. Some pursue sustainability out of pragmatism, some out of idealism. But regardless of their motivation, they have consistently generated above-average growth rates and profit margins.

To make their environmental efforts pay off financially, these companies have, broadly speaking, followed one or more of three main approaches. First, many, like Sekem, took a long view, investing in initially more-expensive methods of sustainable operation that eventually led to dramatically lower costs and higher yields. Others have taken a bootstrap approach to conservation: They started with small changes to their processes that generated substantial cost savings, which they then used to fund advanced technologies that made production even more efficient. Last, some have spread their sustainability efforts to the operations of their customers and suppliers, in the process devising new business models that competitors find hard to emulate.

Collectively, these companies vividly demonstrate that trade-offs between economic development and environmentalism aren’t necessary. Rather, the pursuit of sustainability can be a powerful path to reinvention for all businesses facing limits on their resources and their customers’ buying power.

Read Full Article


Keywords: international trade, sustainability in emerging economies, entrepreneurs and sustainability, sustainability and bottom line

SCB TRANSLATOR (Over 60 languages)
Sponsored by:


DIGITAL ISSUES