The Net Positive Strategy: Where Environmental Stewardship Meets Business Innovation

Kingfisher, one of Europe’s largest home improvement retailers, was the first business of its size to receive full certification from the Forest Stewardship Council (FSC). But, explains Nick Folland, formerly the company’s legal and corporate responsibility director, Kingfisher aspires to create a net positive impact on the environment by “putting more back in than we take out.” Now the group corporate affairs director for the Net Positive plan, Folland is leading the company’s groundbreaking collaborative effort.

What if companies were to put more resources into the environment than they take out? That’s the question underlying Kingfisher’s Net Positive strategy. The Net Positive plan seeks to change Kingfisher’s business model to practices that produce a net positive environmental impact — and implementing it is no small challenge.

Take forests, for example. Kingfisher already sources 86% of its timber from responsibly managed forests, and aims to increase that to 100% by 2020. This strategy has a positive impact on natural forests by ensuring that destructive techniques such as clear-cutting are avoided. To truly be “net positive,” however, Kingfisher also needs to consider how it sources non-timber products like leather and palm oil, which can be produced in ways that contribute to tropical deforestation, so that gains in one area aren’t offset by problems in another.

As if this weren’t challenging enough, Kingfisher is simultaneously attempting to drive a massive change in consumer behavior. It seeks to introduce new “closed loop” products, which will be completely reused and recycled so they never enter the waste stream. The company also aims to rent or lease some products, instead of selling them, which would reduce consumption of resources while providing the same level of service to customers.

MIT Sloan Management Review guest contributing editor Hannah Clark Steiman spoke to Nick Folland, the company’s legal and corporate responsibility director, about the challenges of developing and implementing the Net Positive plan.

What is “Net Positive”?

Our expectation is that we will put more resources back into the earth than we take out, not just do “less bad.” The reason it’s core to what we do at Kingfisher is because our corporate purpose and aspiration is to give people better homes and better lives. We’re convinced that, going forward, a better home and a better life must be one that is sustainable in the long term. So it’s about tying sustainability to our core business purpose. That’s what makes us think it’s a new way of doing business and not just a typical corporate social responsibility strategy.

How did it come about?

We’ve been looking at the whole area of sustainability for 20 years or so.

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2 Comments On: The Net Positive Strategy: Where Environmental Stewardship Meets Business Innovation

  • Praveen Kambhampati | May 17, 2013

    I see a great future for the term “Net Positive Strategy” as the way the business houses round the world carry out a cost benefit analysis of their commitment to the environment. Or they are compelled to do so by proactive initiatives by Kingfisher. Home improvement area by a general perception seems far away from any environmental impact. Someone has to technically explodes the BOM ( Bill of Material ) that goes into making a premium home out of woods.
    A very responsible behavior by Kingfisher which would definitely add further value to their credibility for the proactive and caring approach to the nature.

    There seems to be an imbalance, though, on how much can be restored back into the nature.
    Usage of outer casing for gutters and water tanks seems good but the cost effectiveness has failed many times in the past. A detailed insight may give more clarity on this “staged” reuse approach.

    But the very thought of giving back could trigger an accounting system with mandatory reporting heads for budgets and expenditure on restoration. a profit shared with nature. An all inclusive “Sustainability Strategy” is very much evident in their business model.
    Way to go, Kingfisher !!

  • Mujtaba al-Mahmood | June 25, 2013

    ‘The Net Positive Strategy’ and PepsiCo
    Accepting an accolade as a “Recovering Plunderer” as opposed to what Fortune story had tried to brand him as the “Greenest CEO” of America some 14 years ago , Ray Charles appealed to the conscience of the corporate society and possibly the green activists that there has to be demonstrable alternatives to ‘Take-Make-Waste’ industrialized system! Lot have been said and achieved since then, but a great deal needs to be done to reverse the trend of mistreating, if not plundering our planet earth, and reengineer more industrial processes toward producing ‘close-loop’ products that hardly enter waste streams. As we are aware, ‘Sustainability concept and its operating system’ has covered some great distance thus far to this end and it is evolving in a way leading corporations are gradually buying into it , if they are nearing a tipping point is another discussion- some companies are embracing far more intimately than others and firmly imprinting sustainability agenda into their corporate DNA . To turn the tide ,as Ray Chares coined, of Take-Make-Waste , they are showing alternative routes to becoming environment-friendly, yet reducing costs ,yielding better top-line and bottom-line returns. HBR story published in 2009 by Prahalad and Rangaswami showed based on a research that sustainability was proving to be a key driver of technological and organizational innovations.

    It is encouraging to know, Kingfisher is one of such companies that is sourcing 86% of its timber from responsibly managed forest and moving on to the Sustainability path to create a net positive impact on environment by ‘putting more back in than it takes out’. I thought the title of the MIT story offered a powerful business logic –‘the Net Positive Balance Strategy is where the Environmental Stewardship meets Business Innovation’.

    Let us take another case in point of Net Positive Balance. PepsiCo calls it ‘Performance with Purpose’, it is pursuing a strategy to create a positive water balance, by giving back more water in than it is taking out particularly in its operations in the water distressed territories around the world. The fact that a beverage drink consists of 90% plus water ,PepsiCo like any other beverage company faces an enormous operating challenge as it needs to harness tens of billion liters of water each year from the planet earth to keep its business going .But, then fresh water is a finite global resource. In a recent report on ‘global water risk’, Ceres mentioned,” Our global economy runs on water. Fresh water powers industrial production which is the essential ingredient in many products and is perhaps the most important natural resource for human survival.”
    Approaching this conundrum, PepsiCo has found a powerful Water Balance Equation particularly in India. Its Corporate Citizen Report 2010/11 informed that PepsiCo retained and improved its positive water balance status during the period. It replenished 10 billion liters exceeding its intake of 5.8 billion used in its manufacturing facilities throughout India. PepsiCo’s out reach is another great example that it developed a local solution by engaging stakeholders, it provided knowledge and agricultural implements to the rice farmers in India to adopt innovative agronomic practices of direct seedling in paddy cultivation bypassing the nursery which has been traditionally the most water intensive practice . This method has helped reduce water use by 30% in paddy cultivation and saved 5.8 billion water in one year alone which led to improved water access to 130,000 farmers in the water-stressed areas. Besides, PepsiCo is driving water use efficiency and approaching a “close-loop’’ system of recycling waste water in its plant operations. This is truly a powerful story in divergence to the “Take-Make-Waste” industrial system!

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