In the first of a series on sustainable design, Ama Seery, Sustainability Analyst and member of the Global Sustainable Equity Team, breaks down sustainable design and explains how it can be incorporated into an investment strategy.

Key takeaways:

• Design is a multi-faceted term that shapes the world we live in. Sustainable design addresses environmental and social issues and contributes to sustainable development.
• The Global Sustainable Equity Team believes that continuous design and development is key to the evolution of a sustainable economy.
• In the team’s view, companies will have to adapt and transform their business models to address the rising demand in sustainable products.

What is design? This is a hard question to answer because it is so complex. The term encompasses more than just aesthetics. It is applied when describing objects, systems and processes. It is used to shape the way we communicate and how we live. It is linked to the identities of individuals, organisations and nations. This topic is too big to address in one article. This is the first in a series we will be writing, addressing the topic in all of its different faculties.

John Heskett, a scholar and lecturer on the economic, political, cultural and human value of industrial design, stated that “design, stripped to its essence, can be defined as the human capacity to shape and make our environment in ways without precedent in nature, to serve our needs and give meaning to our lives” .1

He was right. The clothes you wear, the chair you sit in, the dwelling you live in and the manmade items that you can see were all designed. Even the font you are reading right now was designed! As humans we use design to serve our needs, and on the Global Sustainable Equity Team we believe that should also extend to sustainability.

Taking a step back, we think sustainable investing should be informed by the Brundtland Commissions’ definition for sustainable development.

“Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.2

In that spirit, investors would emphasize the triple bottom line: that is, to invest for profit, people and the planet in equal measure.

The triple bottom line

When talking about sustainable design, our team is referring to design that addresses today’s challenges broadly and contributes to sustainable development. This is different from environmentally sustainable design or eco-design, which have a strong focus on environmental considerations. Importantly, sustainable design is not constrained by certification schemes, such as BREEAM4, LEED5 or the Life-cycle Assessment (LCA), that are often required in construction industries.

Making sustainable design part of the investment process

Investors can incorporate sustainable design as part of a broader sustainable investing strategy. That includes considering both the products and operations of a business: looking for the companies that have a positive impact on the environment and society, which we think will help firms stay on the right side of disruption.

To that end, on our team we think investors should look for evidence of sustainable design in a firm’s products/services and in its operations to gauge where a company is intentionally addressing environmental and social issues. It is this intentionality that is used to find evidence of positive impact. In our view, companies that make environmental and social issues a key factor in their research and development can build strong foundations for long-term sustainable growth.

We have noticed a distinct rise in demand for more sustainable products and transparency in the supply chain of these products from consumers. As individuals become more aware of the environmental and social impact of the services and products that they consume, companies in many different sectors have had to adapt and transform their business models to cater to this demand. Companies that are acutely aware of the environmental and social impact of their products or services and actively work to design and develop positive impact products in a sustainable way may thrive in the long run.

Footnotes:

1 Heskett, John. Design: A Very Short Introduction (Very Short Introductions) (p. 5). OUP Oxford.

2 Report of the World Commission on Environment and Development: Our Common Future: (http://www.un-documents.net/wced-ocf.htm)

3 Coined by John Elkington, the triple bottom line refers to sustainable development having environmental, social and economic considerations.

4 BREEAM – Building Research Establishment’s Environmental Assessment Method

5 LEED – Leadership in energy and environmental design