5 Business cases for Sustainability

All the talk we hear about companies saving money due to various measures – be it through product innovation or improving efficiency or by generating own energy – here I think are the important questions:

Q1. Should or shouldn’t those savings made by the company because of its sustainability efforts be passed down to the end consumer?

Q2. For example, if I have solar panels generating electricity on my roof and am not paying a dime to the power utility, then how would I feel…I don’t know maybe…hmm, I can put a couple of more air cons, keep the lights and fans on…use more power, as I don’t have to pay for it…and simply to justify the payback period. The question is – will it lead towards higher consumerism and ‘bad-habit consumerism’ which created the problem in the first place?

If we have an abundant source of energy, like it is in the case of oil, we exploited it to the hilt causing the problem. Who knows what policies play out in the future – maybe to curb bad consumerism or some other yet unknown environmental problem, governments start charging the amount of sunlight falling on a particular area per square feet – and then it’ll be a bigger problem with all the ‘bad consumption habits’.

Q3. Companies need to look into their core business to aim for sustainability. A coal plant can replace its entire fleet of vehicles with Prius’ and hybrid diesel trucks and optimize it’s operations (solar energy, green buildings, host of certifications etc)…but if the company is still in the dirty coal business and have future interests lined up, then, in my opinion, if that coal company just takes one big step towards renewable energy, then they are truly on their way – all else is green wash.

Shareholder expectations, market shifts and competitive pressures have made “sustainability” an essential business practice among the world’s leading corporations.

Traditionally, the focus of a corporation has been on creating the shareholder value at the expense of or destroying the stakeholder value. And it holds true the other way round also, when a company seems to be doing all the good things in the eyes of its stakeholders but loosing money for it shareholders, thereby risking its own viability.

Moving towards sustainability, a corporation needs to consider both the shareholder and stakeholder value in equal measure.

But how can sustainability be measured and factored into business decisions? How far should a company go in its environmental responsibility and corporate citizenship initiatives? “Doing the right thing” makes sense philosophically, but in practice there are always cost-benefit trade-offs to be considered.

So, the business case for Sustaianbility (why companies must pursue sustainable business development):

  •  It becomes a moral obligation/being a good corporate citizen- the right thing to do
  •  License to operate in new emerging markets
  •  In the coming years, a Sustainble Business strategy will be the real differentiator- Competitive advantage
  • Savings and improved efficiency
  • Product innovation

For example, GE’s Global citizenship program. Working in communities where they don’t have any business footprint has helped drive innovation for other emerging economies. By working in African villages and developing health care systems there, GE was able to modify their products that could be sold in China and India.

“Sustainable Business Development is a viable business concept to improve outcomes, mitigate negative impacts, reduce risks and achieve balanced solutions,” states David Rainey in his book ‘Sustainable Business Development’. 

Was listening to a podcast by Timberland president Gary Smith- He in effect says: “As much as we’re doing to promote a sustainable business development, still, nobody in the developed world needs another pair of shoe. We’re encouraging people to consume stuff that they don’t need…it’s a tough ask. We can at least encourage them to consume recycled/recyclable stuff”.

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