Manilka Ediriweera explains how eco practices help organisations thrive
Sustainability and sustainable development are two of the most widely discussed topics at present. The UN World Commission on Environment and Development says: “Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Growing concerns about climate change, environmental degradation and social injustice have transformed how companies carry out their operations. Sustainability in business focusses mainly on the impact that organisations have on the environment and society.
Decades ago, consumers weren’t too concerned about supply chains, carbon foot-prints or minimum wages.
However, with purchasing power currently vested in consumers, sustainable business practices have come into the limelight with growing concerns about climate change, social equality and green living. As a result, corporate sustainability has undergone many changes over the years.
The 2017 Cone Communications CSR Study revealed that more than 89 percent of consumers are inclined to switch to brands that are associated with sustainable practices. In addition, studies have proven that millennials are willing to pay more for sustainable goods.
Since sustainability is a global concern that’s gaining momentum, organisations should ensure they practise and incorporate such measures, in order to reduce business and reputational risks.
Let’s identify how sustainability is changing the way the marketplace operates…
There have been several changes in the manner in which the corporate sector carries out operations. Following an increase in consumer responsibility and requirement for transparency, companies are now recognising the need to actively incorporate sustainability into their operations.
What began as a way to improve corporate reputation and create long-term financial value has become a strategic concern driven by market forces. This has paved the way for organisations to develop and design sustainable strategies that create value, market sustainable products and services, introduce new leadership types, improve transparency and implement internal changes that will have a profound impact on employees.
For many years, companies were convinced that the more sustainable they became, the more costs they incurred – and this eventually led executives to address environmentally-friendly practices as mere CSR activity. However, this notion is now being replaced by the realisation that sustainability creates both bottom and top-line returns for businesses, through lower operational expenditure, generating additional revenue streams and reducing inputs.
Transparency about how companies manage ESG (environmental, social and corporate governance) practices is becoming an essential requirement with many regulatory bodies being established around the world to oversee compliance.
Due to the tendency for investors and money managers to invest in businesses that have incorporated ESG values into their corporate strategies, sustainability also means money in the bank.
Integration of sustainability practices has resulted in improving operational efficiencies and reducing costs, maintaining corporate reputation and providing new opportunities for growth. Moreover, it provides companies with a competitive advantage.
All these benefits have led to the integration of sustainability as a core value of business strategies. It also acts as a driver of innovation and influence, positively transforming how companies operate.
It’s evident that sustainability is imperative for business success. Corporates should integrate sustainability practices because they lead to cost savings, create additional revenue – i.e. by helping to attract and retain customers who are concerned about a company’s environmental footprint – and minimise risks while promoting organisational growth.
At present, leading global corporations are fully embracing this concept – that of being a part of the environmental policy conversation.
Similarly, all businesses – irrespective of their size – should embrace this concept to compete successfully.
Corporations can take steps to create a more sustainable business strategy; but first, they must understand and view compliance as an opportunity. They can then take the relevant steps to align their strategy with sustainability.
Thereafter, they should work together with suppliers and retailers to ensure that value chains are sustainable, and move on to introducing sustainable products and services to the market, along with new business models, in order to gain a competitive advantage. Finally, they can create ‘next practice’ platforms to create changes to existing paradigms.