Why all businesses should embrace sustainability

For all enterprises, across all sectors, sustainability is becoming more important. In order to remain successful today, 62 percent of executives consider a sustainability plan essential, and another 22 percent think it will be in the future.

Simply stated, sustainability is a business approach to long-term value development by taking into account the ecological, social and economic climate of how a given enterprise operates. Sustainability is founded on the premise that business sustainability is fostered by the implementation of such strategies.

Businesses understand the need to act on sustainability as standards of corporate responsibility grow and as accountability becomes more prevalent. Professional contact and good thoughts are not enough anymore.

What sustainability programs look like; the following business leaders illustrate:

·         Both Nike and Adidas have seriously moved up. Although Adidas has produced a greener supply chain and tackled specific issues such as dyeing and removing plastic bags, Nike has concentrated on reducing waste and decreasing its footprint.

·         Both Unilever and Nestlé have taken on big responsibilities, Unilever in particular with regard to organic palm oil and its overall footprint in waste and energy, and Nestlé in areas such as the life cycle in goods, climate, water quality and waste.

·         Walmart, IKEA and H&M have pushed towards more sustainable retailing, primarily by leading partnership to minimize waste, improve resource efficiency and maximize material use through their supply chains. It has also taken steps with suppliers from developing markets to fix local labour conditions.

·         Both Pepsi and Coca-Cola have developed ambitious goals, such as increasing the emphasis on water resources and setting water replenishment targets.

·         Both Biogen and Novo Nordisk have been focusing on energy conservation, waste reduction and other environmental initiatives in the biopharmaceutical industry. Via partner programs in the fields of health and safety, they also concentrated on social effects.

·         We see how banks such as ANZ and Westpac in Australia both support local communities with good sustainable practices in financial services and by integrating sustainability into their business processes and culture.

·         Car manufacturers such as BMW and Toyota have made strides in reducing energy efficiency and emissions, not to mention Tesla as an outsider who really questions the overall footprint of the industry.

Strong sustainability commitments have all been made by these organizations, largely by openness and resolving material concerns. They are embarking on a more sustainable path, and within the next decade, all businesses can follow suit.

Some practical recommendations

There is no "one correct solution" for sustainability, much as with the overall plan. The best approach depends on the goals and desires of each organization. For all management teams to strengthen sustainable activities, here are a few helpful acts.

Align strategy and sustainability: Management needs to ensure consistency between the company's strategy and sustainability efforts. We also see divergence, which makes sustainability initiatives fragile, lacking real dedication and prioritization, of course. Many good examples are available. "Take the" Sustainable Living "of Unilever, which seeks to decouple growth and development and reduce its resource footprint by focusing on waste reduction, resource quality, creativity in sustainability, and ecological sourcing (such as organic palm oil). Similarly, Toyota is well known for electric engine engineering, but less so for reducing its dependency on rare earth minerals. For hybrid and electric engines, these minerals are required. But Toyota has minimized its import reliance and operational risk by developing alternative motor technologies, thus minimizing its financial risks in the event of price increases.

Compliance first, then competitive advantage: Compliance, which also refers to laws on waste management, emissions and energy efficiency, as well as human rights and labour accountability, must be tackled first and foremost by businesses. Compliance is a problem that concerns investors as well. Latest BCG / MIT data shows that investors are gradually shying away from the risks of compliance. A total 44 percent of investors state that they are divesting from businesses with low results in sustainability.

Reactive to proactive: Many of today's leading sustainability firms, such as Nike, Coca-Cola, Telenor, IKEA, Siemens and Nestlé, have largely stepped up as a result of the crisis. For instance, in places like Indonesia in the 90s, Nike faced boycotts and public rage for oppressive labour practices, but turned the tide around. By releasing a full list of the factories, it contracts with and a comprehensive 108-page study exposing conditions and wages in its factories, it became a leader in creating transparency in 2005. It has also acknowledged common problems, especially in its factories in South Asia. These businesses have all built more constructive sustainability policies by understanding the effect of sustainability in a crisis.

Quantify, including the business case: Both businesses are struggling to quantify the return on their investments in sustainability. This is a simple concern with respect to enforcement. However, businesses need to connect sustainability with a business case with regard to areas of competitive advantage. The ones that actually do, however, constitute a relatively small group.

Transparency is a precondition for sustainable policies to be measured and strengthened. Without accountability, plain as that, you cannot judge. Transparency builds on the premise that efficiency can be enhanced by an open atmosphere in the business as well as with the world. The only way to achieve accountability for businesses is through open contact with all main stakeholders focused on high standards of disclosure, clarification, and accuracy of information, as well as an openness to identifying faults and improving practices.

Engage the Board: In a recent MIT / BCG poll, a complete 86 percent of respondents agree that boards should play an active and powerful role in sustainability. Just 42 percent say, however, that their boards are significantly involved. In relationships with key stakeholders, such as NGOs, governments and international organizations, boards are also important.

Engage your ecosystem: We see that collaboration is critical to successful sustainability practices, particularly in crisis resolution and the creation of broader solutions. The MIT / BCG data shows that sustainability is seen by 67 percent of executives as an environment where teamwork is important to succeed.

Finally, and most critically, the company is widely involved: One example of participation is Salesforce.com, which leads to the personal capacity of each employee to connect with environmental groups and programs that benefit local communities through its "1/1/1" philanthropy program. Nespresso is another good example, reacting to the debate about the sustainability of its capsules, the business has integrated sustainability into the DNA of every aspect of its company. The very aim of Nespresso is related to the campaign known as the "Positive Cup." During any decision taken at Nespresso, sustainability is considered. The business seems sincere about its effect reduction and is also looking at its aluminium sourcing

Concluding Words

In summary, sustainability is a serious problem, one that matters beyond individual businesses. But a number of major businesses are reassuringly implementing forward-thinking sustainability strategies. It's becoming increasingly obvious that sustainability is a megatrend that just doesn't go down!