Wednesday, July 29th, 2009
The Nature of Sustainability Strategies
Viewed through a sustainability lens, a sound, well-aligned organizational strategy for the 21st century, interdependent, global economy must be green and socially responsible if it is to succeed in the moderate to long term. Sustainability is in its simplest terms about how to do well now without destroying the ability to do well in the future (i.e., it is bifocal in being able to see both close-up and further away). It’s also about taking a well-rounded approach to making personal, governmental, and business decisions that put environmental awareness and social responsibility on a par with sound economics. This is also referred to as the triple bottom line.
One can see these multiple elements in a business-oriented definition of sustainability as: “a company’s ability to achieve its business goals and increase long-term shareholder value by integrating economic, environmental and social opportunities into its business strategies”. Similarly, Corporate Sustainability is a business approach that creates long-term shareholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. Corporate sustainability leaders achieve long-term shareholder value by gearing their strategies and management to harness the market’s potential for sustainability products and services while at the same time successfully reducing and avoiding sustainability costs and risks.
Note in this definition the articulation of sustainability into essentially a SWOT framework, accounting for the opportunities and risks arising from business—society interdependences.
The three interrelated domains that together comprise sustainability — economic/financial, social/governance, and environmental stewardship — are depicted below as Total sustainability management model.
Within each of these domains are a number of areas in which the policies and practices of an organization across its entire value chain can have both short-term and longer-term impacts for the organization and society.
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Tuesday, July 28th, 2009
For enterprises to operate in a way that actively fosters sustainability, we believe those organizations need to help restore — or at least not undermine — the capacity of the natural environment to provide resources and services. To earn the sustainability moniker, organizations must also actively contribute to stability in the communities and economies in which they operate.
We define a “state-of-the art” sustainable enterprise as one that adopts a long-term, collaborative, “holistic” or systems-oriented mindset. It integrates sustainable development into its core business strategy, and its activities result in the generation or regeneration of the planet’s capital stocks: that is, natural, social, financial, human, and manufactured capital. A state-of-the-art sustainable enterprise implements ethics-based business principles and sound corporate governance practices that consider the rights and interests of all relevant stakeholders, not only the immediate interests of company shareholders.
A sustainable enterprise is likely to pursue a triple-bottom-line strategy that is tied to three broad domains of stakeholder needs: social, environmental, and economic. A sustainable enterprise is committed to transparency and accountability. Such an organization gives stakeholders opportunities to participate in all relevant decisions that affect them. A sustainable organization uses its influence to promote meaningful systemic change among its peers, within its neighboring communities, and throughout its supply chain. This is because it recognizes that, for sustainability to be achieved, it is not enough simply to change one’s own organization; enterprises should also be a vehicle for encouraging the improved performance of others.
Qualities of a sustainable enterprise
- Top-management support. The CEO, the chairman of the board and senior management teams show public and unwavering support for sustainability
- Centrality to business strategy. Sustainability is central to the company’s competitive strategy
- Values. Key values related to sustainability are deeply ingrained in the company
- Metrics. The company deploys an array of rigorous sustainability measures
- Stakeholder engagement. The company reaches out to and involves a broad array of external and internal stakeholders around sustainability issues, including customers, suppliers, governmental and non-governmental organizations (NGOs)
- Systems alignment. The company’s structure, systems, processes, and culture are aligned around sustainability
- Organizational integration. Various aspects of sustainability are viewed holistically and integrated across the functions that have responsibility for them
To what extent does your company have practices in place to do the following?
- Ensure the health and safety of employees
- Ensure accountability for ethics at all levels
- Engage collaboratively with community and nongovernmental groups
- Support employees in balancing work and life activities
- Encourage employee volunteerism
- Involve employees in decisions that affect them
- Provide employee training and development related to sustainability
- Reduce waste materials
- Highlight our commitment to sustainability in our brand
- Improve energy efficiency
- Work with suppliers to strengthen sustainability practices
- Get groups across organization that are working on sustainability-related initiatives to work more closely together
Potential barriers to sustainability
- Lack of demand from consumers and customers
- Lack of demand from managers and employees
- Lack of awareness and understanding
- Lack of standardized metrics or performance benchmarks
- Lack of specific ideas on what to do and when to do it
- Lack of demand from shareholders and investors
- Lack of demand from suppliers
- Unclear or weak business case
- Lack of demand from the community
- Lack of support from senior leaders
- General risk aversion
- Fear of competitor’s taking advantage of us
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