Sustainability for business

In a nutshell, sustainability in business relates to how firms affect the environment or society.

A sustainable business strategy seeks to have a positive impact in one or both of these areas, thereby contributing to the resolution of some of the world's most important issues.

Sustainable business practices can assist address a variety of global concerns, including:

·      Climate change.

·      Income Inequality

·      Depletion of Natural Resources

·      Human rights issues

·      Fair working conditions

·      Pollution

·      Racial injustice

·      Gender inequity.

Although it may appear such, sustainability in business is not entirely altruistic. As Harvard Business School Professor Rebecca Henderson points out in the online course Sustainable Business Strategy, you can't use business to accomplish good in the world unless you're doing well financially. Doing well and doing well are inextricably linked, and effective business strategies incorporate both.

Shared value opportunity Venn diagram showing 'do well' on the left and 'do good' on the right
Many modern businesses have adopted the triple bottom line, which proposes that organisations should focus on more than simply revenues, or the "bottom line," and also assess their environmental and social impact. These priorities are known as "the three Ps," or people, planet, and profit. Quite often, this sustainable approach to business improves overall corporate performance.

Why is sustainability important?
In addition to promoting social and environmental change, sustainability measures can help an organisation succeed overall. It may appear counterintuitive that investing more money in sustainable business practices can increase a company's profitability, yet research shows that the most sustainable businesses are also the most lucrative.

Environmental, social, and governance (ESG) indicators are frequently used to assess how ethical and sustainable an organisation is. According to McKinsey, companies with strong ESG ratings routinely outperform the market over the medium and long term. While sustainability measures may require a short-term investment, they can provide long-term advantages.

Benefits of Sustainability in Business:

1. Protect your brand and reduce risks.
A CEO's biggest nightmare is to end up on the front page due to a controversy. Not only do poor practices harm an organization's brand and cost it clients, but dealing with a public relations crisis can take key human and financial resources away from its core business.

You do not want to be the corporation that allowed an oil spill or forced people to work in hazardous conditions. By implementing a sustainable plan that protects the environment and your employees, you are also protecting yourself from potentially damaging accidents.

2. Being purpose-driven provides a competitive advantage.
Sustainability should not interfere with economic objectives, and infusing your organisation with purpose can help attract a motivated, skilled team that promotes financial success. During a Facebook Live chat, Henderson mentioned a recent survey that found 89 percent of CEOs feel an organisation with a shared mission will have higher employee happiness. Furthermore, 85 percent believe they are more inclined to refer a company with a strong purpose to others.

Making your firm a place that does good in the world, rather than merely a place that pays well, might provide you a competitive advantage when it comes to hiring top people.

Related: A Harvard Business School professor investigates the impact purpose can have on your organisation.

3. There is an expanding market for sustainable goods.
According to a 2019 study, 73% of worldwide customers are eager to adjust their purchase habits to reduce their negative environmental impact, and sales of sustainable products have increased by nearly 20% since 2014. Millennials, in particular, are more prepared to pay a premium for products that contain sustainable ingredients or make social responsibility claims. If your company commits to sustainable products and practices, it may gain market share by converting environmentally conscious customers and increasing sales.


4. Cooperative Action Can Drive Change.
Individuals may feel overwhelmed, alone, or unable to influence substantial change. That is not the case when the most innovative, profitable, and powerful companies work together to address some of the world's most serious issues. While governments struggle to handle public goods concerns, purpose-driven businesses that collaborate to address these issues have had remarkable success.

Palm oil, for example, is inexpensive and adaptable, appearing in over half of all packaged products such as soap, lipstick, and ice cream. However, palm oil production (pdf) has resulted in record greenhouse gas emissions, contributing to climate change.

In light of this, Unilever, a consumer goods company, pledged to utilising exclusively palm oil from certified sustainable sources in 2008. The organisation collaborated with its competitors, as well as governments, non-governmental organisations, and indigenous peoples' organisations, to lead the industry in adopting sustainable palm oil practices. As a result, Unilever continues to thrive, and the world benefits from sustainable palm oil harvesting practices.