With the World Economic Forum 2020 starting this week, buzz around sustainability will be rekindled once again with dialogues, discourses and debates on ‘reimagine the purpose and scorecards for companies and governments’. While scorecards will be developed but will businesses really make sustainability a core business strategy or will it continue to be at the fringe?
Interestingly, sustainability as a subject has continued to be discussed since the mid-twentieth century with limited progress. Concerns about pollution, the population explosion, climate change, depletion of finite resources, degradation of biodiversity, etc. have been topics of continued discussion for several decades now. Our collective forces could have addressed all environmental issues three decades ago and helped protect so many species from becoming extinct. However, the reality is different.
Let’s first understand what is a sustainable business strategy. It represents the strategies that companies adopt and the impact they have on the environment and society. The three pillars of sustainable business strategy are environment, economic and social benefit or simply ‘Planet, Profit and People’.
Can businesses sustain a strategy focused on sustainability?
Sustainability, also referred to as ‘Purpose’ or ‘Shared Value’, will help companies sustain businesses only if they prosper while addressing some of the biggest challenges of the natural world. To ensure benefit to all the three pillars of sustainability, companies need to adopt this approach at the core of their business strategy. Companies that imbibe sustainability into the fabric of their organisation, that is, encompass and embed it in all aspects of its operations—from sourcing to manufacturing to distribution, make sustainability their competitive advantage and make profits. For this, a vision of long-term profitability involving social and environmental good, corporate reputation, market competitiveness, customer loyalty and profitability is essential.
As defined by Michael E. Porter and Mark Kramer in Harvard Business Review, “Shared Value is not social responsibility, philanthropy, or sustainability, but a new way for companies to achieve economic success.” While CSR and philanthropy are aimed at “giving back” to society, Shared Value is deriving competitive value by solving social and environmental issues. Ecosystem collaboration will be the cornerstone for social and economic good. It is becoming apparent that a sustainable business strategy helps conserve the natural environment, protect the company’s corporate reputation, power innovation, engage employees, attract and retain talent, derive competitive advantage and gain brand value. Adopting Sustainability as a business strategy will help companies derive long term profitability.