Sustainability, it’s a smarter way to do business in the face of new market forces that reward companies who create value for society and the environment, and penalize those who don’t. Sustainability is no longer just about being “greener” or socially responsible. It is no longer just a “nice to have”. It is now an essential part of any successful corporate strategy.
It’s due to three trends, declining resources, radical transparency and rising expectations, that are forcing companies to embed sustainability in their core business activities for bottom-line financial reasons.
Sustainability has shifted from a moral-based view to a market-based view. Companies who create value for society and the environment can create even more value for their customers and shareholders. During the 1990s, sustainability was primarily a niche business for eco-players: Ben & Jerry’s Ice Cream and other specialized firms selling to the smaller number of true-green consumers. In the 2000 to 2010 period, we saw big corporations incorporate sustainability into their core business, from General Electric to Walmart, Unilever to HSBC, IKEA to BMW, and many others. But the problem still to a some extent is how executives have approached sustainability in practice. In sustainability in business-as-usual, executives focus on low hanging fruit of energy conservation and waste reduction where there are cost savings, but they don’t fundamentally rethink their business models or product designs or relationships with stakeholders.
The next wave, I believe, will be smaller and mid-size companies who will embed sustainability in everything they do, not as a way to “go green” or be socially responsible, but as a way to meet customer expectations, grow profits, and be even more successful.
We need to replace sustainability with flourishing as a more inspiring vision for business. Flourishing is about whole system health, thriving, doing well. It is about the world we all want, not the one we just get by in. However, if we aspire to having a positive impact through business, we need to pay attention also to individual wellbeing and reflective practices that help us feel more connected with others and with the natural world. This can lead us to take actions that habitually and reflexively incorporate care for others and for future generations.
To get businesses flourishing, we need to solve three challenges. First, we need to engage mainstream business people, those who may not necessarily believe in climate change and who are defensive when told that they SHOULD behave this way or that way. Making a strong business case shows the link between sustainability performance and value creation. Many companies are still at the beginning of this journey. Other people get offended at the idea that business should make a profit when they are “doing good” for society. But if we want to engage the vast majority of the mainstream business community, we can’t appeal to moral arguments alone.
Another challenge is to bring into the conversation small and mid-sized companies, and family owned companies, who are not interested in sustainability for the sake of being “green” or socially responsible. In other words, these companies don’t aspire to being the next boutique sustainability business, but they do want to address new sustainability pressures as a way to grow and succeed.
Third challenge is to get CEOs and senior executives to pay more attention to personal health and wellbeing – to see individual flourishing as an objective of management – and to create opportunities for employees to engage in reflective practices that enable them to feel more connected to the world around them.
Managing Partner, Sustainable Value Partners
Chris Laszlo’s most recent book is Embedded Sustainability: The Next Big Competitive Advantage (2011). You can follow him on Twitter @EmbedSustain