Sustainability is a business strategy. It seeks to adopt sustainability as a key component in the company’s operations. The strategy envisions meeting the needs of the present generation without compromising the ability of future generations to meet their own needs.
What is sustainability?
It is a balance between social, economic, and environmental factors. Corporate operations and development are pursued not to deplete natural resources or harm the planet’s ecosystems. Sustainable development aims to create a better world for everyone now and in the future. Corporations adopting sustainability as a core principle of business strategy incorporate in each decision the impact it has on future generations. In sustainability, we consider the long-term implications of our actions and decisions on the planet, society, economy, and business.
Sustainable business strategy
A business incorporating sustainability as a core business strategy makes sustainable operations necessary in all business operations. Sustainability is used to create long-term value for all stakeholders. Stakeholders include customers, employees, shareholders, and the environment.
Sustainable practices are integrated into all aspects of the business, from sourcing, manufacturing, distribution, marketing, and customer service. It will include reducing energy and resource consumption, minimizing waste, adopting renewable energy sources, using environmentally friendly materials, and promoting social and economic equity.
The business advantage of sustainability strategy
Sustainable business practices improve brand reputation, reduce costs, enhance innovation, and attract and retain customers and employees who value sustainability. The strategy is particularly valuable for companies in Europe, Australia, North America, and emerging markets. In these markets, there is a heightened awareness of the consequences of unsustainable policies impacting humanity. A sustainable business strategy is a smart business move for long-term success. Let me share some supporting data points that illustrate the need for adopting a sustainable business strategy.
Such corporations are better able to attract capital at competitive rates when compared to traditional business strategy companies.
- According to the Global Sustainable Investment Alliance, global sustainable investment assets grew to $35.3 trillion in 2020, a 15 percent increase from 2018.
- A PWC survey found that 80 percent of institutional investors consider ESG factors when making investment decisions.
- Sustainability-linked loans and bonds are becoming increasingly popular. Bloomberg reports that issuance of these instruments reached $66.5 billion in 2020, up from $5.5 billion in 2016.
- An MSCI study found that companies with strong ESG performance had higher profitability and lower risk than those with weak ESG performance.
- A Harvard Business School study found that companies that adopted sustainability practices outperformed their peers in the long run in terms of financial and stock market performance.
Sustainable strategy in the tech sector
Tech companies are often seen sitting at the cutting edge of innovation. These companies have been a forerunner in adopting sustainability as a core business strategy:
Google has invested in large-scale wind and solar projects. It has implemented energy-efficient measures in its buildings and data centers. It has also created tools and initiatives to help people reduce their environmental impact. Google Maps shows bike and transit directions, and Google Nest smart home products help consumers reduce energy usage. The company has set a goal to achieve carbon neutrality in its global operations. It will power all its data centers with renewable energy.
Salesforce has launched the Salesforce Sustainability Cloud platform, enabling companies to track and report on their sustainability performance and goals. Internally, the company has implemented sustainable practices, such as using 100 percent renewable energy, reducing waste, and promoting sustainable transportation options for employees. The company has committed to reaching net-zero greenhouse gas emissions across its entire value chain by 2050.
Microsoft, too has made similar commitments. It has also created the AI for Earth program, which uses artificial intelligence to address climate change, biodiversity loss, and water scarcity.
Implementing a sustainable strategy
A company desirous of implementing a sustainable strategy begins with a sustainability audit. The audit assesses the company’s current environmental and social impact. It identifies areas of improvement and provides a baseline for measuring progress.
The audit helps the company set sustainability goals that align with its values and missions. Like all other business goals, goals should be specific, measurable, achievable, relevant, and time-bound. The sustainability plan is now prepared. It outlines the strategies and tactics the company will use to achieve its sustainability goals. A sustainability plan includes details of initiatives the company will use to reduce the environmental impact, promote social responsibility, and ensure long-term economic viability. Our multi-national team of experts can help you prepare such a plan.
The sustainability plan preparation process requires collaboration and interaction with stakeholders. It will mean collaborating with employees, customers, suppliers, investors, and the community. The exchange is crucial in gaining their support and input on its sustainability initiatives. Our team will create the necessary frameworks and survey instruments that the company’s internal team can use to gather information and perceptions of each stakeholder segment. The interaction also helps in securing stakeholder support for the sustainability plan.
With the plan reading, the company can begin implementing the sustainable practices listed in the plan. These practices are to be aligned with the company’s sustainability plans and goals. The practices may include, for instance, programs for reducing waste, conserving energy, using renewable resources, and promoting social responsibility.
The sustainability plan requires monitoring and reporting the progress of each of the listed programs. Each program will have indicators against which progress is measured and monitored. Performance monitoring will help the company measure progress and make necessary strategic changes if a program does not achieve its stated goals. The reporting brings with it transparency. The metrics help demonstrate the environmental and social impact of the programs listed in the sustainability plan.
It is important to note that sustainable business practices are not a one-time project but an ongoing process. The company should continuously review and improve its sustainability plan and practices to align with its goals and mission.