Nestled among the glossy financial reports and well-thumbed newspapers found on corporate coffee tables, there is a new little green book entitled ‘The Sustainability Report’.
So what exactly is Sustainability and why are modern global organisations taking it so seriously?
Sustainability is a topical buzzword that can refer to anything from building landfill gas powered generators to combating gender inequality. It pops up everywhere from the green washed offices of BP to the government offices of parliament.
This lack of definition has led many corporate sustainability initiatives to be shallow, only focusing on saving energy, reducing waste, streamlining production and improving employee engagement. All of these initiatives are great, in that they improve operating profit, benefit the environment and motivate staff. However, many are really just efficiency policies. Well managed companies ought to be already running schemes to reduce energy use and cut waste. This has more to do with maximising profit than benefiting the environment. In fact, many of these initiatives do not do much for the environment as the organisations fail to look outside of their own businesses. For example, the majority of greenhouse-gas emissions associated with consumer goods are produced either in the supply chain or by shoppers.
The ability of companies to find, recruit and manage talent hinges upon having an effective employee engagement and development strategy, not on corporate videos showing grinning employees awkwardly dancing to the latest global music phenomenon.
As a result, most corporate sustainability initiatives are not much more than cost –saving, compliance and PR exercises – very few companies actually include sustainability at the core of what they do.
This is beginning to change, organisations are beginning to not just focus on their own green foot-print, but are beginning to look at broader schemes and targets to improve the environment and society. Organisations are looking at helping suppliers, sellers and customers as well as themselves. There are varied schemes such as improving the wage levels and safety of supply chain factory workers, schemes that focus on helping farmers in the supply chain to maximise their consumption of water and schemes that look at improving the business skills of the small business owners that sell a company’s products. Unilever are singled out as the leaders in this area with their ‘Sustainable Living Plan’. They are aiming to help a billion people to take steps to improve their health and well-being; halve the environmental impact of their products; and source all of their agricultural raw materials sustainably.
Unlike the earlier mentioned efficiency schemes, many of these sorts of initiatives raise costs and bring no real short term financial rewards – so why should companies make sustainability central to what they do?
The argument is that good sustainable policies improve the fundamentals of business in the long run. It can change customer’s behaviour in positive ways – by perhaps increasing the demand for green products. Consumers, regulators and shareholders are also increasingly demanding about how organisations behave, improving reputation through positive action improves goodwill and perceived value. Sustainability should therefore not be viewed as a short-term scheme to increase efficiency but as a passport to trade in the future and a boost to a company’s long-term competitive position.
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