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Sustainable Business is Good Business

Guest post by: Richard Matthews

Article Overview: Sustainability is a worldwide movement that is changing the way we do business. Sustainability is a megatrend that reflects a general shift in thinking or approach affecting entire countries, industries, and organizations. Sustainability is the next transformational business megatrend comparable to mass production, manufacturing quality movement, IT revolution, and globalization.

Sustainable Business is Good Business

Sustainability is not a passing fad or a marketing gimmick, it is a worldwide movement that is changing the way we do business. Sustainability entails continued development or growth, without significant deterioration of the environment and depletion of natural resources on which human well-being depends. This definition measures income as flow of goods and services that an economy can generate indefinitely without reducing its natural productive capacity.

Sustainability is more than a trend, a trend reflects a pattern of gradual change in a condition, output, or process, or an average or general tendency of a series of data points to move in a certain direction over time, represented by a line or curve on a graph. The term megatrend was popularized by John Naisbitt in his 1982 bestseller "Megatrends". Rather than being a function of a series of data points, the term megatrend reflects a general shift in thinking or approach affecting entire countries, industries, and organizations.

In the May 2010 issue of Harvard Business Review there is a feature article titled ‘The Sustainability Imperative'. The feature is written by David Lubin from the Sustainability Network and Daniel Esty from Yale University. Together they argue that sustainability is the next transformational business megatrend comparable to mass production, manufacturing quality movement, IT revolution, and globalization.

The authors suggest firms seeking to gain a competitive advantage must know what to do and how to do it. With many already onboard businesses must act now, as this unstoppable megatrend will make or break companies around the world.

Although we are still at a relatively early stage of the sustainability megatrend, it can be expected to continue to grow exponentially.

There are at least four critical areas for businesses seeking to enhance their sustainability they include methods, strategy, management, and reporting.

To address the specialized requirements of sustainability, companies are employing new business methods. Specifically, companies are using habitual practices and systematic processes to achieve accuracy and efficiency, often in an ordered sequence of fixed steps. Sustainable methods include business-case analysis, trend spotting, scenario planning and risk modeling.

Sustainable strategy involves planning to reduce a company's footprint. This implies using resources efficiently and effectively. By using analytical data, businesses can position themselves to develop distinctive sustainability strategies. Many aspects of strategy development will remain internal, but companies are increasingly adopting open-source approaches that rely on outside assistance.

Some sustainable companies are instructing their managers to incorporate sustainability objectives into compensation models, reviews, and other management processes.

Some firms have invested in technology to record and report environmental events such as spills and waste disposal. An environmental management system can be the foundation for policy deployment, practice management, goal setting, decision making, and data capture.

Sustainability concerns involve obvious issues like efficiency, carbon intensity and transparency, green IT, green power use, GHG reductions, toxic emissions, packaging, water intensity, paper use and recycling. Other less obvious issues include cleantech investments and patents, employee commuting, telecommuting, environmental financial impacts and toxics in manufacturing.

There are many things that businesses can do to be more sustainable, and many good reasons to do so.

The right vision and effective execution can help companies compete and emerge as winners. Inadequate sustainability efforts could profoundly undermine a company's ability to compete and survive. Some once great companies have watched their iconic brands crumble into dust due to their failure to proactively adapt to emerging megatrends. GM and Kodak are but two examples.

Many companies around the world now have a Chief Sustainability Officer (CSO) including AT&T (U.S.), SAP (Germany), and LoyaltyOne (Canada).

Other forward looking companies are already benefiting from their sustainable positioning. By focusing on outperforming competitors on regulatory compliance 3M's Pollution Prevention Pays reduced pollutants by more than 2.6 billion pounds and saved the company more than $1 billion.

DuPont understands that environmental risks outweigh potential earnings. That is why under a zero waste commitment, Dupont has opted to divest itself of its holdings that have big eco-footprints such as nylon and carpets.

Dow's 2015 Sustainability Goals yielded new products in areas from solar roof shingles to hybrid batteries. Its core business, which had traditionally relied on commodity chemicals, has shifted toward advanced materials and high-tech energy opportunities.

IBM uses their environmental management system as the foundation for policy deployment, practice management, goal setting, decision making, and data capture.

Some companies have made valiant efforts but this does not preclude room for improvement.

Walmart has 38 sustainability goals and earlier this month they released their third sustainability report. This year Walmart's new new climate goal is to reduce 20 million metric tons of carbon pollution from its products' lifecycle and supply chain over the next five years. But other areas still need improvement, Walmart needs to focus on avoiding waste and they need to define the way they measure progress on packaging.

Pioneering companies are already reaping the rewards of their sustainable efforts and a growing number of businesses are realizing that success in sustainable positioning comes from enhanced consumer loyalties, competitiveness and cost savings.

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Article Tags: 21st century economy, 3M, competitive advantage, data capture, decision making, Dow, Dupont, GM, goals, IBM, Kodak, Management, megatrend, methods, Policy, reports, Strategy, Sustainability, sustainable growth, Walmart



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