“Sustainability” has no single definition. But experts on the subject agree that the word refers to the way companies remain profitable and competitive — now and into the future — while taking into account customers and employees, communities, social issues and the environment. In short, people, profits and the planet drive sustainable organizations and their operating strategies.
Businesses balance the need for economic growth with the active protection of the environment and the needs of an evolving society through sustainable development. Sustainable companies operate on the idea that they can make profits and expand into new markets while doing things such as lowering toxic emissions from their own manufacturing processes or by making products or providing services that help address social concerns. Computer manufacturer Dell, for instance, now ships 70 percent of its notebooks in material made of bamboo and mushrooms. The nontoxic, recyclable packaging is even harvested near its source.
Corporate Social Responsibility
More of a tool than a strategy, corporate social responsibility holds up a company’s brand as a responsible corporate citizen. Through corporate social responsibility, companies demonstrate their support of causes or activities that benefit society in general. Corporate sponsorship of fundraisers for health organizations or arts programs are examples of corporate social responsibility carrying out upfront sustainable strategies. Today, sustainability and corporate social responsibility often are interchangeable terms.
Operational Risk Management
Sustainable companies want to avoid harming people and the environment. The strategy is to minimize their risk while responding to customer demands for safer products or manufacturing processes. The strategy also must comply with safety standards and government regulations.
As the world’s population grows, the demand for resources, such as food and water, increases. Sustainability requires companies to become more efficient and cost-effective in using and consuming resources. Resource productivity is about making the biggest gains possible in productivity and profits while using the least amount of resources at the lowest costs.
Employees must buy into the idea of sustainability for it to succeed, since they carry out the strategies. Companies must hire and train workers who can help them achieve sustainable goals.
The strategy of sustainable consumption allows companies to use sustainability to build their brands and customer loyalty. For example, companies that recycle production materials might earn repeat business from customers who also value recycling.
Corporate accountability requires a company to measure, report on and make public its sustainable progress. An example of corporate accountability might involve measuring the reduction in carbon emissions for a certain time period and recording it as a benchmark against a goal. Robert Eccles, author of “One Report: Integrated Reporting for a Sustainable Strategy” (Wiley, 2010), advocates that public companies be required to report sustainable information along with financial information in their annual reports to maintain transparency.
Companies often think sustainability is simply about business practices aimed at cleaning up the environment. In the complex area of sustainability, the environment is just one concern. Harnessing renewable, or non-finite, energy sources, such as wind, solar, hydroelectric, biomass and geothermal power, in the most cost-efficient way is another consideration for sustainable companies. These energy sources provide “clean,” or environmentally safe, electrical power for customers, communities and businesses.
About the Author
Valerie Bolden-Barrett is a writer, editor and communication consultant specializing in best business practices, public policy, alternative energy, personal finance and career development. She is a former senior editor of national business publications covering management and finance, employment law, human resources, career development, and workplace issues and trends.