Balancing planet and profits: building sustainability into the business modelPosted on: January 19, 2023
Sustainability, as defined by the United Nations (UN), is “meeting the needs of the present without compromising the ability of future generations to meet their own needs.”
The current global population is just north of 8 billion, predicted to reach 9.8 billion by 2050 and 11.2 billion by 2100. With greater demands on our planet than ever before – demands that simultaneously destroy the environment and, in the majority, fail to support the needs of the global population – change, on a seismic scale, must be realised.
What are the challenges – and how can business leaders effect meaningful, systemic change in their organisations?
What are the challenges facing sustainability?
Global sustainability challenges are numerous, widespread and deeply complex, accounting for the greatest issues facing both our planet and its inhabitants:
- Hunger and poverty
- Racial injustice
- Climate change
- Human rights abuses
- Environmental degradation, pollution and loss of biodiversity and natural resources
- Lack of clean water and sanitation
- Barriers to quality education
- Barriers to quality healthcare
- Irresponsible consumption and production
- Economic instability and income inequality.
This list is not exhaustive. Urgent solutions are required to tackle these global challenges, as laid out in the UN’s Sustainable Development Goals (SDGs). The responsibility and outcome of the SDGs, in large part, lies in the global business sector. Incorporating sustainability into business strategy, and adopting a values-driven approach, is critical to their overall success.
What are the benefits of a sustainable business strategy?
The labour and resources associated with switching to more sustainable business models – whether real or perceived – are likely holding some leaders back from taking immediate action. However, the assumption that the costs outweigh the benefits is not only short-sighted but misguided: much research exists that suggests the opposite to be true. Harvard Business School consider sustainability a core strand in any successful business strategy, while McKinsey demonstrate how businesses with high ESG ratings outperform others in both the short-term and long-term.
Switching to sustainable practices can bring numerous business benefits:
- Innovation and development
- Better risk management
- Increased competitive advantage
- Healthier financial performance and bottom line
- Greater customer loyalty
- Attraction of high quality talent
- Brand protection
- Sustainability can be a unique selling point
- Access to the growing sustainable goods market.
Strategies for developing more sustainable business practices
In 2022, it’s not enough to deliver the bare minimum in a bid to stay on the right side of legislation and compliance: consumers and employees alike demand more. As a result, corporate social responsibility (CSR) is being taken more seriously than ever. Here are a handful of examples of approaches that business – from the large to the small – can adopt to do their bit for our shared global future:
- Embed organisation-wide sustainability. Responsibility and cultural change should occur in decision-making at every level of the business. Adapting organisational structures, or appointing one or two sustainability ‘leads’, will likely fall short of genuine, large-scale change. Sustainable thinking must be fully integrated into sustainability strategy, becoming a wider ethos of both a business and its workforce. While sustainability is an individual, as well as collective, responsibility, training leaders and managers to help cascade knowledge and support their team members to work in a more sustainable manner can support take-up.
- Take a long-term view. Budgets, deadlines, and key performance indicators (KPIs) and other metrics are examples of cultural business barriers to sustainable progress. Sustainable practices reward long-term perspectives. For example, while a construction company may be reluctant to use greener building materials and designs – viewing them as more expensive and harder to source – these buildings will be more eco-efficient in the long term, using less natural resources, standing the test of time and engaging customers with sustainable values.
- Disrupt unsustainable models and ways of working. Traditional, shareholder-centric business models – that often overlook stakeholders – are outdated and not future proof. Sustainable businesses, in contrast, seek to create ‘shared value’ across the corporate ecosystem – developing a model that benefits, for instance, employees, the supply chain, shareholders, wider society and the planet. Continuous, iterative improvement, and open dialogue with stakeholders, helps to engage all involved parties and develop a sustainable roadmap. Leaders should examine existing infrastructure and attitudes and develop sustainable ways to interface with, or improve, them – the very key to disruption.
- Support other sustainable enterprises. Are there partnerships that do not currently support sustainability initiatives? What, or who, are the alternatives that will support the larger vision? Rather than operate in isolation – and focus purely on internal efforts – truly sustainable businesses take a broader perspective, working with and supporting companies that share their vision and values.
Of course, there may be specific sustainability issues a business wishes to address alongside broader efforts. A food manufacturer may focus on switching from single-use plastics to recycled, reusable or fully biodegradable packaging; a logistics company may invest in renewable-energy, electric vehicles to reduce greenhouse gas emissions and the subsequent environmental impact; or a restaurant may develop a more localised menu that incorporates produce grown by sustainable, local suppliers to support small businesses and reduce carbon footprints.
Business case study: implementing sustainable practices
There are countless great examples of businesses – from new businesses and start-ups to multinational brands – who are making headway in their efforts to increase sustainability. The circular economy refers to the systemic, solution-focused approach to sustainable economic development that benefits the environment, society and businesses. Here are three companies that have adapted their operations and models to become part of the circular economy:
Drinks brand Sprite has started the process of swapping their green plastic bottles to clear ones, supporting recycling efforts – as coloured plastics are harder to recycle – and improving the recyclable value in global markets. In Southeast Asia, for example, clear PET bottles sell for an average 35% more than coloured bottles.
BlackRock, the world’s largest asset manager, are investing in forward-thinking businesses that prioritise environmental sustainability on behalf of their clients. One such example is driving value and investment into global brand Adidas, who are committed to using 100%-recycled materials in their trainers by 2024.
Vestiare is a peer-to-peer resale clothing platform, allowing fashion-forward but environmentally conscious users to put unwanted items back into circulation. As well as encouraging an ‘upscale effect – in which individuals experience a mindset shift and think more critically about the inherent value and sustainability of items – it also means fewer resources are being used and less waste is produced.
Champion corporate sustainability through your leadership role
Businesses that fail to factor in sustainable action can damage employee retention, future growth and profitability. Gain the skills and expertise to push forward the sustainability agenda with Keele University’s online MSc Management with Sustainability programme.
Whether you’re ready to take the next step in your career, or want to bring about sustainable change in your current role, our flexible course can help. You’ll learn how to navigate and balance competing environmental, financial, social, market and technological trends, guiding decision-making at the highest levels. Study operations and supply management, sustainable finance, human resource management, strategic marketing, leadership, and much more.