Business leaders across the globe and industries are implementing innovative strategies aimed at promoting sustainability within their business operations. Within our ever-evolving climate crisis, integrating sustainable practices into a business has never been more important.
For a business to be sustainable, it must provide economic development, social development, and environmental protection according to the United Nations’ 2030 Agenda for Sustainable Development. These measures ensure corporations don’t take more resources than they actually need—allowing future generations to thrive on Earth’s limited resources.
Though simple on paper, successfully implementing sustainable business strategies has been a consistent challenge for businesses of all sizes. Conflict can arise in defining what sustainability means for a business’ success. Yet, by identifying clear and attainable goals and formulating a winning strategy to achieve set objectives, a compelling strategy can arise.
To help mitigate and address these challenges, identifying what sustainability means in business is key.
What is Sustainability in Business?
Sustainability in business refers to meeting the needs of consumers and shareholders without depleting natural resources.
For businesses to positively impact the environment and society, they must dedicate time and money toward developing strategies that satisfy the three pillars of sustainability.
What are the Three Pillars of Sustainability?
The three pillars of sustainability, set by the United Nations, are economic, social, and environmental. Understanding the three pillars helps businesses coordinate and meet economic, social, and environmental demands to ensure ethical and ongoing success.
The three pillars of sustainability are also known as people, planet, and profit. To successfully implement sustainable practices, businesses ought to make sure these three pillars are in harmony.
1. Economic Development
Economic development is commonly known as the efforts made by businesses to generate profits. Without profits, a business cannot sustain its operations. Failure to produce profits can leave a negative impact on job creation—another measure of economic development.
However, businesses must be responsible and effectively allocate their resource. That way, the environment is not harmed in the process of reaching financial goals.
Striving for a high level of economic development involves strategically balancing the interest of a company’s shareholders and the community. While the main objective of economic development is typically to maximize profits, businesses must also address important environmental issues. Today, several business leaders are utilizing the power to adopt sustainability initiatives to further drive business success.
2. Social Development
Social development ensures responsible, ethical, and safe treatment of employees, shareholders, and consumers. Sustainable social development typically manifests itself as providing fair wages and a safe and positive working environment.
Cox Enterprises, a global communication company, ranks among the many corporations working toward sustainable social development by empowering startups to address pressing environmental issues. The Cox Enterprise Social Impact Accelerator has been part of this company’s sustainability initiative. So far, Cox’s Accelerator program has invested more than $100 million in sustainability initiatives since 2007.
3. Environmental Protection
Environmental protection is top of mind for many executives. In an IMD study, 62% of executives consider environmental protection necessary to be competitive in today’s changing markets. This pillar is measured by the reduction of wasteful processes, water usage, and carbon footprints. These processes are often cost-effective if implemented correctly, giving any business a competitive edge in their industry.
Providing economic and social development while saving the environment is frequently referred to as the Triple Bottom Line. It’s a business’ approach that measures a company’s financial performance and its impact on society and the environment—rather than solely focusing on generating the greatest amount of profits.
Historically, businesses have been the biggest contributors to climate change. Today, however, purpose-driven leaders are placing initiatives to drive positive change. Regardless of size, all businesses have the opportunity to contribute towards a better tomorrow.
Why is Sustainability Important?
Sustainability is important because it improves trust with customers, employees, and investors of a business while protecting our environment.
Suppose there are no changes to business processes that harm the environment. In that case, there’s a high probability that natural resources will become obsolete, ecosystems will fall apart, and climate change will be catastrophic.
For example, business activities such as excessive use of oil can cause short-term and long-term environmental costs. Products that require oil can harm the environment through air and water pollution. Since oil is non-renewable, it compromises future generations’ ability to meet their own needs with valuable, non-renewable resources.
There are many short-term and long-term benefits to having a sustainable business strategy in place. Some of the countless benefits of promoting sustainability in business include energy efficiency improvement, increased competitive advantage, and reduced costs.
Sustainability Ignorance is Not an Option
Fortune 100 marketing consultant Layton Cox states, “Businesses should focus on creating good by doing good. Having sustainable practices are good for the businesses’ longevity, hence the name sustainable, and their core goal of doing good.”
To measure the success of a sustainability initiative in business, metrics in environmental, social, and governance (ESG) are often used. Studies show that companies with high ESG ratings consistently outperform the market. Typically, a higher ESG score is more attractive to investors because they believe it will build greater business resilience moving forward—all while creating value for today’s conscious consumers.
Consumers demanding sustainable business practices is another reason why sustainability is important in business. A 2020 research conducted by IBM revealed that 60% of consumers are willing to change their shopping habits to reduce their environmental impact. The study also concluded that consumers were even inclined to pay a premium for sustainable and environmentally responsible brands.
Even though millennials pay more attention to sustainability, every age group indicates that sustainability is a significant consideration in selecting which brands to support and which to boycott.
Three Sustainability Practices for Businesses
Sustainability practices that can drive business profits are increasingly being implemented by several companies today. Organizations that integrate sustainable business practices in their core mission and growth strategy help keep every member accountable in creating a sustainable workplace.
Reach Zero Waste
According to Zero Waste International Alliance, “Zero Waste is a goal that is ethical, economical, efficient, and visionary to guide people in changing their lifestyles and practices to emulate sustainable natural cycles, where all discarded materials are designed to become resources for others to use.” A Zero Waste business manages its supply chain to eliminate all toxic materials used in its processes that can harm the environment.
The benefits of being a Zero Waste business include reduced waste management and disposal expenses—all while increasing the opportunity to market products and services as eco-friendly to attract further consumers and investors.
To gain more valuable insight into waste production, businesses can obtain a waste audit. A professional waste audit provides a detailed analysis of waste generation, management, and disposal—all of which can help determine the initial steps for a business to go green. The waste audit will develop a thorough understanding of a waste stream and how to manage it efficiently.
Specific strategies that have been successful in achieving Zero Waste include:
- Reusing packaging material reduces the amount of landfilling (packaging accounts for one of the largest portions of waste generated).
- Redesigning products to be more eco-friendly such as biodegradable products, products using recycled material, and improving the product to use less material.
- Installing solar panels or energy-efficient lights and equipment to reduce carbon footprint.
Achieve Gender Equality
Achieving gender equality and empowering all women has been one of the primary goals for sustainability outlined in 2012 by the United Nations Conference on Sustainable Development. Gender equality is not only a fundamental human right, but a critical element of sustainable development as its goal is also the equal consideration of all people.
Although improvements have been made in past years, a 2020 United Nations research found that women only hold 28% of managerial positions worldwide. The disadvantages in education have translated into limited skill sets and opportunities that men do not typically face in the labor market.
Empowering women and girls is imperative in creating initiatives centered around igniting economic growth and advancing social development. Yet, progress towards gender equality in business is being made. According to the US Census Bureau annual report, total employment by women-owned businesses increased to 8%, while all other businesses rose to only 1.8%.
Making company-wide commitments to more diverse and equitable workplaces can be a challenge. However, business leaders that clearly articulate the importance of gender equality to the organization’s core values and overall growth strategy will reap the benefits of creating a more inclusive, empowering, and sustainable work environment.
Completing gender equality certifications, such as EDGE, can help an organization design a practical blueprint to accelerate gender equality progress.
Adopt a Product-as-a-Service Business Model
A Product-as-a-Service (PaaS) business model allows consumers to purchase the desired results rather than the equipment that delivers the same result. Traditionally, products are sold as a one-time transaction, customers then take ownership of the physical product, and the producer is no longer responsible for taking care of the product.
The problem with a traditional ownership model is that it becomes waste when the product has reached its lifetime. However, PaaS companies can fix this issue and promote recycling while creating more revenue opportunities.
With PaaS, products are provided in subscription models. This means that customers subscribe to the product and pay recurring monthly fees. That way, the producer is now responsible for the maintenance to upkeep the quality of the results delivered from the product. Since ownership is not transferred, this incentivizes the company to improve its product constantly.
Research from Linkoping University revealed that rethinking the product design and business model of washing machines can yield significant benefits to consumers, manufacturers, and the environment.
High-quality washing machines offered as a PaaS saved customers a third per wash cycle and the manufacturer earned a third more since customers were paying per wash. Additionally, this PaaS model could help save more than two metric tons of CO2 emissions—improving air quality—by replacing five low-quality machines with one high-quality machine over 20 years.
Moving forward, businesses must have a strategic plan. The goals should be to deliver sustainable results that help align financial and environmental objectives. Sustainability for businesses should aim to devise innovative methods that tackle the harmful effects of climate change that are bound to diminish future generations’ resource supply while still improving their bottom line.
How to Effectively Promote Sustainability Practices
Implementing sustainability practices in the workplace has its unique set of challenges, especially in the beginning phases. However, since consumers, employees, and investors see more value in green businesses, the time to act is now.
The following are sustainability examples from other green-leaning businesses that can be applied to encourage an environmentally conscious workplace:
- Patagonia is a leading sustainable clothing brand in the sport and outdoor sector. Not only did they accomplish this by donating 1% of revenue to other environmental organizations, but they also organized workshops for customers to learn how to repair their own clothing. Results show they could extend a garment’s life by two years, which cuts its combined carbon, waste, and water footprint by 82%.
- Unlike many banks that invest their customer’s money in non-sustainable companies, Triodos Bank invests in companies working to create a better world. Their larger investments are in renewable energy, and because of their transparency, it has gained much attention from the market.
Banco do Brasil, a bank focused on promoting greater diversity among employees, intends to reach a rate of 30% of their leadership positions filled by women by 2025. They have implemented new training programs for all employees to achieve gender equality effectively.
- Leading food manufacturers McCormick & Company supports farmers in more than 85 countries to source their herbs and spices—naming this method sustainable sourcing. Not only does buying supplies directly from farmers increase their supply chain efficiency, but it also supports farmer’s local communities.
A Sustainable Future
Sustainability is rapidly becoming a crucial element of success for any organization’s growth. By not factoring in sustainable business practices, companies can potentially risk driving away consumers, employees, and investors.
Businesses shouldn’t associate profit loss or high investments with integrating sustainability practices into their strategy. Sustainability is not just about environmental protection. There are societal needs that need to be met. Businesses can become powerful vehicles for change and progress in meeting such needs.
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