In 1987, United Nations coined the term sustainable development. They said economic development which is sustainable is the one that meets the needs of the present generation without compromising the needs of the future generation.
What is Business Sustainability?
In the broadest sense, sustainability means the ability of something to maintain or sustain itself over time.
Business sustainability refers to how businesses seek to improve so they can have the necessary resources to thrive in the future generation. For many businesses and corporates, sustainability is more than just a trend; it’s part of their strategy to improve and minimize negative environmental and social impacts and ensure that future generations will have adequate resources to meet their needs.
Making business more sustainable is essential for both, the business and as well as the planet. It is the practice of operating the business functions in the best interests of the local and global environment, meaning it supports the community and economic development on a healthy planet.
Such a business is sustainable because it contributes to the health of the structure within which it operates, thereby helping construct an environment in which business can thrive.
Triple Bottom Line
A sustainable business adheres to the triple bottom line.
Now, what is the ‘Triple Bottom Line’?
This term was developed in 1994 by John Elkington, the founder of a British consultancy called SustainAbility. The three elements of the triple bottom line are profits, people and the planet.
” A sustainable business earns profits by being socially responsible towards using and protecting our use of the planet’s resources”.
Importance of Sustainability in Business
Business is the most powerful sector in society. They have that immense power that executives of the business can choose to create a better life for all or just a few.
Society is also pushing the corporates and businesses towards business sustainability, and even stakeholders of the company are also expecting the companies to go for sustainability. In addition to all these factors, governments are also imposing laws, rules, and regulations on sustainability that the companies must abide by mandatorily.
Business has to stand up to these expectations of society, stakeholders and government. Failing to do so means losing the social license to operate and society’s trust in a company.
Apart from this, companies can benefit in the long term from adopting sustainability. Let’s take a closer look at some of them:
- Increased revenue
Customers are starting to realize the benefits of going eco-friendly. Recently, a study found that 73% of global consumers are willing to change their consumption habits to lessen their negative impact on the environment. Millennials, in particular, are ready to pay more for products that contain sustainable ingredients or products that have social responsibility claims. This will increase revenue. Some government firms and NGOs also prefer giving contracts to the companies that run in an eco-friendly manner.
- Tax incentives
Due to the high pollution rate, we are evidencing the increasing urgency of the climate crisis. In order to control and eradicate this crisis, the government are setting some benefits and also at the same time is stringent towards the target of achieving sustainability.
To encourage businesses to help meet this target, governments are introducing tools that fit into broad categories: 1. Incentives- including grants and tax credits, 2. Penalties- such as taxes and fines. This strategy is known as Carrot and Stick.
For instance, Diesel engine replacement grants (DERG) are administered by the US state government. They are intended to incentivize the replacement of old diesel vehicles with new and cleaner ones. Company and government organizations can receive funding up to 25% of the cost of replacing diesel or alternative fuel vehicles and up to 75% of replacing zero-emission vehicles.
- Good PR and Increased brand awareness
As mentioned above, many customers are dropping themselves towards eco-friendly products, even if they have to spend a few more bucks for the same. Going green puts one brand and company into good books of the potential customers. Advertising your eco-friendly products through various channels helps establish good relationships with the target audience. This audience can also do chain marketing for you by recommending your product to their knowns. This will, in turn, increase brand awareness.
- Conservation of natural resources
The primary purpose of sustainability is to preserve the resources for future generations and to protect the planet. It helps in saving natural resources and also helps in reducing environmental pollution. Harmful activities such as deforestation and mining can also be reduced by going green.
- Reduced utility costs
Small and big businesses can significantly reduce their utility costs by using energy-efficient and cost-saving technologies. For instance, switching light bulbs from incandescent to Energy Star-rated CFL bulbs lowers electric bills immediately.
Steps to create a sustainable business strategy
1. Identify issues
The first stage in formulating a sustainable business strategy is examining current business practices to identify the areas of issue and areas to be improved. It involves understanding the company’s current impact on the environment and reviewing the company’s policies, operations, and position.
2. Consult with stakeholders and employees
It is essential to get stakeholders involved in the process of creating a sustainable strategy because they are a valuable resource to the company, and they invested in the company’s success, so they should be engaged in the process. Employees are another crucial group of a company, and they may be directly involved in its sustainable strategy, so it is essential to involve them. Creating programs to encourage employees to recycle in the workplace or engage with volunteer work.
3. Set realistic and specific goals
The next step is to set goals that the company wants to achieve through sustainability. These goals should be realistic and attainable. If a company has more than one issue, then it should decide which one to give priority and importance to. When setting goals, the company should ensure that the goals are specific, attainable and can be traced.
4. Create a plan
Once the goals to achieve have been set, create a plan to reach that goal. The plan should be actionable and achievable. Create a budget for the sustainable strategy and set a timeline in which the company wants to achieve the set goal.
5. Track progress
It is essential to track the progress, to check and to ensure that strategy is working or not. This can help the company reach its goal in a more efficient way. If you notice that the progress you anticipated is not going as planned, you can make amends and adjustments to strategy.
Patagonia is one outdoor clothing company; it’s always on the top of eco-friendly company lists. Patagonia has, in 47 years, taken countless ways to be eco-friendly. They are pledging 1% of their total shares to the conservation of natural resources. Much of their raw materials are recycled or grown organically so that they can reduce their environmental footprint. They aim to be completely carbon neutral by 2025.
IKEA’s invested in business sustainability throughout its entire business operations. It starts with their supply chain, where the Swedish furniture maker sources 50% of its wood from sustainable foresters and 100% of its cotton from farms that meet better cotton standards, which mandate reduced use of water. IKEA has more than 7,00,000 solar panels powering its store, which helps them save energy and cut electricity costs.
Unilever has not only made green investments but also adopted them as part of its corporate identity. It made a significant step where three-quarters of Unilever’s nonhazardous waste does not go to landfills, and the share of its agricultural suppliers has tripled over the years.
4. New Belgium Brewing
New Belgium Brewing Company is the fourth largest craft-brewery in the US and has been committed to being eco-friendly since its founding in 1991. It uses only sustainable vendors and is also a Platinum-certified Zero waste Business, and 99.9% of their waste does not go to landfills. They aim and acknowledge their role in greenhouse emissions and lower the impact by energy conservation, producing energy onsite, and implementing energy tax.
5. Schneider Electric
Schneider Electric is a European multinational energy and automation provider. It has been named as the most sustainable company in the world. “The core of our strategy is to build a sustainable business and company, ” said Jean-Pascal Tricoire, CEO of Schneider Electric. By operating to protect Earth from overheating and global warming, Schneider Electric is reducing CO2 emissions. It is also slowing the rise of the Earth’s temperature by focusing on digital and renewable disruptors.
6. Numi Organic Tea
Numi Organic Tea is an Oakland based organic tea enterprise, is a company that include people, planet, profit, and purpose in their business model. Numi Organic Tea’s mission includes maximizing social and environmental impact, which they will achieve through Numi Foundation. Recently, Numi Organic Tea, on Earth Day, pledged to become carbon neutral by 2023. Their three-step plan includes:
- Reducing emissions throughout their supply chain.
- Using 100% renewable energy for their headquarters.
- Offsetting emissions.
7. West Paw
West paw is considered to be the best for eco-friendly pet supplies. It is based in Bozeman, Montana, and it uses all sustainable materials for its products. Their triple bottom line includes people, pets and the planet. Their environmental innovation makes sure of the thing that pets can play without pushing our planet into pollution. For example, IntelliLoft is an eco-friendly fibre made from recycled plastics. By using their eco-fibre for fluff and fabric, West Paw has kept 12.6 million plastic bottles from landfills.
Edited by Prakriti Arora