What does sustainability mean, really? Part one: Business

The term sustainability (environmentally speaking) is starting to become more commonplace in the business environment and in the home. One of the first times I heard it used in this manner was in a template I was using to develop an executive summary for competition in the Clean Tech Open. “How will you create a sustainably run business?” My first impulse: Survival. Profit, margins, cash on hand, ROI, growing customer base. Then I dug a little deeper and realized the intent was to proactively consider something else. I started with Wikipedia. I love this description:

Sustainability, in a broad sense, is the capacity to endure. In ecology the word describes how biological systems remain diverse and productive over time. For humans it is the potential for long-term improvements in well-being, which in turn depend on the well-being of the natural world and the responsible use of natural resources.

Okay, so how does that translate to everyday life in a business?  Most businesses (especially start-ups) are primarily concerned with survival.  Short of avoiding egregious acts, the environment is low on the priority list.  Bob Willard, a leading expert in this arena, defines five levels of sustainability for businesses:

Reactive: (Businesses usually make changes because they must.)

  • Level 1: Pre-Compliance (Whatever can be gotten away with.)
  • Level 2: Compliance (Whatever it takes to meet regulatory enforcement.)
  • Level 3: Compliance + (Eco-efficiency, regulatory threat, PR crisis.)

Proactive: (This is a fundamental leap for a business.  Re-branding.)

  • Level 4: Integrated Strategy (Business opportunities; risk management.)
  • Level 5: Because it’s the right thing to do – (Passionate founder / CEO.)

According to Willard, many businesses don’t get past level 2 and only a very small set get to level 4.  He does suggest that those at level 5 generally started there in the first place.  The sustainability performance and actionable steps level 4 and 5 businesses do are quite similar, but the reasons for doing them are different.  Level 5 companies are more altruistic; Level 4 companies realize it is good for business.  “They get it”, according to Willard.

The concept that sustainability practices are good for business is not new.  But to maximize the financial benefit, it is critical to integrate the concept of sustainability in every aspect of the business.  To do that, businesses need to make sustainability part of the corporate culture.  They need to leverage sustainability actions and practices with respect to traditional business metrics.  Some have obvious benefits that save costs on materials and energy.  Others are not as obvious, unless they are viewed from a more classic business perspective.  Summarizing from an article by Chris Boyd (Senior VP, Environment and Public Affairs, Lafarge.):

  • Eco-efficiency: Less limited natural raw materials, less fuel consumption and waste production; obvious cost cutters.
  • Product added value: Expands unique product offerings. Designed-in sustainability means more complex and technological products that have more value added; licenses, exclusive technology, etc.
  • New market opportunities: A sustainability policy can facilitate expansion into new countries or regions, allowing companies to respond better to the emerging expectations of customers; grows market share.
  • Socially responsible management: Being recognized as a sustainable company helps maintain the loyalty of employees and attract high-potential new employees; saves training and recruiting costs.
  • Improving reputation: A proactive strategy improves corporate image and grows brand value.  Improved practices strengthens positive relationships with local authorities and communities.  This can in some cases reduce regulatory costs, taxes and preemptively avoid crises.

Sustainability can be good for business (Level 4) and be the right thing to do (Level 5).  Businesses that successfully integrate eco-sustainability into their overall business strategy will lead the pack in their respective sectors.  In the not so distant future sustainability will not only be an asset, it will be necessary for survival.

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4 responses to “What does sustainability mean, really? Part one: Business

  1. What level is it when you do the right thing AND keep your eye on the bottom line? In a way, I think it’s a moral imperative that companies who are doing it right stay in business. If they go under because their business model did not focus enough on profit, then they can no longer be part of the solution… which, of course, businesses must be if we have any hope of changing things.

    Great post, C!

  2. Judy,
    Good question. My belief is that Level 4 and Level 5 businesses really do both. One comes from the realization that it makes good business sense to do the right thing and the other finds a way to make doing the right thing make good business sense.

    Chad

  3. Judy/Chad,

    Authors like Keith Ferrazzi, Jeffery Gitomer and Michael Port tout that money and profit are byproducts of good relationships.

    I feel that building your business around sustainability, helping people or some other altruistic cause will have similar results; money and profit. As Chad mentioned, great companies at levels 4 and 5 do both.

    Business models that strictly focus on profit lose their competitive edge because they have few other reasons for being there. The culture of the company and it’s reason for existing are attractive to people. People that work there and buy there. Who wants to work or buy from a company whose sole motivation is profit?

    So implementing sustainable strategies throughout the firm provides meaning in what people are working for or buying from. Kind of like building good relationships. The by-product is money and profit, not the enabler.

    So in my opinion, firms can not afford to avoid sustainable practices in whatever industry they operate.

    Thanks for the really great discussion!

    Stacy

  4. Thanks Stacy,
    I have nothing to add to that!
    Chad

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