Sir David Attenborough told the world back in 2002 that we have “a responsibility to leave for future generations a planet that is healthy and habitable by all species.” Nearly two decades later, these wise words are just now beginning to be realized around the world.
This is thanks to the myriad organizations pushing for reduced reliance on fossil fuels, more investments in renewable energy sources, and limits to the amount of noxious chemicals that businesses and airlines are allowed to pump into the sky. Whether it’s the UN Sustainable Development Goals, the green wave that swept the European parliament elections in May 2019, or Sweden’s own Greta Thunberg, who turned skipping school into a political act, environmental sustainability is very much in focus right now.
What is driving all of these positive sustainability actions in the business world? The three big reasons are management understanding and prioritization, market pressure, and the strategic benefits of adopting more sustainable business models and practices.
Management understanding a sustainable business model
The company management understanding and prioritizing sustainability has a huge effect on a company’s impact on the environment and efforts to reduce the same. This is according to 63% of respondents to Sustainability Focus 2019, a report summarizing sustainability challenges and trends faced by Swedish companies today.
Top-down sustainability alone is capable of making seizable changes to policy, strategy and operational directives. These approaches have the potential to create widespread and immediate change when applied effectively.
In the US, sustainability the auto industry has evolved by passing stricter fuel-economy standards that manufacturers must meet in order to sell vehicles in the state of California – the fifth largest economy in the world. This then sets a precedent for auto industries in other parts of the country and around the world.
In contrast, bottom-up approaches attempt to influence policy through behavior. “The appeal of any bottom-up approach is that individual actions can have a massive impact when adopted by large numbers of people, and the barrier to entry is low,” writes Student Programs Director at the Office of Sustainability, Jason Gallup. “An individual behavior change—say, biking to work—may have a limited impact, but has great potential if adopted by many. The key to effectively activating the potential of a bottom-up approach lies in communicating both the goals of behavioral changes as well as the best strategies for implementing these changes to have maximum impact.”
Which approach does your company’s management take? Top-down or bottom-up?
How to address sustainability challenges
The role of business in addressing sustainability challenges has never been more important than it is today. Yet, many companies continue to struggle to incorporate sustainability into their strategies, governance, and management structures. The ones that do address sustainability challenges often cite customer demand and the increasing trend towards sustainable development as major drivers on their company's sustainability work (95 per cent of the respondents of the Sustainability Focus 2019 report mentioned above).
Elsewhere, do you want to know who’s leading the field? The Global 100 ranks large corporations across the globe on their performance reducing carbon and waste, their gender diversity among leadership, revenues derived from clean products, and overall sustainability. In its 15th year, the ranking is compiled by a Canada-based sustainability-focused financial information company and magazine, Corporate Knights, beginning with a list of about 7,500 companies, all of which generate more than $1 billion in annual revenue.
Is your company bowing to pressure from the market or leading the field?
Sustainability as a business opportunity
“In recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices,” write London Business School’s Ioannis Ioannou and Harvard’s George Serafeim.
“The accelerating rate of adoption of these practices has also provoked a debate about the nature of sustainability and its long-term implications for organizations. Is the adoption of sustainability practices a form of strategic differentiation that can lead to superior financial performance? Or, is it a strategic necessity that can ensure corporate survival but not necessarily outperformance?”
The business case for sustainability is no longer a question. The focus is now on how to harness it: How can companies thrive and generate business value in an increasingly complex environment, while also contributing long-term social and environmental goals? How to systematically approach sustainability in business practice to improve the odds of success? How to concretely develop innovative solutions that create real value for all stakeholders? What’s more sustainability work often make companies an attractive employer, both for existing and future employees.
Is sustainability part of your company’s strategy? Learn how you can get started by measuring your impact in our on-demand webinar.
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