Sustainability, procurement drives economic growth
SUSTAINABILITY is a concept that looks at continuity and availability of resources there is today for the future generations. Sustainability is faceted on three cornerstones which form the triple bottom line and these cover; planet, people and profit. For today, we want to look at sustainability briefly and also see how it plays a very important role in business. We shall in our subsequent articles touch on each facet and take a deep dive to understand how they play along in the subject matter. ‘…. People can live on planet without Profit...’
It is the profit element that is not natural in nature that has made the earth and humans to bleed. Sustainability then looks at how we can see humans in many generations to come, see a good planet in many generations to come and still see prosperity and economic growth from profits in many generations to come.
Pursuit
Sustainability looks at how we treat and handle people (human beings) and planet (Mother Nature) in the pursuit to get profits (economic growth).
The business community must therefore begin paying great and keen attention to environmental, social, and society aspects in their operations as these triple bottom line factors are increasingly becoming critical for all companies across all industries.
In the latest McKinsey Global Survey, over 80 per cent of C-suite executives believe that sustainability programme will generate more shareholder value for companies.
Sustainability is a business concept aimed at creating long-term value by taking into consideration how a company operates in the planet, people, and profit environments. Sustainability is built on the assumption that developing such solid strategies achieve company longevity.
As the expectations on corporate social responsibility increases, and as transparency becomes more prevalent, leaders are recognising the need to act on sustainability.” Public relations management, professional communications and good intentions are no longer enough. Some companies have taken sustainability seriously and are reaping big from their initiatives.
Unilever and Nestlé have both taken on major commitments; Unilever is targeting net-zero emissions from its goods by 2039 and a deforestation-free supply chain by 2023. Nestlé has committed to achieving net zero greenhouse gas emissions by 2050 and having 100 per cent recyclable or reusable packaging by 2025.
Walmart, IKEA, and H&M have moved toward more sustainable retailing, largely by leading collaboration across their supply chains to reduce waste, increase resource productivity, and optimise material usage. Walmart has pledged that, by 2040, it will have zeroed out emissions from all its vehicles and transitioned to low-impact refrigerants, IKEA is making strides to using only renewable energy across its value chain, and H&M has pledged to use 100 per cent recycled or sustainable materials by 2030.
These firms have all made strong commitments to sustainability, in large part through transparency and addressing material issues. They are embarking on a more sustainable journey, and all firms should follow suit over the next decade. Companies that stand out in sustainability have evolved from knowing to doing and from just compliance to competitive advantage.
They also know the risk of getting this wrong.
For instance, promising and not delivering, or addressing material issues without being solid on compliance.
Some practical recommendations Just like with overall strategy there is no ‘one right solution’ on sustainability. The best solution depends on the ambitions and stakes at each company. Here are a few useful actions for all management teams to improve sustainability practices.
1. Align strategy and sustainability: Management needs to make sure that the strategy of the company and the sustainability efforts are aligned. Often we see divergence, which of course makes the sustainability efforts fragile, lacking real commitment and prioritisation.
2. Compliance first, then competitive advantage: First and foremost, companies need to address compliance, and here, they check their regulations in waste management, pollution, and energy efficiency as well as human rights and labour responsibility.
Concerns
Compliance is also an issue that concerns investors.
3. Reactive to proactive: Many of today’s leading companies in sustainability, like Nike, Coca-Cola, Telenor, IKEA, Siemens, and Nestlé, have stepped up largely because of a crisis. We all know Nokia didn’t do anything wrong but rather Nokia was not proactive. Nokia failed to see the quick change coming and they were out competed.
4. Measuring progress: Many, if not all companies still struggle with quantifying the return on their sustainability campaign investments. With regards to compliance this is a straightforward issue.
With regards to areas of competitive advantage, however, companies need to link sustainability to a business case. But the ones that do form a relatively small group.
5. Transparency: This is essential for assessing and improving sustainability practices.
You cannot judge without transparency, simple as that. Transparency builds on the idea that an open environment in the company as well as with the community will improve performance.
The only way for companies to accomplish transparency is through open communications with all key stakeholders built on high levels of information disclosure, clarity, and accuracy – as well as an openness to recognising faults and improving practices.
6. Stakeholder buy in: This reinforces how important top managements are in collaborations with key stakeholders such as non-governmental organisation (NGOs), governments, and international organisations.
7. Engage the whole organisation: One good example of engagement is Salesforce, a company so committed to making every employee and department accountable to sustainability that it recently enshrined it into its core values.
Now that sustainability is part of its DNA, the company can leverage its full might to advance climate action and further operationalise sustainability across its entire business.
Sustainability
Sustainability is a major challenge, one that matters beyond individual companies. But a reassuring number of large companies are developing forward-thinking sustainability policies. It is really becoming clear that sustainability is a megatrend that simply isn’t going away and the winners will be those companies that will incorporate sustainability in their operations and supply chain. The world is becoming more aware and alert on these and are not keeping silent, nor turning a deaf ear nor closing an eye. To achieve or score high on sustainability, one needs to remember the three cooking stones. The pot cannot balance without one stone, it will also never balance if one or three of the stones are not of the same size. Achieving this balance is so important.