The case for considering embedded sustainability efforts as business values

The New Economy has unleashed influential megatrends, leaving businesses to deal with a complex brew of social, environmental, governance, and market realities. Today, while corporates and communities are equally susceptible to disruptions, sustainability is not just an altruistic option or a charitable supplement to a company's social outreach programmes, but one of the key elements to building resilience and ensuring mission success.

Gone are the days when sustainability efforts majorly consisted of philanthropy alienated from the core business values. Today, more and more business leaders are coming to terms with the idea of their organisations being custodians of society where they can no longer afford to treat sustainability at arm's length.

But how can decision-makers use sustainability as a vehicle to make their business cases socially comprehensive, environmentally relevant, and financially rewarding?

Improved risk management

In a globalised world, socio-economic activities are more intertwined than ever. Extreme weather events, geopolitical conflicts, and civil unrest, even localised ones, can send severe repercussions across intercontinental value chains, bringing business to a standstill.

For instance, the devastating wildfire in the tropical rainforests of Amazon in 2019 impacted the global pharmaceutical sector by crippling the supply of certain alkaloids essential for the production of anti-cancer agents. Further, it also affected the worldwide timber industry, cosmetics businesses, and oil imports into the US.

A well-defined sustainability framework helps companies prioritise and map out where to focus their efforts, thereby, driving a more robust understanding of risk. Currently, organisations are moving beyond CSR programmes to integrate fair labour standards, and positive environmental action as essential components of their globalised business strategies.

Businesses invested in helping communities cope with climate volatilities and pollution, reduce land degradation, conserve water, access alternate energy sources, and ensure that inalienable human rights are respected throughout their value chains.

Such responsible businesses stand to be rewarded with greater supply stability and assured operational continuity.

ALSO READ

The power of consumer brands to create social impact and why impact investors should take it seriously

Better brand positioning

The sustainability posture of an organisation also serves as its calling card in today's consumer-driven economy. We can keep discussing the power of technology in reshaping every single aspect of the world but it would remain ineffective without a human response.

'The Sustainability Generation', as Gen Z is being called in contemporary business parlance, is not hesitant to spare a premium on brands that evangelise pro-social messages, apply sustainable manufacturing practices, and demonstrate ethical business standards.

In the present knowledge-driven economy, companies continuously need to recruit fresh talent who can retain the pace of innovation. A strong sustainability culture motivates employees by instilling a sense of purpose and boosting productivity.

Thus, the sustainability posture of a company bears a rich dividend by making the brand more marketable and allowing it to access high-quality human capital, necessary to keep it competitive in closely contested markets.

Improved financial performance

The financial and competitive advantages of being sustainable are exceptionally high today. Companies are poised to avail significant cost savings by gravitating towards a circular economy model. For instance, a Zero Waste to Landfill approach attempts to divert at least 99 percent of industrial waste back into the production cycle. While it delivers on the climate action and sustainable consumption vision of the UNSDGs, it also rationalises the manufacturers' waste management and raw materials budgets through revenue generation models.

Similarly, proactive water stewardship like rainwater harvesting and precision water management allows a company to cut its water consumption by recycling and reusing wastewater. Going off the conventional grid and switching on to renewable generation modes can help a company trim its energy expenses, which is by far one of the most significant components of a business’ operational expense.

Additionally, by being sustainable, an organisation is also set to command the trust of the investors who are increasingly using the environmental, social, and governance (ESG) track records of companies to arrive at asset valuation.

With more and more investors looking for greater accountability for their funds, the practice has gained significantly especially in the post-pandemic times, when sustainable companies have raked in record investments.

Thus, the choice to be sustainable enables tangible business benefits and strong returns for institutional decision-makers. The proposition to be sustainable is a clarion call to build back better and maximise shared equity for the institution, the communities, and the planet.