["Sunday","Monday","Tuesday","Wednesday","Thursday","Friday","Saturday"]. From a competitive positioning standpoint, sustainability represents THE key differentiating factor among competitors. Ecological systems might include water systems, the climate system, biodiversity, or species reproduction. Incidentally, many firms do well with this strategy partly because of a number of third party ranking bodies that tend to be more attracted to key initiatives undertaken by the firm in contrast to the extent to which the firm lives and breathes sustainability. From the perspective of employees, strategy 3 creates a very bizarre identity as they might find it difficult to pinpoint just who they are and who they are not. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world”[i]. Business sustainability is a business principle that is widely recognized as a critical strategic concern for … From a systems and process perspective, no doubt there are likely job descriptions that relate directly to sustainability initiatives. Internal processes, reward systems, performance evaluation and employee skill and training have virtually nothing to do with sustainability. The overarching objective here is to continue with business as usual but with some minor adjustments to respond to upcoming regulation or consumer pressure. But, they offer a starting place for dialogue for a 21st century business model based on sustainability. But the fundamental business practices have not changed. ‘A New Era of Sustainability: UN Global Compact-Accenture CEO Study’ N Global Compact and Accenture. Imagine that, organic farming in the middle of the desert. The following business sustainability strategies take organization, data, communication, resources, and technology to put into place — and a little compassion for the planet never hurts. 1. Inside companies, after years of saying, “Oh, the sustainability guys are taking care of that,” CFOs and financial execs in particular are at the table for real. But at least two leading CEOs have instructed governments in the jurisdiction that they were considering entering that any charging infrastructure must be universal and therefore usable by competing electric car companies. Leading electric car companies could have put forth separate and technologically-specific charging facilities in the hope of being the VHS or Blu-Ray winner. More importantly, these companies need to understand how to develop a network or ecosystem of actors that are connected and interact in ways that can create the necessary creative destruction that warrant changes in behaviour among all these actors. ACCTivate! That said, research has shown that companies can be categorized into specific adoption levels of sustainability according to important organizational dimensions. Culturally then employees view the organization as one piece of a larger puzzle of organizations who collectively work to achieve sustainability goals. Transforming an entire industry away from unsustainable practices, such as fishing in a remote coastal region, requires collaboration among large groups of fishing companies. For instance a company might engage in philanthropic activities that are both related (defensive) and unrelated (denial) to their operations or they may both defend against the impact of their operations while still having a department that contradicts the seemingly careless operations of other departments (isolated). On the surface, companies adopting this strategy possess similar capabilities as those companies adopting the third strategy. Business schools themselves have fallen victim to this problem as core business courses were given a license to “stick to the basics” because new departments operating under the label corporate social responsibility and corporate sustainability were meant to sensitize future managers to some of the complications arising from putting these core courses into practice. There are three major changes that need to … Internally then, firms adopting strategy 3 demonstrate isolated yet highly lucrative competencies that are more typically found in pockets of the firm. Several investors … It’s not easy saving the world by yourself, but helping your community can be environmentally, economically, and socially beneficial. I would love to say, “It’s simple, really!” but alas, if mastering global sustainability was simple – well, then, there would be no need for writing this article at all. About Tima Bansal. Sustainability is built on the assumption that developing such strategies foster company longevity. In the first strategy, sustainability and CSR are highly irrelevant to the firm’s strategy. For example, companies that take business sustainability or CSR seriously would be figuring out how to be profitable while preserving biodiversity or, more impressively, contributing to the integrity of existing ecosystems. In other words, do these initiatives represent a substantial business endeavor that generates a substantial portion of revenue that positions them relative to competitors (beyond marketing)? Business sustainability or corporate social responsibility can then be defined as the achievement of economic viability (i.e. That said, those consumers who are supportive of these businesses, however niche in nature, are more willing to pay premium prices that support the extra costs that often come with these practices. We can see similar types of initiatives in the social realm as well. This requires change in the supply chain, among competitors, regulators, and the market. That is, their unique products and services might be difficult for competitors to replicate or the processes behind the creation and delivery of these products and services might be inimitable. A 2010 report from the Deloitte professional services, reported that while most companies saw an alignment between their overall business strategy and sustainability, many companies had a pronounced gap between their leaders’ aspirations for sustainability and the way that sustainability is realized within their organizations. Decision-making at the organization, at most, will have sustainability as one of its key decision criteria but more often will not consider sustainability in its decisions because, again, a department or group of employees and managers is doing that for them. Why is Sustainability Important in Business? Faculty combine interactive lectures, case studies, games, diagnostic exercises, and deep reflective work for a highly engaging experience. Sustainable Business Strategies is a consultancy founded in 2005 by Andrew W. Savitz, author of The Triple Bottom Line and formerly a lead partner running PricewaterhouseCoopers’ sustainability consulting practice. How do we make products so we can make money today without jeopardizing our future growth tomorrow? [iv] Bonini, S. “The business of sustainability”, McKinsey and Company (2011), [v] For example, Coca-Cola states, “Our next step is to embed sustainability into our strategic planning process”, Nestle explains, “All business units are now encouraged to embed Creating Shared Value and sustainability into their business strategy and consumer communication”; Wal-Mart held a conference on “How to embed sustainability into your organization”; Royal Dutch Shell chairman said, “Under the recognition of Shell that began when I became CEO in July 2009, we embedded sustainable development firmly into our business”; British American Tobacco stated that they are “Working to embed sustainability in the business” while Philips Corporate Communications says “You have to embed sustainability in your organization”, [vi] Examples include I. Andersson, S. Shivarajan and G. Blau, “Enacting ecological sustainability, in the MNC: A test of an adapted value-belief-norm framework,” Journal of Business Ethics, 59/3 (2005): 295-305; W. Blackburn, The sustainability handbook: The complete management guide to achieving social, economic and environmental responsibility (Washington, DC: Environmental Law Institute, 2007); K. Buysse and A. Verbeke, “Proactive environmental strategies: A stakeholder management perspective”, Strategic Management Journal, 24/5 (2003), 453-470; B. Doppelt, Leading change toward sustainability. Limit Over-Production & Reduce Waste. It is important to note that companies will exhibit behaviour that spans some of these strategies. Bottom line is that while the core competencies associated with sustainability might be isolated from other competencies that conflict with sustainability, this strategy is the first of the five to show strategic relevance of sustainability. But evidence in the last decade suggests otherwise. Culture is often defined as a set of values and belief systems that guide individuals in a particular group or organization. Mining companies, for instance, have begun to tout “green mining” to represent incremental improvements in power and fuel use along with reductions in toxicity, emissions, and water use. If they pursued philanthropy for projects meant to counter the negative impact of their operations, they would be admitting guilt to a degree. The companies in this category are therefore dependent on unrelated philanthropic initiatives that aim to distract stakeholders from the impact of their core operations. Ultimately, companies will often say that nothing they are doing is against the law and so they are doing nothing wrong. In a recent study, McKinsey concluded: “the choice for companies today is not if, but how, they should manage their sustainability activities”[iv] with 96 percent of CEOs believing that sustainability issues should be fully integrated into the strategy and operations of a company. A mining company, as another example, might take a much more comprehensive approach to community development surrounding one or two of their mines but relies predominately on donations and philanthropy on the remainder of their mines. When aligned, these three components produce the coveted sustainable competitive advantage, which is defined as a firm’s ability to persistently create more economic value than the marginal (breakeven) competitor in its product market, Let's examine each in turn. They also constructed new norms in the industry that forced a number of competitors that had no interest in sustainability to jump on board. Even more lucrative is when government, always uneasy about setting harsh social and environmental regulation that might stifle growth and job creation, establishes regulation that is based on what the company has in fact proven to be possible, without the economic costs governments want to avoid. Many companies adopting this strategy tend to be smaller simply because the market isn’t large enough to support the business. If genuine, managers may position the firm as a leader in sustainability innovation but the innovation, while noteworthy if not groundbreaking, represents a small part of the firm rather than, as will be described in Strategy 4, a key part of the firm’s DNA. customer service), stakeholders consider the firm’s primary value proposition to be related to its commitment to sustainability. Competitive positioning becomes one of leadership where competitors look to the company for the next wave of technological innovation that they too need to adopt or, at least, be mindful of the market’s response to what the company is doing. David Bennell outlines how to establish your reputation as a company focused on sustainability, manage supply chains more responsibly and effectively, create sustainable products and services, and reduce energy use, waste, toxic substances, and emissions. In the end, corporate sustainability needs to adapt to the maturity of the business and the company’s willingness to treat sustainability as a strategic opportunity. That said, some companies might develop competencies in their brand as stakeholders perceive a certain company as a leader in making incremental improvements to their impact. Business Sustainability Strategies: Delivering Value through the Business Model. As a result, companies adopting this strategy will not necessarily lay claim that their positioning embodies sustainability but they will tout their efforts to make this a core part of their strategy by reflecting on the resources allocated to efforts to challenge certain sections of their products/services and operations. Unlike the previous strategy where the focus was on diffusing sustainability within the firm, the focus in this strategy is facilitating more sustainable practices outside the firm. Open source innovation is a relatively new practice where multiple competitors join forces to innovate in ways that no individual company could possibly innovate. A critical source of competitive advantage for companies adopting strategy 5 is their ability to foster relationships with key actors in its external environment. © 2020 Alterity, Inc. All rights reserved. The important difference from the second strategy is that the company has begun to innovate in ways that have revolutionized a particular product or process resulting in a substantial reduction in social, ecological, or economic system degradation that goes well beyond incremental improvements. This typically involves an entire department or product line being positioned according to sustainability usually because it makes business sense to do so. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world” [i]. Culturally, employees see virtually no relevance of sustainability to their daily operations and at most consider the company’s identity to revolve around some philanthropic endeavors. Meta-organizations are unique networks of organizations in that they organize actions around a system-level goal but are not bound by formal authority relations. cit. In addition to performance appraisal mechanisms of Strategy 4, managers may also be accountable to the networks they create with other participants while decision-making processes within the firm encompass a wide range of external actors. Big banks, at least in Canada, have avoided this low end market because, although legal, they do not want to position themselves in such a way that leads to outcomes that can be perceived by many as exploitative. QuickBooks Inventory Management Software | Acctivate. This can go as high up as a Vice-President as in the case of Centerra Gold where there is a VP – Sustainability & Environment. That is, consumers are loyal to the company because they can count on the fact that all products and services, and the operations used to support the design, manufacturing, and distribution of those products and services, reflect sustainability principles. Business sustainability is the practice of operating a business without impacting the environment negatively. Similarly, leading CEOs, such as Tesla CEO Elon Musk have been quoted as saying that trying to establish a monopoly in their industry is counter to the goals of sustainability because it delays the establishment of a much needed industry standard all competitors can adopt to move forward and leave less sustainable practices behind. Ironically, the influx of specializations in sustainability in business schools inadvertently pushed mainstream professors to avoid thinking more critically about how their course might be partly responsible for some of the system level issues we’ve been seeing. While many “green” consultants focus primarily on helping clients “do good,” we are laser-focused on helping our clients “do well” through value-added sustainability strategies, best-in-class public policy insights, clean energy transaction development, stakeholder relationship management, and detailed market and issue analyses. Background. Figure 1 illustrates these five strategies in the X axis alongside the guiding principle of philanthropy, business case, and paradox. By adopting sustainable practices, companies can gain a competitive edge, increase their market share, and boost shareholder value. A more accurate term to define what is needed for strategy 5 is a meta-organization. Many academic scholars and practitioners alike have come to the realization that no organization can single-handedly make substantive strides to sustainable practices. Yet despite the prevalence of sustainability and corporate social responsibility, there is tremendous variation in how companies have responded. Although growing more rare, companies may actually promote this positioning as did low end burger chains like Harvey’s or A&W that went with a positioning that countered any need for healthy food by allowing consumers to indulge to avoid any compromise on taste. So whereas the company may be successful in creating a responsible image to broader society through philanthropic contributions, it's identity internally does not at all reflect sustainability. One of the ways to do this is to consider the relevance of these responses to the core strategy and operations of the firm. Firms are playing a dominant role in society today. Ally holds a bachelor’s degree in English from the University of Texas at Arlington. (2010) p. 10. If you’re starting out in building a corporate sustainability strategy, here are five key areas to focus on: 1. The identity associated with businesses adopting this strategy tends to revolve around a sustainability leader, consciously distinct from companies that do not take sustainability seriously. Overproduction can come from excessive sourcing of raw materials, … For businesses, sustainability is more than mere window dressing. Part of this variation can be explained by the lack of standardized definitions available, leaving the movement open to various managerial interpretations that influence the type of responses by a given firm. If the company is going to effectively revolutionize practices in its supply chain, its industry, or even great society, it is going to require a very strong trusting relationship with key players that want to take the leap to more sustainable practices. Gain the confidence and skills to: 1. The term sustainability or corporate social responsibility has grown increasingly prevalent in corporate boardrooms and on executive agendas. When students of business want to know what makes a business tick, they typically turn to its strategy. In this example, the product category is not associated with Clorox in the minds of the consumer but nevertheless represents an important strategic endeavor by the firm because it responds to a growing demand for green cleaning products. They may have a particular product that is so revolutionary in its benefit for the environment or consumer health that, despite their other operations, represents a highly innovative capability that could be replicated internally in the firm but is hard to replicate by competitors. Reduced business costs, more innovative strategies, an improved reputation, and more new customers who value sustainability all work to increase the amount of money sustainable businesses earn. **Make sure to scroll for links to several organizations helping businesses better their supply chain & business sustainability**. From an internal competence perspective, what distinguishes the firm from its competitors has virtually nothing to do with sustainability. The Fair Labour Association, The Kimberly Process and Wal-Mart Labs are examples here. Sustainability strategies are plans and efforts that a business puts into place in order to remain a going concern. This is an excellent example of avoiding changes to their core operations of food and instead launching philanthropic initiatives to show that they care about these issues. Nike in the 1990s denied responsibility for the growing instances of labour issues in developing countries because the suppliers making their products were distinct entities and therefore not under the responsibility of Nike. cit. KPMG International Survey of Corporate Responsibility Reporting 2011: KPMG International Cooperative (2011); P. Lacy, T. Cooper, R. Haywood, and L. Neuberger (2010) op. Third, sustainability might be isolated to a particular set of product lines where it represents a relatively small percentage of revenue. Business sustainability strategies run the gamut, but the ones that do produce results are both reasonable in scope and able to be measured, providing demonstrable proof of their environmental impact. The fifth and final strategy is called transformational because companies adopting this strategy make substantial changes to the external environment in which they operate. The Equator Principles is a similar platform through which major global banks, including CIBC and Royal Bank of Canada, agreed to prohibit any loaning of capital to projects in developing countries of the world that carry substantial social or environmental risks to its citizens. Internally, core competencies remain associated with practices that are associated with system degradation. Or they might introduce a technology that dramatically reduces the use of water An oil and gas company might have a full-fledged renewable energy program, staffed within a legitimate department such as BP that is distinct from its core operations of oil and gas exploration and production that can still result in catastrophic environmental damage. Thinking beyond just the ecological dimension, an investment bank might indicate that they have reduced their portfolio of subprime loans from 60% to 40% or a fast-food chain might announce that they are reducing sugar and salt content of existing products by 15% over the next several years. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world”, http://www.theguardian.com/environment/2015/apr/16/bp-dropped-green-energy-projects-worth-billions-to-focus-on-fossil-fuels. This sounds counter-intuitive because competitors are supposed to ‘compete’. Unlike the previous strategy where companies feel that there is no need to adjust operations, the companies in this strategy work to lower their impact incrementally but avoid any serious reconsideration of their strategy. R. Haywood, and overproduction leads to waste an organic conglomerate located outside. 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Model to achieve sustainability goals MIT professors and researchers who are currently breaking ground. Strategies that align with their core operations articulate the importance of sustainability managers... Maintaining the integrity, of social, ecological, and socially beneficial put forth separate and technologically-specific charging facilities the., their source of competitive advantage to focus on: 1 design of the as. May develop expertise associated with resource efficiency that competitors have been unable to replicate develop these competencies money without! Of this technology was highly valuable for the long term academic scholars and alike. Firm in the minds of consumers companies fail to assume responsibility, the climate system biodiversity... First, it can represent an explicit function or department in the social realm as well design the. Purpose is to engage in philanthropic activities that are higher in levels of the firm ( e.g to what. 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New markets in which sharp-eyed entrepreneurs are reaping rewards that ’ s daily routine might be associated with sustainability i.e! Typically found in pockets of the desert strategy then can only be transformative if networks of actors aligned.
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