Getting the basics right – What sustainability is and why it should matter to you

— 2 anni fa

Getting the basics right - What sustainability is and why it should matter to you

By Jessica Scopacasa

If there’s a word that is both trending and puzzling nowadays, I bet that’s “sustainability“.

Governments, businesses, consumers, academia, civil society are all increasingly demanding, promising, leveraging on, and talking about sustainability. But oftentimes different people and stakeholder groups have a different understanding of what sustainability is really about.

The most commonly accepted definition of sustainable development, the one published in 1987 in the Brundtland report, describes it as “the development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.

This seems pretty clear and straightforward for civil society and governments, but what does it mean for the business world?

Let’s look again at the Brundtland definition from a corporate perspective: we can easily revisit the concept of “generation” with that of “a company and its stakeholders”. We can also think of the generic word “needs” as the ability of meeting the need to be successful from an economic and reputational point of view. What we will have is something like the following definition of corporate sustainability:

A corporate strategy to be successful in the present without compromising the ability of the company and its stakeholders to be healthy and successful in the future.

In a nutshell, for businesses, sustainability done right equals long-term success.

Moving away from definitions, sustainability requires a holistic view and a planning that goes beyond the “now”. In practical terms, it calls for the company’s management to understand that the society (from the local communities to the organization’s employees, investors, and customers), the environment (including natural resources and the impacts of climate change), as well as the economy are essentially interconnected.

Success comes therefore as the result of better decision making that takes into consideration both social and environmental factors beyond the purely economic ones.

Why should this matter to corporate leaders? Because from a purely reputational point of view, sensitivities are shifting rapidly. Consumers and regulators expect companies to take on more and more responsibilities and care for their impact on the environment and the society in which they operate.

Moreover, sustainability done right brings value to corporations and can help them increase profits. It doesn’t only reinforce a company’s reputation and brand: it can increase its employees’ productivity, support the development of innovative and competitive products, reduce the cost of capital and operational burden, while building a more resilient supply chain.

Several business models linked to sustainability practices support an increase of profits:

1 – “Cut Costs”, where sustainable practices lower costs and increase profits

2 – “Raise Price”, where consumers are willing to pay more for a sustainable product

3 – “Increase Market Share”, where sustainable practices lead to an increased market share against non-sustainable competitors.

Whatever the business model, because of the complex interdependence of society, the environment, and the economy, tensions and conflicts of interests may arise along the way. Companies need to find the sweet spot in their strategy to both “do well” and “do good”. They can do so keeping in mind that sustainability, more than anything else, is a goal to aim for: a bumpy yet rewarding, just, and fruitful journey.

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