Is sustainable business on your radar screen?

Some organizations have made fundamental shifts to redesign their operations behind sustainable principles. These are sustainability leaders. For most organizations, however, efforts have tended to stall out after the easy work of reducing energy and waste.

But there is much more to sustainability. Eventually, designing operations and products with sustainability principles in mind must become the norm in every organization. The most sustainable organizations are not ones that try to make marginal improvements on the way business is conducted, but make the sustainable way the normal course of business.

Let’s look at a few encouraging trends:

•Innovation: new technologies and processes improve sustainability and efficiency;

•Collaboration: governments, businesses and communities achieve better outcomes when they work together;

•Economic value: sustainable practices often reduce costs, increase resilience and create new business opportunities;

•Long-term thinking: investing in environmental protection today leads to lasting social and financial benefits.

Additionally, society expects more from business than financial sustainability; it expects that companies undertake work to ensure the social and environmental sustainability of their operations and products.

Do products meet real needs without creating new problems?

Conscious companies understand the full impacts of the products or services they introduce into society. Taking a systems thinking approach to the design and delivery of products or services may allow for the discovery of other unintended impacts — both good and bad. Adding benefits beyond the core value can enhance customer perceived value, expand markets and make positive contributions to the world.

On the other end, products sometimes can meet one customer need while at the same time inadvertently create another problem in the process. Operational efficiency and waste minimization are not a new business concern. Surprisingly, despite the effectiveness of this movement, sustainability has revealed even more sources of waste and operational risk.

Some of this takes the form of materials that, while cheap to purchase, create additional, hidden costs related to health and environmental impacts. Toxic materials require protective gear as well as special handling and disposal can result in lost productivity from illness or injury.

Do products help customers be sustainable?

For many products or services, the biggest impact is downstream; how consumers use them or behave in the process of using them. Companies have an enormous opportunity to encourage sustainable customer behavior by the way they design or shape their offerings. As customers’ behaviors change, their demand for sustainable products and services increases. This “virtuous cycle” moves the society in a more sustainable direction and builds market opportunities at the same time

What costs make us vulnerable to future risks?

Current regulatory policies and standard business practices allow business in all industries to externalize some of the costs of their operations. By “legalizing” pollution, for example, they have passed on the cost of harmful effects of emissions and effluent to the public. Similarly, businesses are seldom held responsible for the “end of life” expenses related to the products they put on the market. What would happen to the bottom line if public sentiment changed and organizations suddenly were expected to bear these burdens?

The question to ask here is: How would you operate if you had to incorporate these expenses into your ledgers? What would that imply you to do differently to stay profitable? As with many sustainability considerations, the opportunity is in getting ahead of these risks!

What is fair distribution of our revenues?

If the business model hollows out the middle class or causes customers to go into deep debt to buy its products or prevents suppliers from earning a living wage or investors from earning a fair return, the organization undermines the foundation of its success. Enterprises should consider what portion of sales ideally should go to each stakeholder group (shareholders, employees, key partners and the community, for example) to maintain the long-term viability of the entire system upon which their business model is built.

It’s good to see that the SEC is forcing publicly listed companies in the Philippines to invest into inclusive growth and improve the lives of the poor and unemployed.

How is trust established and maintained with stakeholders?

Intangibles such as brand image and goodwill are often the most important and valuable assets for most organizations. The value of customer loyalty and advocacy never has been more important than in this age of digital transformation — a highly connected world enabled by social media. Trust is built on competence and character. Character is demonstrated through openness, honesty, consistency and follow-through. Figure out what might be important to customers in their decision-making process and make it easy for them to access credible, timely and accurate information. It can take years to develop trust, and just one misstep to lose it.

Feedback is more than welcome; email me at [email protected]