Business sustainability and CSR have been used interchangeably for a while. The experts say there are differences between the two. A company that has its hands on numerous CSR initiatives would not necessarily pass for a sustainable business.
Lets start by understanding what a sustainable business is. A sustainable business is one that would remain profitable for a long time. For a business to run successfully, it would need resources – human, natural and financial. These three resources need to be managed optimally for a business to maintain its position in the market. Natural resources are depleting fast and there is an urgent need for businesses to develop and execute strategies to remain in business. These strategies would cut across all functions – human resource, procurement, supply chain, facility management, finance etc.
CSR on the other hand is based on the premise of ethics. A business operates in a community and is responsible for providing certain amenities to the community. An example is the MTN Foundation by MTN. Their own CSR is focused on education. Another one is the Sterling Bank Environment Makeover and RECYCLART by Sterling bank which are focused on waste management. All these are good and part of achieving sustainability because CSR helps with good reputation in host communities and countries. But thats not all.
In addition to CSR, a business that wants to be sustainable would have the principles of resource efficiency at the core of their activities because resources are scarce and limited. Resources need to be used in ways that would enable businesses of today remain for a long time without depriving the businesses that would be created in future the ability to also thrive successfully. Communities where oil spillage have occurred would prefer that the oil giants design more efficient extraction methods that would amount to little or no spills and damage to the ecosystem than an educational facility because the facility would not optimally function in a highly polluted environment.
Why are sustainability strategies important for businesses now?
According to the United Nations, by 2050, global population will grow to about 9 billion people – all needing access to healthy food, water, good shelter etc. Businesses are perceived as major entities with the capability to meet the environmental challenges facing the world now. A recent report by ThomsonReuters has it that the G250 are responsible for approximately one-third of the world’s carbon emissions and effectively mitigating long term risks of climate change would be stalled if these group do not reduce their emissions. The G250 has companies in oil & gas, utility, automotive, cement, aircraft, manufacturing, steel, mining etc. The full report can be found here.
For existing businesses, especially those whose activities are carbon-intensive, shifting the course of business towards sustainability is not a feat to be achieved in a short while. It will involve a high level of disruption in normal business procedures. In the words of Richard Branson, its “screwing business as usual”. Depending on the scale of a business and the processes involved, little changes all add up. Turning off unused lights, more efficient supply chain, cleaner products, fixing leaking pipes and taps, carpooling are ways to start. In fact, the kind of foods served during meetings and lunches should reflect a commitment to sustainable consumption and a healthy workforce. Maintaining a healthy workforce reduces the number of times workers are absent from work which save the company money and man hours. Legal liabilities do not have to show up before compliance is practiced. However for new businesses, the earlier it is part of their strategy, the better. Having said this, to start with the transformation in the case of existing businesses, the most important step is getting the full support of top management. These people must understand sustainability as it relates to business success for it to yield tangible results. When the management has it as a culture, it resonates all through the business sub units.
It might be hard at first and that is why it is of essence that the key players and decision makers need to know and understand that practicing sustainability is not tantamount to reduced profitability. This way, it’s easier to engage staff, customers and even suppliers – this will extend to assessing suppliers’ operations for sustainability. It will also extend to the personal lives of members of staff and consumers.
As time goes on, all processes will be inclined towards doing more with less. Less waste, less procurement and increased cost savings. We will make more profit when our processes produce less waste which will in turn be conserving limited resources. This same report mentioned above has it that “There is no evidence that executing decarbonization strategies results in a financial penalty, including reduction in total shareholder returns, reduction in profitability or employment, or other common measures of value. Second, there is emerging evidence of companies driving business opportunity, competitive differentiation and value creation through effective execution of climate-impact management strategies“.
It might be difficult for businesses especially small businesses to see that sustainable production can be less expensive because a lot of them think about the short term gains at the expense of long term sustainability. This is particularly unethical for business since ethics demand that we do what is right to everyone and in everything.
For businesses that have focused on CSR and thinking it makes them sustainable, it’s never too late to go back to the drawing board and drive environmental stewardship, resource & operational efficiency, transparency, talent management and accountability into their core. Sustainability is applicable to all scales of businesses so size is not a barrier.
Building a hospital would not reverse the effects of oil spills.
Entrepreneurs do not see obstacles and problems, they see opportunities to innovate and innovation is driven by sustainability.