The Business Case For Sustainability

Harvard Business Review published an article called The Comprehensive Business Case for Sustainability in which they define the different models that ethical and sustainable businesses use which go over and beyond the traditional, profit for profit-sake, approach of the businesses of yesterday.

In the article they discuss “Traditional business models aim to create value for shareholders, often at the expense of other stakeholders. Sustainable businesses are redefining the corporate ecosystem by designing models that create value for all stakeholders, including employees, shareholders, supply chains, civil society, and the planet. Michel Porter and Mark Kramer pioneered the idea of “creating shared value,” arguing that businesses can generate economic value by identifying and addressing social problems that intersect with their business.

Much of the strategic value of sustainability comes from the need to continually talk with and learn from key stakeholders. Through regular dialogue with stakeholders and continual iteration, a company with a sustainability agenda is better positioned to anticipate and react to economic, social, environmental, and regulatory changes as they arise.” Read the full article

Of course it is vital that strategic decision makers balance the core needs of their business with this desirable new position. It simply won’t work if a business is taken off at a tangent into new and uncharted waters at a whim or to serve a social agenda that is at odds with their current position. Prudence is everything in the transition, and especially when it comes to the maintenance of shareholder profits.

The business case for sustainability therefore needs to firstly address the current context and then position the journey to sustainability and a more mindful business from that clear starting point. It needs to reflect reality. There is no point in creating ambitious goals and committing valuable resources to a Mindful Action Plan if is unlikely to gain the traction with, and commitment from, the people inside the business who will need to make it happen.

So our starting point is clear: An understanding of the practical strategic scenario in which the business currently operates; A clear view of the macro, micro and market sector dynamics and hierarchy; And how the business sits within this commercial framework. It is in this known ‘first base’ that risk profiles for change, can be created and the level of need for innovation established.

The HBR article goes on to say that, “Many business leaders have the erroneous perception that one can have profits or sustainability, but not both. This probably has its roots in Milton Friedman’s 50-year old, but still influential, thesis that the only business of a business is profit as well as a hangover from the 1970s and 80s, when low quality, high priced environmental products failed in the market and early socially responsible investing delivered low returns. That conventional wisdom has now reversed.

In addition to the financial benefits that accrue from increased competitive advantage and innovation as discussed earlier, companies are realizing significant cost savings through environmental sustainability-related operational efficiencies. Moreover, investors are now able to track the high performers on ESG (environmental, social and governance factors) and are correlating better financial performance with better ESG performance.”

The time is now to encourage your business to become more ethical, mindful and sustainable. Are you already on the journey? How have you presented the business case?

To contribute comments to this article please Subscribe to The Mindful Collective and apply to become a Member if you would like to publish your own articles.