When we think of a business being sustainable, for some people, environmental sustainability comes to mind. Such as large companies reducing their environmental footprint. However, there are many aspects of sustainability that businesses of all sizes can explore.
Business has been changing for decades, with more and more companies making sustainability a key part of their strategy. In a McKinsey survey, 70 percent of respondents said their companies have put in place formal structures to govern sustainability.
While this stat is encouraging, after decades of implementing sustainability, there is still uncertainty on what ‘sustainability’ actually means. This lack of clarity exists with business owners, employees and customers alike.
What does it mean for a business to be ‘sustainable’?
A sustainable business operates without negatively impacting people or the planet.
For a business to be sustainable, its goal is to operate without negatively impacting people or the planet.
When making business decisions, companies striving for sustainability will consider environmental, economic, and social factors. And they monitor the impact of their operations to ensure that short-term profits don’t turn into long-term harm.
Exactly ‘how’ a business is sustainable varies widely and is governed by many factors including: governance, strategic agenda, company values, business goals, and operations.
Of course, the core operations of the business may dictate the type of sustainability it undertakes. For instance:
- A manufacturing company might ensure sustainable materials are used in its manufacturing process. Ensure raw materials in the supply chain are sourced ethically, and work toward greenhouse gas emissions being reduced.
- Big Wheel Burger, located in Victoria, BC Canada, as described in this article is a restaurant. They are Canada’s only carbon-neutral and zero-waste fast food restaurant. They use energy-efficient appliances and recycle oil into biodiesel for use in vehicles. They have a long list of social benefits to their employees and the community.
- TREC Dental, a dental practice located in Calgary, Alberta Canada, focuses its sustainability on social benefits. As a values-based, socially conscious business, they provide dentistry to individuals who don’t have access (locally and internationally). They contribute financially and through employee volunteering to several values-aligned local organizations.
Deloitte reports: “In a study, 93 percent of business leaders said they believe companies aren’t just employers, but stewards of society.” I believe this is so true, every business should be a steward of society!
Why is ‘sustainability’ important?
Whatever aspect of sustainability (environment, economic, social) a company focuses on, you might say they’re doing what is right and just.
A sustainable company recognizes the intersection of doing well by doing good.
Sustainability is important because it can help the company focus on what matters most. I’d like to think they focus on – people, planet, purpose, and profit – in that order. Not to say that some sustainable companies focus on profit first, but I’d like to think the ship is turning.
People – Employees:
Sustainability efforts attract employees with a shared interest. In a war on talent, this is a huge differentiating factor. Every company wants happy employees who contribute. In cases where employees feel valued and are contributing to a shared purpose, they are more creative, innovative and loyal.
Forbes reports, “The Cone Communications Millennial Employee Study found that 64% of Millennials won’t take a job if their employer doesn’t have a strong sustainability policy. And 83% would be more loyal to a company that helps them contribute to social and environmental issues (vs. 70% U.S. average).”
People – Customers:
Sustainable companies resonate with customers and their buying power is immeasurable as they vote with their wallets. When customers align with the values and efforts of the company, they’ll happily lay down their cash.
A recent study by McKinsey and NielsenIQ, revealed “consumers are shifting their spending toward products with ESG-related claims. In many categories, there’s a clear and substantive correlation between consumer spending and sustainability-related claims on product packaging.”
Planet:
I think we’ve already established in this article that a sustainable business may work on global or local environmental challenges, or be a good environmental steward through their practices, efficiencies, and reducing their carbon footprint.
Purpose:
The concept of Purpose fits squarely at the centre of a sustainable business. To put Purpose in perspective with terms you might be familiar with: Vision is the long-term goal for the company. Mission is the ‘how’ to achieve the Vision. Purpose is ‘why’ the business exists beyond making a profit.
Profit:
Companies with strong sustainability initiatives, outpace and outperform non-sustainable companies.
The analysis in a McKinsey report shows that companies achieve better growth and profitability and exceed them in shareholder returns.
Companies seeking investors should be aware that investors want clarification of the company’s sustainability initiatives, as noted in this McKinsey report. Investors will be particularly interested in examining the company’s board diversity, climate action mitigation, carbon footprint, and community impact efforts.
Want to see a sustainable company in action?
A great case study is Ben & Jerry’s Ice Cream.
Ben & Jerry’s takes a stand on climate change and social justice.
I love this statement on their website, “If it’s melted, it’s ruined. It’s true for ice cream, and it’s true for the planet.”
The Ben & Jerry’s website provides information about the current state of climate change, its disproportionate impact on underserved communities, and a range of strategies to address it. Their sustainability efforts are outlined and they highlight global goals everyone can work toward:
- Reduce carbon emissions (which means reducing fossil fuels) by at least 45% by 2030
- Transition to 100% renewable energy by 2050
- Stop using coal entirely
- Leave fossil fuels in the ground and fully divest from the fossil fuel industry
- Stop deforestation of old-growth tropical forests
- Adopt regenerative practices that turn agriculture from a source of greenhouse gas emissions to a carbon sink
They recognize the environmental cost of the ice cream they produce. They’re transparent about it, providing access to their report, and are actively working to reduce their footprint. “We understand that the greenhouse gas footprint of producing ice cream is significant. Each pint of ice cream we make produces roughly 3.3 lb. of greenhouse gases. We’ve worked hard over the years to reduce our emissions at all levels of our supply chain, but there is much more work to be done.”
Final thoughts
In the world of business, terms and meanings around sustainability and purpose are floating around at the speed of light. It can be hard to keep up with what it all means. It all boils down to the fact that for a business to be sustainable, its goal must be to operate without negatively impacting the environment, the communities or society at large. Was this article on sustainability helpful? Let me know in the comments below.
