Corporate sustainability


Corporate sustainability

Corporate sustainability is a business approach that creates long-term consumer and employee value by not only creating a "green" strategy aimed towards the natural environment, but taking into consideration every dimension of how a business operates in the social, cultural, and economic environment. Also formulating strategies to build a company that fosters longevity through transparency and proper employee development.

Corporate sustainability is an evolution on more traditional phrases describing ethical corporate practice. Phrases such as corporate social responsibility (CSR) or corporate citizenship continue to be used but are increasingly superseded by the broader term, corporate sustainability. Unlike the other phrases that focus on "added-on" policies, corporate sustainability describes business practices built around social and environmental considerations.

The phrase is derived from two keys sources. The Brundtland Commission's Report – Our Common Future which described sustainable development as, "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". This desire to grow without damaging future generations' prospects is becoming more and more central to business philosophies.

Within more academic management circles Elkington (1999) developed the concept of the Triple Bottom Line which proposed that business goals were inseparable from the societies and environments within which they operate. Whilst short-term economic gain could be chased, a failure to account for social and environmental impacts would make those business practices unsustainable.

Contents

Strategic Principles For Corporate Sustainable Development

Transparency

Deals with the idea that by having an engaging and open environment within the company as well as the community will improve performance and increase profits. It is an open culture that promotes employee involvement in regards to the innovation and creative processes. Reaching out to the community creates a much bigger team, is extremely cheap, and provides evaluation from all angles. Companies are looking inward and realizing changes must be made to fulfill environment needs such as energy efficiency, limiting product waste and toxicity, and designing innovative products.

Employee Development

People are the most important renewable resource and therefore, are the strongest asset to any organization. A strong development program could be the underlying factor for a company's success or failure. Employees are the concrete foundation for the company and must be thoroughly analyzed and evaluated to tap into their true motivations and desires. For a company that wants to reach its greatest potential, employees must work towards improvement rather than perfection. Programs should be implemented that rewards star performers, fosters the creative learning process, and provides comprehensive training and evaluating.

Resource Efficiency

Companies must adapt to this rapidly changing environment by being prepared to change and implement new creative ideas related to sustainability. Companies should not throw away old products and materials, but rather be prepared with upgraded technology that can transform the product. New solutions that improve recycling and waste redirecting can ultimately reduce costs and increase profits. For example, Wal-Mart Stores Inc. has redirected more than 64 percent of the waste generated by stores and Sam’s Club facilities. In 2009 alone, they recycled more than 1.3 million pounds of aluminum, 120 million pounds of plastics, 11.6 million pounds of mixed paper and 4.6 billion pounds of cardboard. On an annual basis, they expect to save around $20 million and prevent 38 million pounds of waste being sent to landfills.

Companies focused on sustainability are appointing a Chief Sustainability Officer leading a department with a mandate to proactively develop and implement a corporate sustainability strategy.

Benefits

Corporate sustanibility is beneficial for the business firms as the investors and the customers reward them profits with increased sales and shareholder value.[1]It can be achieved if human sustainability and ecological sustainability is taken into account. The Sustainability Model[2] introduced by Dexter Dunphy can be used as an effective tool to measure the corporate sustainability as it compares the present behavior in respect of the 2 factors mentioned above.All the phases are not needed to be followed by the corporation, they can skip phases as some of the phases can be found repetitive with the daily functioning of the firm. From the Source of Stuart Mart, Kenan Flager Business School, it is stated that Like it or not the responsibility for ensuring a sustainable world falls largely on the shoulders of the world's enterprises, the economic engines of the future.

Hence, it becomes even more important for corporate to ensure that it incorporates sustainability principles into its business strategy. Corporate sustainability reporting has started gaining center stage. Till now, the approach toward sustainability reporting has been voluntary, i.e companies can choose to report on their sustainability performance (non-financial reporting). However, a recent study by researchers from Harvard University and London Business School finds that mandatory sustainability reporting leads to better sustainability performance and improves corporate behavior.[3]

Contribution to innovation

Many organizations are using sustainability driven ideas for providing goods and services to the poorer people, the so called Base of the Pyramid. But engaging with the pyramid markets doesn't make the activities of an organization sustainable. The social and environmental impacts should be balanced with the value of the shareholder and development of the economy.[1] There is a requirement of products with services in the markets where the cost6 of entering is high.For example:telephones where the operator needs to invest in infrastructure and the subscriber needs to make investments in handsets. To create innovation driven sustainable strategies these principles can be utilized:

  • Examine operations from a sustainability perspective
  • Harness strategic narrative to instil a shared purpose
  • Make a clear leadership statement on sustainability
  • Set up a board committee to take charge
  • Embed a focus on innovation for sustainability within every aspect of the business’s purpose and strategy
  • Link up with like-minded companies

For example, ITC Limited has placed 'triple bottom methodologies at the center of its business which resulted in less dependency on natural resources and maximized returns for the shareholders. [1] ITC is considered as a 'water positive' company for the 4th successive year as it also concentrates on rain water harvesting and pursues the goal of zero discharge with dedication. The created potential of water harvesting is 4 times the net consumption of the company. The initiative of the E-Choupal has won ITC the TERI award for Corporate Social Responsibility in 2005.[4]It is the only information technology based intervention located in the rural India.A case study on how the ITC e-choupal movement created a shift in the Indian Agriculture has been included in the curriculum of Harward Business School.It empowers over 3.1 million farmers by providing them with customized,comprehensive crop-specific real-time information which is in their native village habitat and language. It provides farmers with expert advice, price trends and micro-level weather forecast which significantly improved the farmer's decision making ability, productivity and spreads awareness of the prevailing market trends and international demand. It also eliminated the middlemen and multiple handling to a large extent which resulted as lesser transaction costs.

Sustainability Model Phases

  1. Rejection
  2. Non Responsiveness
  3. Compliance
  4. Efficiency
  5. Strategic Pro activity
  6. The sustaining corporation

Rejection

Rejection can be in terms of two factors, i.e.Human Sustainability and Ecological Sustainability.

Human Sustainability

Humans are considered as a resource which include employees,subcontractors,community to be exploited by the organisation but their health and safety measures are ignored,the organisation doesn't take responsibility for health and welfare of its work force.The discrepancies arising from various sub-sectors like gender,social class, intellectual ability are exploited to positively affect the business of the firm and negatively affect the human resource.Cost of increasing their skills, like cost of training,is kept minimum to the extent of necessary for operating business.[5]

Ecological Sustainability

Environment is assumed as a free good which is available for exploitation.The Owners and Managers of the business firm keeps a hostile view to environmental activists and to the pressures from government and community groups helps in getting ecological sustainability. Resource extraction,production processes affecting the ecosystem, pollutants like by-products in the biosphere are variables which affect the ecological system as a whole.'

Non-responsiveness

Human Sustainability

Organisations consider the labor as a cost which should be minimized to the lowest level.If training is provided, it should be technical and supervisory training based.

Ecological Sustainability

In the operational decisions, financial and technological are the factors which are given importance instead of environment.Traditional techniques of production are used and the environmental resources such as air water etc are wasted or polluted.

Compliance

Human Sustainability

In the eyes of the top management,the firm is a 'decent employer'. The basic necessity is considered as the compliance with the law in Industrial Relations and relevant community expectations.

Ecological Sustainability The top management tries to comply with all the environmental, health and safety requirements.

Efficiency

Human Sustainability

The human resource functions are integrated into a coherent and systematic HR system. The Technical and supervisory training is augmented with interpersonal skills. Strategies are now based on Value Adding instead of Exclusively Cost Reduction.

Ecological Sustainability

Cost generating poor environment practices are again taken into consideration for increasing the efficiency levels by keeping check on the production techniques, eliminating waste products and reduce costs.Issues with less Environment damage are ignored.

Strategic Pro Activity

Human Sustainability

Strategic Advantage is developed through Innovation. Innovation is promoted through utilizing the social and intellectual capital,stress given on the product and service innovation and meeting the challenges of the emerging market demands.The recruitment process focuses on choosing the best talent to increase the sense of competition.The Organisational practices which affect the communities are taken into consideration and initiatives are taken to eradicate their problems.

Ecological Sustainability Ecological Sustainable Strategies are the opportunities to increase the competition.Recycling of the waste material is promoted.Development of products and processes which are substitutes of the damage causing products and services to environment are introduced so that the organizations can lead the competitive market through environment friendly products.

The sustaining corporation

Human Sustainability

For upgrading the knowledge and skills of the human resource of the community and society generally,the organisation takes the initiative and responsibility.It transforms and takes over the ethical position based on the perspective of multiple stakeholders.


Ecological Sustainability

The organisation takes the initiative of promoting values related to ecological sustainability and attempts to influence other important organization in the industry.It also tries to promote the government policies related to sustainability.

Notes

References

  • [1]"Measuring corporate sustainability", by G Atkinson, Journal of Environmental Planning and Management, 2000.
  • [2] "Beyond the business case for corporate sustainability", by T Dyllick, K Hockerts, in Business Strategy and the Environment, 2002.
  • [3]"Concepts and definitions of CSR and corporate sustainability", M Van Marrewijk - Journal of Business Ethics, 2003.
  • [4]"Organizational change for corporate sustainability", by DC Dunphy, A Griffiths, S Benn, London: Routledge Publishing, 2003.
  • Werbach, Adam. Strategy for Sustainability: a Business Manifesto. Boston, Mass.: Harvard Business, 2009. Print.
  • [5] "Strengthen Your Business by Developing Your Employees", by Leslie Levine—Business Resources, Advice and Forms for Large and Small Businesses, 2010
  • [6] "Walmart Sustainability Report 2010 - Environment - Waste." Walmartstores.com. Web. 1 July 2010.
  • [7] "Green Dialogues: With Prof. Ioannis Ioannou and Prof. George Serafeim." ThinktoSustain.com. Web. 25 May 2011.

See also

[1]

References

External links



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