Why sustainable business is key to organisational growth

here was a time when the term sustainable was synonymous with environmental sustainability. This is no longer the case.

While environmental sustainability remains at the core of sustainable business practices, sustainability as a concept has branched out to reach all arms of an organisation, informing organisational visions, missions, standard operating procedures, and culture.

But what is meant by sustainability at business? The concept of sustainability in business is not entirely new, although its practice is becoming increasingly common. Back in the 1990’s, the triple bottom line theory suggested organisations evaluate themselves on three bottom lines defined by three P’s: profit, people, and planet.

The ‘profit’ component is the traditional bottom line, ‘people’ measures the organisation’s social responsibility towards both employees and the society they operate in and finally ‘planet’ measures the impact the organisation has on the environment.

The key to sustainability in business is that ethical and moral considerations inform business strategies, policies, and goals, and that sustainability becomes an organisation-wide procedural change. It is different than a CSR campaign or department in that sustainability defines the existence of the organisation, and how it operates. CSR campaigns, like all other business initiatives and functions are based on the core sustainable values the organisation follows.

Defining core sustainable values however, does not come in a ‘one size fits all’ formula and nor is it industry-specific. However, an organisation’s product and service, area of operation, and aspirations for the future will influence the development of these values. In the cleaning industry, for example, the manufacturing of green products that are not harmful to the environment has become a priority due to changing consumer trends globally, and the dangers of harmful cleaning by-products to climate change.

For a sustainable strategy to have any effect it needs to be multi-pronged and take into consideration both the internal and external operations of the organisation. A useful guide to assist in the development of a sustainable business strategy is the parameters of the triple bottom line: profit, people, and planet.

Sustainable strategies shaped around the conservation or preservation of the planet or environment in which an organisation operates can be simple policies such as those preventing the excess use and wastage of paper to eco-economic policies. Eco-economic policies push organisations to practice resource and energy efficiency, which includes the use of natural resources, energy consumption, waste disposal, land use and bio-diversity management while pursuing profits.

Further, environmental sustainability is affected by all operations of the organisation. As such it is imperative that an organisation’s value chain is analysed for the effective implementation of environment friendly and sustainable strategies. For example, in the manufacturing of products, environmental sustainability begins with the sourcing of materials and ends with the usage of the product and not its sale.

Sourcing and the use of appropriate materials are instrumental in the functioning of the end product. Utilising materials obtained through an unethical source with little regard for worker rights or environmental sustainability may reduce the cost of manufacturing and briefly increase profits but can also backfire badly on an organisation as the product becomes tagged with unethical business behaviour. At this point, even though the organisation is only indirectly responsible towards the sustenance of unethical working conditions and harmful environmental practices, it will be held accountable by consumers, governments, and other stakeholders, which could affect profits.

For example, the use of recycled material in the manufacturing of new products has a positive effect on the use of scarce resources, reduction of landfills and waste, and the cost of production for the organisation. Even the manner the product reaches the end-user should be looked at by organisations to ensure that the most environmental sustainable method of transport, storage, and marketing is utilised.

However, one of the areas an organisation has total control over is the impact when its products are used or operated. Building a product that is energy-efficient, uses less energy or natural resources, and reduces operational cost for the end-user contributes to long-term environmental sustainability, and customer satisfaction which could build brand loyalty. These products are a happy example of an environment lead yet profitable product that also provides benefits for the end-user.

Far from infrequent CSR projects, sustainable strategies that give people and society primacy are long-term policies that take into consideration three distinct but connected groups: the customers, the organisation’s employees, and the society it operates in.

Building a sustainable product should also meet a consumer need. The product needs to be appropriately designed to tackle an existing and pertinent problem. For example, in the Middle East a persistent problem is the fine-dust particles, extreme weather conditions, and the lack of water necessary for cleaning. Add to this the busy lifestyles of individuals in cosmopolitan cities such as Dubai; cleaning becomes a difficult job that could result in additional expenditure involved in availing professional cleaning services at the individual level.

At organisations such as hotels, hospitals, and retail venues, the cost of cleaning, plus the time and effort involved in cleaning is exacerbated by inefficient cleaning systems, adding both to actual and opportunity costs for the organisations.

That is one side of the story, the other is the amount of pollutants the functioning of the machines release into the surrounding environment. The most immediate concern is the emission of greenhouse gases, the efficient use of resources such as water especially in this region, and the safe disposal of waste products. Products that are manufactured with these in mind increase profitability, and green measures for all those involved.

Another benefit of using a product that is designed to be environmentally conscience is that fumes, waste, or operation of the product does not adversely affect the end user. Adhering to principles such as intuitive and ergonomic design in the manufacturing of a machine can assist the user in the operation of the product, and the reduction or elimination of harmful waste products are positives for the overall health of the user. As such when organisations make informed choices about the products procured, the decision can impact worker conditions and contribute towards an organisation’s workers’ wellbeing.

Focusing on employee management and relations has been done by organisations across industries the world over for years. However, today the focus has shifted radically on to the costs of underemployment, appropriate personal income, job and personal growth, employee wellbeing, and employee happiness. Organisations that help employees attain their personal goals through learning and up-skilling programmes increase their chances of developing new knowledge within the organisation, retaining the knowledgeable employee as well reaping rewards through the employee’s contribution to work.

Sustainable strategies that benefit society are those that provide services and products to alleviate a social problem, or those that do not add to a problem such as a sustainable and green product that uses fewer resources and produces less harmful by-products and waste.

Organisations can also develop strategies that directly address a societal problem such as providing fresh drinking water in areas with no access to safe drinking water. However, the biggest contribution an organisation can make to society is to maintain its profit-making ability.

The profit-making ability of an organisation is an important if not the most important goal, as the organisation’s survival and contribution to the planet and people is dependent on its profits.

How do sustainable strategies increase an organisation’s profit-making ability?

Sustainability in business is a strategic tool. Understanding global, regional, and local trends assists the organisation in understanding the customer and forecasting better for the future. When organisations draft policies that are beneficial to both the environment and society it has learnt the existing gaps in the market, and the inherent opportunities that could be filled through marketing innovation, or product development. These new opportunities if acted upon lead to business longevity.

Conducting business in today’s volatile world makes business longevity difficult. For example, resource planning can assist an organisation in sourcing suitable substitutes for depleting resources that are necessary for the manufacturing of the company’s main product or service.

Planning for substitutes, especially for depleting resources, could lead to the innovation of new products or services. This benefit of the sustainable business creates a drive towards innovation in product and service offerings, and organisational processes. It is easy to see how both innovation and longevity are intertwined for an organisation’s profitable success in a future constrained by scarce resources.

Finally, sustainability is also about retaining customers as consumption trends move towards sustainable and ethical products and services.

Customers’ access to knowledge and awareness of products and business practices have become easy due to wide-spread social media and general access to information via the internet. This is a good thing as now customers can make informed choices about the products they use and ultimately the brands they trust.

For organisations, these technological platforms provide an opportunity to connect and clearly communicate with existing and potential customers on the benefits of its products and services, and receive customer feedback and complaints of the same.

Ignoring customers’ use of technology can cause irreparable damage to an organisation’s brand and market position.

Richard Nouira is managing director of Kärcher Middle East