Why sustainability is the future of business enterprises

The (late) Nobel economist of the 1970s, Milton Friedman, argued that the primary purpose of a business is to generate profit for shareholders and that by focusing on corporate social responsibility and sustainable practices, businesses would be less competitive and unable to act in their shareholders’ best financial interests. This ‘profit-driven’ business model may have allowed the economy to grow from the 1970s, however running a purely profit-motivated business is no longer an option in the 21st century.

With environmental concerns like climate change, pollution and environmental degradation (to name a few) being a reality of the times we live in, the topic of sustainability has become an increasingly important issue for all businesses. Societies are constantly evolving and businesses too, are evolving in line with these social shifts.

According to the Stanford Social Innovation review, survey results estimate that more than 90 per cent of CEOs believe that sustainability is an important factor for a company’s success and there is a necessity to have a clear sustainability strategy. Simply put, the future of business enterprise is rooted in a sustainable business model; one that creates long-term value and generates profit, while improving societal and environmental conditions.

Beyond helping combat global environmental challenges and demonstrating value as a responsible corporate citizen, many leading organisations are cognizant of the sustainability agenda of the UAE, with the UAE being one of the first nations to ratify the Paris Agreement in 2015 and on track to hit 50 per cent of its green energy targets by 2050.

Within a competitive marketplace it’s those who embrace future trends – most notably, eco-positive trends – that will be able to prosper and also win over new audiences with their progressive business approach. Here are 5 tips on how to get started:

1. Ensure compliance and don’t go for the low hanging fruit
The first step for any company that wants to embrace sustainability is compliance with the law. However, this can be a complex undertaking as there are a range of legal and voluntary regulations, protocols and codes that come into play especially when we consider that environmental regulations vary by country, region, and even city. So it’s important to ensure awareness of all pertinent laws and codes. For many businesses it’s tempting to adopt to the lowest environmental standards, but it’s strategic to consider compliance with the most stringent rules, as this enables first-mover advantage and promotes innovation. For example, if companies keep an eye on and work towards, new sustainability standards when they are initially proposed, it will allow them time to experiment with alternatives, develop options and also spot new opportunities. Aspiring for the gold standard will save money in the long run and ensure a level of future-proofing that is grounded in sustainable business practices.

2. Business strategy and sustainability must work in tandem
Business strategy and sustainability efforts must be aligned to ensure there is successful execution, otherwise, the sustainability agenda will suffer from lack of commitment and prioritisation. In many cases, this can involve developing a new business model by exploring alternatives to current ways of doing things.

Most global brands have already synergized business objectives and sustainability into their overall strategy, to reduce their carbon footprint. Take Siemens for example, an industrial giant that has operations across multiple industries, they were recently named the most energy-efficient enterprise in their sector and are continually investing more resources into eco-friendly customer solutions, such as green heating and air conditioning. Adobe is another example; named the “greenest IT company” by Newsweek a few years ago, Adobe continues to break boundaries and set ambitious targets: they have an ongoing goal to achieve net zero energy consumption and have reduced their water consumption by over 60 per cent since the year 2000 – despite employee growth.

3. Addressing the value chain
In-house sustainability is an important starting point, but companies that are serious about sustainability must broaden the spectrum and also look at their suppliers. Companies can develop sustainable operations by analyzing each link in the value chain and ensuring that raw materials too, are sourced in a sustainable way.
While companies may not have complete control over the different touch points along the value chain, by implementing guidelines with a mandate to avoid suppliers that use materials which are toxic and harmful to the environment, they can choose who to do business with. Best business practice entails mapping out the supply chain and communicating sustainability expectations directly to all suppliers, as a way to educate suppliers. An alternative is also to encourage suppliers to become more environment-conscious by offering them incentives that offer a win-win for both parties.

4. Transparency is key
With consumers becoming more conscious of their purchasing decisions, they want more than just quality products and are now increasingly looking for brands that align with their personal values. A 2019 survey led by Hotwire found that 47 per cent of internet users worldwide had stopped buying products or services from a brand that violated their personal values and protecting the environment and sustainability topped that list. With sustainability fast becoming a key criterion for customer selection, if companies want to build trust in their sustainability claims, they need to be transparent with customers. Reporting on the economic, ecological, and social impacts of a company’s activities allows for credibility and operational integrity to be clearly communicated and any positive and measurable impact to be shared with all.

5. Engage employees to create a culture of sustainability
Sustainability strategies need to be understood and supported by staff, so it’s essential to educate and encourage employees about the importance of environmental initiatives, and create a “culture of sustainability”. The culture of an organisation can be defined as the collective mindset, that shapes the direction of a firm and in this case, should be about nurturing a long-term mindset that believes in “purpose beyond profit” and recognises environmental and societal values as key considerations. Creating an organisational culture is not easy but a solid foundation can be laid if the organisational heads lead by example and act as role models to adopt and articulate the organisation’s sustainability commitment to organisational transformation and positive change. Additionally, this should be supplemented by trainings, workshops and open dialogue with employees about the need for sustainable solutions as an area of competitive advantage, as well as environmental, societal and bottom-line benefits.

Mai Youssef is the corporate communications and marketing services director for Canon Middle East and Canon Central and North Africa