One of the ways to understand these differences is to consider them in the context of strategic adoption levels where sustainability in the firm varies according to its role in positioning the company in the marketplace, representing lucrative competencies that are difficult to imitate, and creating a particular culture and identity that aligns with sustainability. This latter, rather less studied, reason has important implications for competitive positioning because it offers consumers an opportunity to be activists through their purchasing power. On what employees are rewarded, how they are trained, how decisions are made, and company policies and mission statements all support culture. In response, CEOs regularly tout their efforts to “embed” or “weave” sustainability into their operations and culture as the ultimate commitment[v] while scholars and practitioners have offered a number of prescriptions to achieve this objective[vi]. The Equator Principles is a similar platform through which major global banks, including CIBC and Royal Bank of Canada, agreed to prohibit any loaning of capital to projects in developing countries of the world that carry substantial social or environmental risks to its citizens. But at least two leading CEOs have instructed governments in the jurisdiction that they were considering entering that any charging infrastructure must be universal and therefore usable by competing electric car companies. This sounds counter-intuitive because competitors are supposed to ‘compete’. In summary, research has shown that companies respond to pressures for sustainable business practices in very different ways (see summary table in Exhibit 2), ranging from ignoring and defending against those pressures to aligning the broader objectives of the company and even the supply chain. Overproduction can come from excessive sourcing of raw materials, … ACCTivate! Chapter 4:Ways to Conserve Resources & Reduce Pollution. Finally, external positioning and internal competencies must be supported by an organization’s culture and identity that transcends the worldviews of employees to the point where they see the relevance of the firm’s strategy to their daily activities, making it feel like employees live this strategy on a daily basis. A more accurate term to define what is needed for strategy 5 is a meta-organization. The overarching objective here is to continue with business as usual but with some minor adjustments to respond to upcoming regulation or consumer pressure. That is, consumers are loyal to the company because they can count on the fact that all products and services, and the operations used to support the design, manufacturing, and distribution of those products and services, reflect sustainability principles. If your company doesn’t recycle, today is the today! **Make sure to scroll for links to several organizations helping businesses better their supply chain & business sustainability**. I would love to say, “It’s simple, really!” but alas, if mastering global sustainability was simple – well, then, there would be no need for writing this article at all. Corporate sustainability strategies. The results of this study may contribute to positive social change by providing information to entrepreneurs about successful strategies for small business sustainability, which can lead to business owners, employees, and communities living and working in a human-oriented, prosperous, and A firm’s positioning in the marketplace then represents somewhat of a contradiction because, on the one hand, a part of their operations or a small section of their product line exemplifies sustainability principles but, on the other hand, the remainder of their operations is non-sustainable or continues to be criticized as such. This helps them defend their operations because they can lay claim to the fact that they are at least redistributing some of the profit associated with these operations to various causes that work to stem their effects. The external environment can be defined here as an industry, consumer market, supply chain, local community, or even broader society in which the company operates. One of the ways to do this is to consider the relevance of these responses to the core strategy and operations of the firm. The rise of industrialization was a game-changing catalyst for technology, for trade, and eventually, for convenience. In other words, companies are starting to lose the argument that they are not responsible for system degradation and so want to show that they are responding to pressures of stakeholders, especially consumers. As Harvard Business School Professor Rebecca Henderson notes in the online course Sustainable Business Strategy, you … This can go as high up as a Vice-President as in the case of Centerra Gold where there is a VP – Sustainability & Environment. Meta-organizations are unique networks of organizations in that they organize actions around a system-level goal but are not bound by formal authority relations. cit. Open source innovation is a relatively new practice where multiple competitors join forces to innovate in ways that no individual company could possibly innovate. Food manufacturers have either developed their own highly sustainable products or they might purchase healthy brands such as PepsiCo’s purchase of Naked Juice. Or they might introduce a technology that dramatically reduces the use of water An oil and gas company might have a full-fledged renewable energy program, staffed within a legitimate department such as BP that is distinct from its core operations of oil and gas exploration and production that can still result in catastrophic environmental damage. Business sustainability is the practice of operating a business without impacting the environment negatively. Other companies may develop expertise associated with resource efficiency that competitors have been unable to replicate. Unlike companies adopting the third strategy where sustainability related capabilities are confined to one department or small group of employees, capabilities are often at the firm level, crossing functional areas as employees, in their daily behaviour, interact in ways that create innovative forms of value for consumers and other stakeholders. That said, those consumers who are supportive of these businesses, however niche in nature, are more willing to pay premium prices that support the extra costs that often come with these practices. Gain the confidence and skills to: 1. Marketing is important in conveying this image to outside actors but positioning is supported by strong evidence that supports these claims (e.g. Organizations must embrace sustainable development at their core. When students of business want to know what makes a business tick, they typically turn to its strategy. The important difference from the second strategy is that the company has begun to innovate in ways that have revolutionized a particular product or process resulting in a substantial reduction in social, ecological, or economic system degradation that goes well beyond incremental improvements. Decision-making at the organization, at most, will have sustainability as one of its key decision criteria but more often will not consider sustainability in its decisions because, again, a department or group of employees and managers is doing that for them. Start a conversation with a specialist today to learn more. As with any other business initiative, you need to make a plan of action and assign accountability. Before continuing, let’s define some terms. Complexity is important when considering internal competencies because the higher the complexity of a given competence, the more difficult it is for a competitor to copy or substitute it. The following business sustainability strategies take organization, data, communication, resources, and technology to put into place — and a little compassion for the planet never hurts. Mining companies, for instance, have begun to tout “green mining” to represent incremental improvements in power and fuel use along with reductions in toxicity, emissions, and water use. Strategies for Sustainable Business connects executives with MIT professors and researchers who are currently breaking new ground in sustainability thinking and practice. Ultimately, companies will often say that nothing they are doing is against the law and so they are doing nothing wrong. Unlike the previous strategy where companies feel that there is no need to adjust operations, the companies in this strategy work to lower their impact incrementally but avoid any serious reconsideration of their strategy. SEKEM’s own ‘mother farm’ was so advanced in its agricultural practices environmentally and socially that the Egyptian government established regulatory policies in the agriculture sector based partly on what SEKEM proved was possible. Why? Sustainability needs to be incorporated into corporate strategies and reflected in organizational business goals. As a result, companies adopting this strategy will not necessarily lay claim that their positioning embodies sustainability but they will tout their efforts to make this a core part of their strategy by reflecting on the resources allocated to efforts to challenge certain sections of their products/services and operations. In the second strategy, companies have moved beyond denial of responsibility and have begun to admit that they are partly responsible for the erosion of certain social, economic, and ecological systems. Faculty combine interactive lectures, case studies, games, diagnostic exercises, and deep reflective work for a highly engaging experience. Why is Sustainability Important in Business? But any smart student of business would be interested in distinguishing responses that negatively affect these systems. (2010) p. 10. While there might be other factors that differentiate the firm in the marketplace (e.g. When Toyota came out with the Prius as the first hybrid vehicle, they demonstrated a highly lucrative core competency that competitors could not duplicate for quite some time. For businesses, sustainability is more than mere window dressing. Another very common response in the defensive strategy is for companies to aim for the low hanging fruit; a common expression that refers to those initiatives that represent relatively easy changes that demonstrate a business case. If your business sustainability strategies are successful, you can actively have a positive impact on your environment, while doing your part to reduce issues like global warming, inequality, and social injustice. Remnants of more radical changes to sustainability begin to emerge such as Nike’s green shoe initiative where consumers can design their own shoes using environmental benign materials. But the fundamental business practices have not changed. There are three major changes that need to … In addition to combining forces to innovate, competitors and players along the supply chain (customers and suppliers) often come together to self-regulate in ways that governments have struggled. Yet despite the prevalence of sustainability and corporate social responsibility, there is tremendous variation in how companies have responded. Similarly, leading CEOs, such as Tesla CEO Elon Musk have been quoted as saying that trying to establish a monopoly in their industry is counter to the goals of sustainability because it delays the establishment of a much needed industry standard all competitors can adopt to move forward and leave less sustainable practices behind. The primary reason for this is because firms adopting a transformational strategy tend to go beyond a niche segment of the market and are trying to tap into the mainstream. Any public criticism of the firm is deflected as managers vehemently deny any wrongdoing or responsibility. In a recent study, McKinsey concluded: “the choice for companies today is not if, but how, they should manage their sustainability activities”[iv] with 96 percent of CEOs believing that sustainability issues should be fully integrated into the strategy and operations of a company. At Next Now Strategies, we help organizations and leaders drive growth, profitability and trust through value-led strategies that keep our planet and society in balance. Many academic scholars and practitioners alike have come to the realization that no organization can single-handedly make substantive strides to sustainable practices. Think about the old BETA/VHS war (for those who are old enough) or the more recent HD-DVD/blu-ray war where the supply chain had to wait to figure out which standard would become dominant. What sort of sustainability strategies for business can we put in place while maintaining the integrity of our bottom line? That’s right — 1.8 billion more customers — extremely exciting for your future ROIs. cit. Sustainability might be isolated in an organization in a variety of ways. [ii] KPMG found that 95% of the top 250 companies report on sustainability. They also constructed new norms in the industry that forced a number of competitors that had no interest in sustainability to jump on board. First, positioning goes beyond marketing and represents a unique value proposition to consumers that distinguishes the firm from its competition. Nike in the 1990s denied responsibility for the growing instances of labour issues in developing countries because the suppliers making their products were distinct entities and therefore not under the responsibility of Nike. The following business sustainability strategies take organization, data, communication, resources, and technology to put into place — and a little compassion for the planet never hurts. CIBC’s Run for the Cure, although a worthy cause, ignores how their everyday decisions associated with capital lending might actually be greasing the wheels of those companies making products that have shown linkages to cancer. This requires change in the supply chain, among competitors, regulators, and the market. The process behind the development of this technology was highly valuable for the firm. Associations representing restaurant or food production companies are often heard arguing that the unprecedented growth of food-related health problems is hardly a problem of the food itself but much more a problem of personal responsibility and a deficit in exercise. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world” [i]. Interface Carpets is a US-based carpet company that has pioneered a number of technologies that have revolutionized the once very toxic carpet industry. For instance, the evolution of credit unions has isolated the original purpose of addressing gaps in finance in local communities yet represents only a small percentage of their core business operations that resemble the typical financial institution. Facebook has denied responsibility for the proliferation of fake news although they’ve more recently shifted to acknowledging their role and thus have moved up this strategy continuum. Absent government regulation, natural resources such as a fish species, water or clean air would be depleted if companies behaved independently. With the above in mind, it is possible to categorize companies into one of five business strategies for sustainability beginning on the one hand with businesses that separate sustainability from strategy and ending on the other hand where sustainability defines their strategy. From a systems and process perspective, no doubt there are likely job descriptions that relate directly to sustainability initiatives. Many companies adopting this strategy tend to be smaller simply because the market isn’t large enough to support the business. Established in the late 1970s, the company was so transformative in its business model that it single-handedly convinced over 800 Egyptian farmers to transition their practices to organic cultivation in exchange for guaranteed access to the European market. In fact, the existence of a sustainability department has been found to give employees a license to continue on with business as usual or, in some cases, to operate even more egregiously in their degradation of social, ecological, and economic systems. From an internal competence perspective, what distinguishes the firm from its competitors has virtually nothing to do with sustainability. These steps are only the beginning of a process that can eventually transform a company’s entire business strategy into a sustainable business strategy. About Tima Bansal. It is no longer good enough to have a set of sustainability initiatives or responsible business goals. If you’re starting out in building a corporate sustainability strategy, here are five key areas to focus on: 1. Companies are therefore positioned as the sustainability leader based on all of the ways that they’ve worked to reduce the impact of their existing operations, products and services on systems. For instance a company might engage in philanthropic activities that are both related (defensive) and unrelated (denial) to their operations or they may both defend against the impact of their operations while still having a department that contradicts the seemingly careless operations of other departments (isolated). ["Sunday","Monday","Tuesday","Wednesday","Thursday","Friday","Saturday"]. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world”[i]. The Guardian reported that The European Commission’s outlawing of subsidies for clean energy were largely requested by BP, Shell, Statoil and Total, and by trade associations representing oil and gas companies[vii]. While many “green” consultants focus primarily on helping clients “do good,” we are laser-focused on helping our clients “do well” through value-added sustainability strategies, best-in-class public policy insights, clean energy transaction development, stakeholder relationship management, and detailed market and issue analyses. Reduced business costs, more innovative strategies, an improved reputation, and more new customers who value sustainability all work to increase the amount of money sustainable businesses earn. Other businesses may simply consider sustainability to be one of the many things that they do and don’t hide the fact that there is a contradiction because, in their mind, they are simply responding to the highly diverse set of demands in the marketplace at the time. The results in Table 7 indicate that all business sustainability strategies have a significant positive effect on competitive advantage. 2. The identity associated with businesses adopting this strategy tends to revolve around a sustainability leader, consciously distinct from companies that do not take sustainability seriously. the business case). Proudly created with Wix.com, The term sustainability or corporate social responsibility has grown increasingly prevalent in corporate boardrooms and on executive agendas. Luckily, we’ve managed to make the most of what physical land we have, and who knows, maybe floating houses are the future….and we always have Mars as a back-up plan. QuickBooks Inventory Management Software | Acctivate. The Denial Strategy omits any use of sustainability or CSR in its competitive positioning and at most would rely on its disconnected philanthropic contributions as part of their marketing strategy to suggest that the company is a good corporate citizen. Performance evaluations are tied to cost reductions efforts that just so happen to be associated with environmental system improvements for instance, but there is very little in the way of accountability towards social and ecological goals across levels of the business. You’ll need to evaluate your operations across a range of … In the past, only a small number of CFOs have gone public with a positive take on sustainability as a driver of business value (Kurt Kuehn, former CFO of UPS, comes to mind). By adopting sustainable practices, companies can gain a competitive edge, increase their market share, and boost shareholder value. 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