People + Planet + Profit
Three elements of sustainability that constitute an evaluation model measured by the “Triple Bottom Line”, covering a company’s impact on social, environment and economics respectively.
In years past financial results used to be the most important defining measure of a company’s strength. However today society is requiring more. Consumers are actively seeking organizations that can show positive results pertaining the other two elements of sustainability, people and planet. This means expanding the company’s focus from merely creating shareholder value. They now have to include all stakeholders – the people who work in the companies, the people who live in their communities, consumers who use the products, their workers, and their affect on the environment around them.
Sustainability does not mean INSTEAD of shareholder value, it means is as well shareholder value…
Why Sustainability? Why now?
Adopting a sustainability policy is gaining importance throughout the business world. For organizations already painted with the green brush because of owner passion or the nature of their product, planet and people friendly practices have always been a priority. However a growing portion of the business community are now evaluating the benefits of moving towards incorporating sustainability based principles – and they are being pushed.
Consumers are starting to ask more questions regarding the origins of the products they buy and the behavior of the companies that make them. Influential consumer groups are publicizing bad corporate behavior and alerting media to stories that name and shame. A strong consumer campaign, fueled by the internet, can now cripple a company. Shareholders are seeing these risks, along with those that have always been there but are somehow now amplified (ecological disasters, health and safety failures) and are asking for more transparency. Financial institutions are asking the same questions. From farm to factory to trading floor, businesses are confronted with new challenges to be more environmentally responsible, more socially responsible, more aware of their impact on all stakeholders.
The Greening Supply Chain
A large number of global corporations have established proactive sustainability strategies. This has created another swelling pressure that is reverberating through their supply networks. As major global corporations uncover the fact that their sustainability footprint extends beyond their immediate boundaries, they realize the need to supply themselves sustainably to achieve their goals. Because large companies often seek suppliers outside of their home regions, many environmental and social problems are being “imported.”
Thus, large companies now are “greening” their supply chains, literally putting pressure on their suppliers to clean up their act. In some cases, corporations act in consortia, such as the Electronic Industry Code of Conduct (EICC), so that multiple constituents share the costs — even if it means collaborating with key competitors. These initiatives are causing massive changes in the way suppliers and value chain constituents think about their businesses strategies and run their operations.
Global corporations are now a major force in sustainability improvements, and they are creating a paradigm shift in the marketplace that will have a profound impact. To remain competitive, businesses throughout the supply network will require solutions that help them understand their operational and product sustainability characteristics, improve each where necessary, and in some cases, realize radically new business models. Software solutions providers have an opportunity to manage the complexity of the network of large corporate supply and value chains, enabling selling entities to transparently disclose information about their company practices and product characteristics while allowing third-party audits for validation. Thus, sustainable business practices and their transparency to influential customers are significant drivers influencing both large and small businesses.
Driving Forces Behind Sustainability
Strong pressure to become sustainable continues to increase from regulatory bodies. As restrictions multiply, the management complexity and compliance maintenance challenges grow.
Watchdog behavior by social and environmental NGO’s combined with the threat of revealing transgressions to the omnipresent media have put corporate brands under pressure, ensuring cooperation and compliance.
Financial Institutions are asking about the sustainability strategies of companies when assessing investment risk, and they are making their judgments available to the public.
There are internally driven reasons for mounting a sustainability campaign. Companies that are making sustainability part of their core values or investing in sustainability programs have found increased overall employee morale, reduced attrition, and increased appeal to new hires who tend to be more attracted to companies with green on the agenda.
Often it pays to be green. Many environmental sustainability efforts deliver significant operational payoffs. Reduction of waste translates directly into the bottom line savings for companies, and CFO’s are aware of the direct contribution to operating income it can bring.
Consumer interest has also had an impact that can be seen on store shelves as sustainable products have rapidly proliferated over the past several years. The interest in greener products also has shed light on one of the largest challenges of this movement – getting accurate information to consumers about the impacts of the products they purchase.
AS big corporates adopt sustainable practices they are requiring their suppliers to adopt sustainable practices. The greening of the supply chain is one of the biggest forces behind the sustainable movement today.