Business sustainability is much more than being environmentally aware, tree-hugging and green. In fact, it is more about eco-efficient business practices to keep you growing into the future, writes Charisse Gray.
Sustainability could arguably be considered the single most important issue facing business this century. As international consciousness on the effects of global warming soars, business sustainability has become inextricably tied up with climate change issues and is often equated with eco-efficiency. Critical eyes focus on the abuse of the environment, pollution, energy efficiencies, and wasteful practices in business workplaces.
And yet, business sustainability is much more than environmental awareness and responsibility, tree hugging and being green. In its purest form ‘sustainable development’ refers to how a business manages its economic position and engages with its local community and the environment. The longevity and future of any business is dependent on this. Everything a business does in relation to its people, facilities, products, services, and community, should contribute to a sustainable future.
The climate crisis has not only positively awakened the business community to its environmental, ethical, and social responsibilities, but also to its own mortality.
Businesses are becoming increasingly aware that without employing sustainable practices today they can’t necessarily count on a tomorrow. Astute businesses, no matter their size, understand that to be successful and have a long-term future in an ever-changing world, there are certain strategies they must undertake to future-proof their business. They need to look beyond what and how their business is doing today, and consider what and how they will be doing in five, 10, 15 years.
This not only means implementing ethical and innovative operational strategies but also employing leadership practices that are both driven and grounded in sustainable business practices. Sustainability in any business will be driven by its people, not its practices. Every business needs strong and passionate leaders. Processes are important but they will only ever be the enablers of sustainability, not the drivers.
So, why should your business be implementing sustainable practices? A compelling case for any business in doubt about the benefits of sustainable practices is the fact that all businesses can reap huge benefits from employing sustainable development practices. These practices affect the bottom line. Sustainable businesses enjoy the benefits of reduced costs of doing business, reduced liability, increased competitiveness over the long term, greater innovation, improved productivity, new customers, strengthened market trust, and credibility.
The environmental benefits that occur as a result of sustainable practices are a fortunate consequence.
Vital Sustainability Factors
In a recent presentation to NSW businesses, Kevin MacDonald, CEO NSW Business Chamber, identified three factors that characterised sustainable businesses. They operate within a strong ethical framework, they undertake long-term investment in business intangibles such as strategy, people, networks, and know-how, and they have established partnerships for business growth, innovation, and improvement.
These characteristics, MacDonald said, "represent the key competitive advantages that Australian businesses have over many of their low cost, international competitors.
"Australian businesses are particularly good at finding better ways of solving problems for customers and meeting market needs more imaginatively. This is in fact ‘practical innovation’, and our SMEs are very much at the forefront of it. Innovation is about better answering the problems and issues faced by customers."
Part of this requires all businesses to work towards the future rather than just operating in the present. Longevity and success for a business requires you to:
• view your business in its broadest context and appreciate the needs, rights and interests of all your stakeholders
• show ingenuity to drive change and help deliver overarching solutions
• establish an innovative culture and capacity for technological and social innovation to generate sustainable solutions, products, and services
• address workplace cultural and behavioural change.
At the heart of the long-term health and prosperity of a business is its ability to manage and engage with the economic, environmental, and social issues it faces.
Business sustainability is proactive business management. There is no single set of sustainable development practices because no two businesses have identical strategies. However, the three characteristics mentioned earlier—a strong ethical framework, long-term investment in drivers of growth, and established partnerships for business growth and improvement—are intrinsic to all successful businesses.
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Sustainable Business Characteristics
Let’s take a detailed look at those characteristics and their benefits. A strong ethical framework defines the limits of what an individual can do to deliver value-adding outcomes. Its value includes:
• an alternative to command and control hierarchies (that can limit creativity and independent action)
• setting standards for supply and production activities which can open new market and supply opportunities
• easier integration with supply chain consumers that report on their social and environmental impacts
• providing foundations for successful partnerships.
Long-term investment in business intangibles includes, but isn’t limited to, people, networks, and know-how. A key feature of the knowledge economy is the value of intangible assets, and they are powerful because they have a multiplier effect across a business and its products and/or services. Receiving benefits from intangible assets requires a long-term horizon because the investment is not cheap and returns are rarely seen within quarterly or yearly results. Types of investment include:
• skills development and education for employees
• time granted for employees to attend networking functions/conferences to build personal networks
• becoming a partner in collaborative projects
• codifying the distinct way the organisation operates and creates value
• improving organisational culture
• re-engineering the business model.
And the value of these investments includes:
• increased profit through innovative advancements to products and services
• higher value returns from products and/or services for a small marginal increase in development costs
• more efficient, productive, and effective workforce
• access to larger knowledge base to solve problems and develop new products and/or services
• reduction in transactional costs
• the creation of new knowledge which can translate to financial returns through increased competitive advantage or licensing.
Established partnerships are crucial for business growth, innovation and improvement. Increasingly, competitive advantage is being achieved through partnerships across every line of business from finance to HR to marketing. Partnerships can be used to sell products into new markets, overcome common problems experienced by multiple businesses, or increase access to finance and capital. The value of partnerships includes:
• application of specific knowledge to achieve specific purposes
• stimulating innovation
• sharing risk
• creating common understanding and vision around key economic, social, and environmental issues affecting a region or market
• increasing investment levels in new projects
• increasing the focus on core business without neglecting niche customer requirements or good business practices and marketing opportunities
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ull; increasing revenue and profit by introducing existing products and services to new markets
• building and expanding new networks
• expanding business know-how by solving new problems.
Successful Sustainable Businesses
Let’s look at how some successful companies approach sustainability. Implementing sustainable business practices is not a new management initiative. Progressive companies of all sizes have been engaged in sustainable business practices for more than a decade. Some have been as simple as identifying and reducing inefficiencies, others have undertaken a holistic continuous improvement approach, some have addressed innovative thinking out of sheer necessity, while others have reached deep down to the very core of the way they think and do business and have built sustainable practices into their business philosophy.
SMEs can learn much from the varied approaches and insights of highly successful companies. For example, health company Blackmores’ approach to customer responsibility: "Our practices that would be deemed to be part of sustainable development are core to our culture and fit with our approach to encourage people to be responsible for themselves and their health practices. This includes the lifestyles they lead, that they are responsible for their surroundings, and community and social issues. So it’s a natural fit and core to our culture."
BHP Billiton, a significant, global resources company, maintains a detailed set of community, safety, health and environment targets. These are determined at the corporate level and change and extend over time. Performance against these targets is monitored by an audit process that compares progress towards best practice on a scale from 1 to 5.
In the first two years of incorporating lean manufacturing strategies to the business, manufacturing company, Milspec, effectively doubled their previous output using half the labour force, and diversified into more varied commercial applications. "It’s not about performing tasks faster or working harder. It’s just about working smarter."
Pharmaceutical manufacturer, Eli Lilly: "Our market growth comes from having a continuous stream of innovation. The more you can be out in front in terms of innovation, the more likely you are to seize market share and get a good price."
Manufacturing company, Precision Metals: "Small to medium size businesses that don’t adopt technology to improve their systems will eventually fall to the wayside."
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Nursery company, One Harvest/Vegco’s development of a year-round supply of a nursery-grown product in response to market demand illustrates major innovation with sustainability benefits emerging quickly. The outcomes were clear benefits but not the impetus for the initiative.
One of the approaches of Shell Australia’s Clyde Refinery, New South Wales, to water efficiency and reduction has been raising understanding and awareness of water use in the refinery, monitoring such use and setting targets for more efficient use. Steps taken include understanding and communicating the cost of water in the refinery; preparing a detailed analysis of water usage including a water balance; development of a new refinery water usage manual; setting relevant targets such as condensate (a form of crude oil) recovery, total water usage, and percentage of condensate recovery; implementing a weekly monitoring program to identify baseline and changes in usage; and monthly reporting of usage via a report and graphs in the Central Control Room.
* Charisse Gray is senior business writer for NSW Business Chamber.
Sources: Findings of Sustainable Development and Business Success Reaching Beyond the Rhetoric to Superior Performance; Where will your business be in 2020? The changing face of manufacturing NSW Business Chamber; www.nml.csiro.au
Where To Start?
Creating a sustainable business means taking progressive steps across many aspects of your business. Consider:
Governance: Adhere to the highest standards of corporate governance.
Innovation: Embrace opportunities and invest in the development of products and services that use resources efficiently and effectively over the long term.
People: Treat your employees and others affected by the business fairly and respectfully.
Risk management: Manage risks related to economic, social, and environmental issues.
Stakeholders: Engage in active dialogue with your stakeholders, consider and balance their needs along with those of the business.
Strategy: Integrate long-term economic, environmental, and social issues into your overall business plan and strategies.
Supply chain: Ensure that all business partners and members of the supply chain meet your company's own standards and principles.
Transparency: Be transparent on the economic, environmental, and social impact of the business.
Green Themes
Start simply, with measures that will improve your bottom line and are kind to the environment:
• Choose green energy.
• Choose suppliers who take back packaging for reuse.
• Don’t leave taps dripping. (One drop wasted per second wastes 10,000 litres per year).
• Implement an ‘only use fax and printer when absolutely necessary’ regime.
• Incorporate solar panels and abundant natural lighting in new buildings.
• Install an energy effective airconditioning system.
• Install double-sided photocopying machines.
• Install men's urinals which only flush when needed.
• Install shower water-saving nozzles in workplace bathrooms.
• Install water flow restrictors on taps in staff toilets.
• Organise car pools for staff to and from work.
• Produce double-sided documents whenever possible.
• Provide ceramic cups, not polystyrene for staff use.
• Reduce artificial lighting where natural window light is present.
• Refurbish and recycle office furniture.
• Replace dripping taps immediately.
• Separate waste and recycle wherever possible, including computer equipment, printer cartridges, batteries etc.
• Support Mobilemuster, the recycling program of the Australian Mobile Phone Industry.
• Turn off equipment when it's not being used. Turning lights off can reduce energy used by 25 percent; turning off computers at the end of the day can save an additional 50 percent.
• Use environmentally friendly products throughout the workplace.
• Use recycled paper.
• Use recycled water to flush staff toilets.
Get Serious
Is your business serious about sustainability? Here’s a 12-point checklist of initiatives a sustainable business will have in place:
• Implement sustainable business principles throughout the business and align them with your overall company strategy.
• Identify what aspects of sustainability are of most concern to your company.
• Educate your staff about the benefits of workplace sustainable practices.
• Make sustainability concerns an integral part of your annual strategic goal- setting process across the business.
• Review and audit on a continuous basis use of water, power, and packaging.
• Implement measurement systems to assess your sustainability practices and their impacts.
• Ensure you have top level management and board suppor
t.
• Establish organisation-wide targets or KPIs around OHS, ethics, community and social responsibility, and environmental areas.
• Give staff the necessary resources to meet your sustainability goals.
• Consider tying remuneration directly to your business’ sustainability performance.
• Build sustainability into your brand messaging and marketing.
• Implement measurement systems to assess your sustainability practices and their impacts.
