It is time that sustainable business emerges from the closet and highlights the virtues of achieving profit with a sense of purpose, finds STAND’s Jonathan Sanchez
Today, a significant shift is quietly taking place across the private sector: a shift that STAND believes is both pro-business and pro-social. This is underlined by the commitment of organisations, large and small, private and public, to sustainable business models.
I believe that this discrete embracing of a ‘do well by doing good’ business model is driven by visionary organisations committed to long-term growth over short-term reporting. Conversely, less visionary organisations will be forced to change, as the sober realization of future lack of choice prescribes a new way of working. For whatever reason or motivation, my company STAND believes in organisations committed to sustainable business.
No matter the motivation, whether the business wants or needs to be sustainable, the end result can only be good for business and good for society.
There is one drawback that holds back the development of greater momentum as well as credibility for the new model; many organisations making this, for them seismic shift are doing so under a misguided cloak of secrecy. We understand and have direct experience of this dichotomy. By remaining low profile, organisations can focus on developing longer-term commitment to sustainability, rather than take part in a public race to ‘win the quarter’.
From a more negative perspective “if a tree falls in the forest and no one is around to hear it, does it make a sound?”. What is the point of engaging in sustainable business practices, if one cannot share best-practice, lead the field and drive advocacy around doing well by doing good?
Organisations which keep their good work away from the public gaze do little to placate and mitigate criticism, cynicism and rejection from the NGO/CSO community – a critical stakeholder for reducing instability. Without a public pro-social mandate there is little any organisation can do to protect reputation let alone build it.
Fundamentally, this ‘corporate closet’ is creating a lose/lose paradox. It may serve to protect the organisation involved, enabling a ‘safe space’ to trial and also to potentially fail. But it ultimately fails to deliver the awareness and shared best practices that are so desperately needed to create critical mass, and kick-start the sustainable business flywheel. To enable this workwe have to work in partnership. Conversely, by working solo and in private – we can only hope to fail.
I believe that businesses must publicly demonstrate, reassure and prove the positive social, environmental and profitable outcomes of this model. Only good will come from this; demonstrating that this business model is both profitable and pro-social thereby encouraging other businesses/organisations to ‘keep up’.
Organisations which fail to take-part will suffer from risks previously believed to be of little importance, which now have the ability to cripple corporates, for example; BP’s reputation and economic cost following the DeepwaterHorizon disaster, a decimated share price in German Utilities vs. a renewables boom and failed water privatisations in Latin America etc.
These risks profiles are now the new table-stakes qualifications for a safe, secure and sustainable business:
- How will the organisation defend itself should it fall victim to an environmental, social and/or ethical crisis: how can it demonstrate commitment and track record in upholding its social contract?
- What ’armoury’ (evidence of sustainable, ethical, accountable and pro-social practice) does the organisation have available when it is publically scrutinized by a rampant or aggressive NGO?
- How will the organisation demonstrate to governments and regulators that it has a genuine commitment to the countries and communities in which it operates?
- How will the organisation speak with its own shareholders and employees to provide reassurance around input material costs and availability – how is it protecting long-term supply chain security?
A case in point is the growing campaign promoting disinvestment in businesses that are reliant on fossil fuels and commodities that are seen to have negative social and environmental impact.
The Bill & Melinda Gates Foundation has recently been publicly criticized for holding shares in these ‘dirty energy’ industries and subsequently refused to comment, raising the question ‘to whom are you accountable?’ It is obvious and important to note that this is not a business; it is an NGO with limited liability and accountability (to shareholders, investors, regulators etc.)
Sustainable business benefits from real added value, economic and other.
Driving sustainable business practices, targets and achievements into the newsroom and the boardroom will have multiple positive effects/outcomes:
- Proven to reduce costs (renewables as an energy source). Unilever saved over 300mn Euros in costs over 4 years, by switching to non-fossil fuel energy sources across its supply chain where possible.
- As governments respond to driving societal pressures, sustainable businesses will – and are – benefiting from incentives and subsidies. The German renewables industry, as an example, has dramatically diminished shareholder value across traditional energy sources.
- Acts as an intangible ‘hedge’ or ‘social-insurance’ protecting the organisation’s licence to operate. Thus by creating programmes, initiatives and partnerships, businesses are more likely to engender support from stakeholders when most needed.
It is these three positive impacts that are so often overlooked by the paranoid, inward-looking short-termism of quarter-by-quarter accounting. Surely, in today’s volatile, uncertain complex and ambiguous world, each and every business leader would herald and applaud sustainable business, wouldn’t they?
Finally followers need leaders, so it is the responsibility of those leading this profitable and ethical revolution to show that it can be done, and it is being done.
For the sake of our economy environment and ecology, for our children’s future success, there has never been a more critical time to stand for sustainable – and profitable – business.
Jonathan Sanchez is co-founder of STAND, a consultancy service for leaders in business, politics and sustainability. Prior to STAND, Jonathan was Unilever’s Global Vice President for Communications & Sustainability, with responsibility for Russia, Africa, Middle East and the South East Asia and Australasia regions. He lives in Bangkok and Singapore and is passionate about South East Asian Politics, sustainable coffee farming & photography.