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Developing sustainable business strategies

19.06.2020Comments are closed.

Adriana Rejc Buhovac, Full Professor, Academic Unit for Management and Organisation

Nowadays, managers are no longer discussing whether to develop sustainability business strategies, but rather how to integrate social, environmental, and economic impacts into their day-to-day activities to make sustainability work. You have worked with a number of Slovenian and foreign companies. What are the key messages on how to implement sustainability effectively to achieve impact?

Indeed, sustainability has matured. It is no longer about risk and compliance. It is about innovation and opportunity to simultaneously achieve excellence in social, environmental, economic, and financial performance. What works when you’re trying to implement sustainability successfully and profit from it?

First, it requires clarity of objectives. In most companies, there are competing pressures to produce profits and to be good corporate citizens at the same time. Managers need to understand the causal relationships between the sustainability actions that can be taken and the financial impacts of these actions. More specifically, they need to understand the likely reactions of various stakeholders to sustainability performance. By carefully identifying these interrelationships, a company can improve operational decision-making and make the “business case” for sustainability.

Second, sustainability must be an integral component of the corporate/business strategy. By outlining strategy for addressing social, environmental, and economic concerns and developing systematic ways of managing their sustainability impacts, companies become crisis-prepared and will produce social, environmental, and economic impacts that minimise future consequences involving increased costs, community concerns, legal claims, and damaged corporate reputation.

Third, sustainability success requires strong leadership. There will be less conflict for middle managers and subordinates in dealing with risks and balancing sustainability and financial performance when these conflicts are resolved higher up in the organisation. Top managers must lead by example in deciding how much integration of sustainability concerns they want, how they want to do it, and how they are going to measure it. Control is as important as is leading by example.

Finally, managers must encourage innovation within every aspect of a process or a product, from raw materials, manufacturing, customisation, and logistics to customers and consumers. This may include redesigning products and services (including innovating packaging to cut down on environmental footprint), re-engineering processes to reduce consumption, reduce pollution, and avoid risks, reusing waste to reduce the waste accumulation rates on manufacturing sites, designing products for eventual reuse in another product or be used by nature, etc.

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