Lead in creating sustainable business and world

Lead in creating sustainable business and world

Ph.D. Melita Rant

Throughout the national, European and global economy – from banking to manufacturing – companies are fighting for survival. Confidence in old priorities, mindsets, incentives ad investments are in many ways shaken up.

The root causes can be tracked back to the economic world and business models designed to deliver value around the single (economic) bottom line, and short-term focus. We expect the coming decades to see change in business models backed up by adjustment of worldviews and mindsets towards creating and maximizing the blended value triple bottom line, economic, social and environmental value.

Only that way we will be able meeting the needs of the present generations without compromising the ability of future generations to meet their own needs. As ancient Indian wisdom is teaching us, we should not take any decision that would jeopardize the needs of seven consequent generations of children. The needs of any generation should never be superimposed or subordinated to the needs of other generation. This is the fundamental position of sustainability.

In an ideal world economic, social and environmental value is maximized and balanced, but in practice it is difficult to achieve this because economic, social and environmental values are in conflict. More social value added means less social value created; hence, we tend to trade off one dimension against the other. But here we just may be blinded by the flawed mindset.

One of the toughest management challenges today is how to destroy the business models that have served us well in creating financial value till now and replace them with business models suited for the 21^st century that better meet the criterion of triple bottom line. If management in joint collaboration with all stakeholders don’t manage well these transformation processes, the Darwian evolutionary process weed them out.

Practice shows Slovene company Valtex, operating in the field of building hygiene or the US company Interface that sustainability can be a profound driver of innovation and change not only of business model but also of organizational culture towards greater competitiveness (and hence economic effectiveness) as well as along the design of activity system that is more eco-efficient and socially fulfilling and meaningful.

In reality, a great majority of companies are in-need to reassess and restructure their business models, but the early research findings of Skoll foundation, set up by e-Bay founder Jeff Skoll, are showing us that in response to recession instead of profound process of adaptation, they at best doing different forms of reduction with focus on eco-efficiency with still a defensive posture towards introducing business solutions that: extend the socially useful life of organizations; enhance the planet’s ability to maintain and renew the viability of the biosphere and protect all living species; enhance society’s ability to maintain itself and to solve major problems; and maintain decent levels of welfare for pursuit of future generations of humanity.

At best, companies that are in eco-efficiency stage, are aiming at reducing the waste and use of natural resources, by design and redesigning of buildings/plants to dramatically reduce footprint, eliminate waste or return it to the production cycle as a resource, introduce recycling and remanufacturing, develop clean production, dematerializations; and redesign the products to be more environmentally friendly; develop reporting alongside the global reporting initiative guidelines. In general the guiding principles are to “do more with less”.

More literate companies in the area of sustainability are a step ahead of companies pursuing eco-efficiency. They search and address strategically business opportunities that lie in the area of sustainability and try to integrate them in the current business model. How they do it? Basically, they develop an internal sustainability policy and decision guidelines, start developing wider stakeholder support around sustainability policy, are willing to creatively destroy existing product designs, manufacturing models and reinvent the firm to leapfrog the competition by early breakthroughs in the area of products, services, technologies as changes in the legislation occur or the consumer expectations change. In general the core idea of this group of companies is to “lead in value adding and innovation in the sustainability area”.

Lately, there is also the subgroup of companies that embarked to ride on sustainability frontier, which key objective is to create a constructive culture that continuously renews the long-term viability of the organization alongside triple bottom line.

What do they do and how? The want to co-create in actively participate in changing the “rules of the game towards sustainability”, hence they collaborate with governments, collaborate among themselves and other organizations in order to do that. Such example is establishment of the World Business Council for Sustainable Development which connected 29 leading global companies to produce the Vision 2050 report, which calls for a new agenda for business laying out a pathway to a world in which nine billion people can live well. This report sketches out vital developments that these companies – the holders of economic power – are putting in place within the next decade to help ensure a steady course towards global sustainability.

More specifically, the most advanced companies in the area of sustainability are fostering collaboration along the industry value chain members to ensure that the whole value chain is sustainable; they are purposefully developing human and social capital with all stakeholders to get the knowledge and large-scale commitment for sustainability initiatives; they model best practices and publicize own best practices; they seek external auditing of sustainability and most importantly they try to influence capital market to support the long-term concept of value-adding –valuations of companies should be done not only along financial criteria but along all three criteria jointly (economic, social and environmental). As business protagonist in the area of sustainability they try to “transform the business and society – lead in creating a sustainable world”.

Do I believe that business and economic environment is currently unsustainable environmentally, socially and maybe even financially?  Will major changes in this area happen in your lifetime? Are they happening already? What kind of effects will have? How’s the way in which I am (my company) currently thinking about the world contributing to our environmental and social problems? Do I (my company) have the moral and ethical obligations that go beyond the letter of law? If yes, how can I and my organization work through what it means to be sustainable? Is it feasible to generate shareholder value while proactively addressing societal issues? How should be products and business model be redesigned to reach that goal? What should I do to foster that redesign in the corporation?

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