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Corporate Sustainability: Elusive Idea, Customer Mandate

Posted on August 16, 2011

Robert B. Pojasek is an adjunct lecturer at Harvard University and the Sustainability Practice Leader at Capaccio Environmental Engineering.

Sustainability could be the most elusive thing your customers ever demand of you.

Corporate sustainabilityBusiness owners and managers justifiably cringe at the term because it has been misused and misunderstood to the point of becoming almost meaningless.  Advertising Age magazine named sustainability as one of its “Jargoniest Jargon” terms of 2010, placing the phrase right up there with a win-win situation and walking the walk.

But make no mistake – global corporations such as Wal-Mart and IBM have made sustainability part of their business model in an effort to save money and improve efficiency. And those corporations are requiring their suppliers to do the same. If you’re not already filling out supplier questionnaires about your sustainability efforts get ready – it’s only a matter of time.

Even world financial markets acknowledge the prevalence of sustainability as a corporate strategy. Global companies now compete fiercely to be listed on financial indices such as the Dow Jones Sustainability Index and the FTSE4Good in Britain, or on Newsweek magazine’s Green Rankings.

So let’s define sustainability. It is the ability of an organization to manage with transparency its responsibilities for environmental stewardship, social well-being and economic prosperity over the long term while being held accountable to its stakeholders. You may know sustainability by one of its more common names – corporate social responsibility, corporate responsibility, environmental responsibility or sustainable development.

Once the province of a few companies seeking to “do well by doing good,” sustainability has been driven into the broader business landscape by an unlikely combination of supply-chain efficiency initiatives, resolutions from activist shareholders, risk concerns among insurers and Securities and Exchange Commission disclosure requirements.

As I work with Associated Industries of Massachusetts to launch Sustainability Roundtables in September, I’ve isolated several key points for employers concerned about meeting increasing demands from customers for sustainable practices:

  • Your company is probably practicing elements of sustainability already, especially if you have undertaken initiatives to reduce waste and improve productivity.
  • Influential global companies are committed to sustainability not as a matter of philanthropy, activism or social conscience. These corporations believe that sustainability is good for business and for the bottom line.
  • The potential financial benefits of sustainability grow out of energy efficiency, leaner packaging, cleaner plants, conservation of resources and improved efficiency. Waste is not only bad for the environment, it’s expensive.
  • Environmental stewardship means that products, activities and services create no negative impact on the environment.
  • Responsibility for social well-being means that an organization seeks to avoid negative impacts to society, with an emphasis on employees and the people who use the company’s products or services.
  • Economic prosperity extends to all of the communities in which an organization operates.
  • Sustainability also provides a way to reduce operational, regulatory and reputational risk.  Companies have always hedged against unacceptable risks, but sustainability practices are now included in the risk management programs of most major companies.  These customers similarly expect suppliers to reduce and manage risk as part of a closely connected value chain.

I’d love to get your thoughts at one of our September AIM Sustainability Roundtables. You’re welcome to join us whether your company is an industry leader in sustainability or just beginning to get your arms around the concept.