Business sustainability is moving from a competitive advantage to an absolute necessity. It’s not just the right thing to do for society and our planet. Consumers also care. Compliance could be in question. Small business success could hinge on sustainability efforts. This series of articles addressing socially responsible practices starts with answering the question: what is business sustainability?
We’ll discuss the many reasons your small business wants to embrace business sustainability next. To give you a taste, though, a World Bank Ambassador wrote in Forbes that sustainability efforts:
- Add brand value and competitive advantage
- Meet consumer demands
- Increase efficiency
- Attract talent
- Create new opportunities
So, what is business sustainability? We can think about it in three parts. It’s not just about reducing environmental impact. Though, that’s important, of course. Sustainability efforts also recognize the challenges that social inequity, rapid population growth, and resource scarcity represent.
You may have heard more about ESG goals recently. Each of those represents a component of a three-pronged approach to business sustainability, which we’ll discuss in more detail here:
When a business thinks about “what is sustainability?” it typically focuses on going green. Reducing your workplace’s environmental impact can make a difference. There’s no doubt about it. The main areas to address are climate change, resource depletion, waste, pollution, and deforestation.
Some of the easier possible improvements include:
- Encouraging environmentally-friendly commuting
- Embracing work-from-home flexibility
- Managing paper usage
- Powering down computers at night
- Buying remanufactured ink and toner cartridges
Yet, making an effort to cut your business’s carbon emissions isn’t just about doing the right thing for the earth. Economic studies have shown that companies with green office strategies increase savings and improve company image.
You may be thinking that your carbon footprint can’t be that big. You’re a small business, after all. But, with as many as 47.5% of people in the United States employed by small businesses, this is a big area for improvement. Plus, it can be easier for a smaller entity to become carbon neutral than for the hulking enterprise.
The social aspect of business sustainability focuses on the health and wellbeing of all stakeholders. That can mean developing an environment for your employees that includes lots of natural light and the clean air benefits of live plants. Or it could be taking into consideration the health implications of using one material over another in developing a new product line.
On an even larger scale, the social prong of sustainability efforts would think about the implications of dumping chemical waste in a water supply or over-ordering 5,000 catalogs and then only using 500 before they are outdated and sent to a landfill site. All of it falls under an umbrella widely known also as corporate social responsibility (or CSR).
S+P Global says the “central question behind the ’S’ in ESG” is “how can a company manage its relationships with its workforce, the societies in which it operates, and the political environment.”
Social considers what’s best for the workforce, the customer, and the community. Examples of positive moves by a socially conscious business include:
- Prioritizing diversity hiring and equal opportunities
- Investigating ethics and environmental practices throughout the supply chain
- Ensuring company products, services, or practices don’t risk anyone’s safety
- Refusing to partner with companies employing child labor or in countries with human rights violations
Governance plays a role in business sustainability too. This area of attention also has several components. It runs the gamut from having a broadly diverse leadership team (or board of directors) to not engaging in bribery or corruption.
The business with a high score in the G portion of ESG will heed executive compensation and address the widening pay gap.
Decisions are made, and actions are taken ethically. That means a top-down approach to modeling compliance with industry standards and laws or regulations. For instance, protecting consumer privacy or keeping consumer data secure isn’t done just to check off a box. Instead, it’s recognized as an essential part of the business’s role in the community.
The governance area is key to ensuring that the business can continue to thrive while embracing sustainability strategies. As PWC puts it, “ESG isn’t just a responsibility. It’s a mindset and an opportunity.”
Decision makers at a sustainable business realize there continues to be a “gap between those who have access to opportunity, and those who do not” (that’s PWC again). They act to meet business objectives, sure. But, they do so with an eye to how their decisions can help address the systemic social challenges holding some of society back.
Business Sustainability Can Benefit All
Prioritizing sustainability—all three aspects of it—can make your business more appealing to customers, investors, and business partners. According to McKinsey, “companies with high ratings for environmental, social and governance (ESG) factors have a lower cost of debt and equity… [and] outperform the market in the medium and long term.”
You don’t want to introduce sustainability practices in your small business for financial reasons alone. But, don’t worry, the next article in this series will provide you with several other good reasons to promote business sustainability in your organization.