Leveraging Sustainability For Economic Profit
More and more organisations see the importance of sustainability. Yet still, too many
organisations fail to convert cost centres to value enhancing development activities.
Research
Studies indicate the valuation differential between the most and least eco-efcient
companies’ increases over time. This suggests poor environmental performance is a sign
of operational inefficiency. Furthermore, professional investment managers have started
to view the quality of sustainability integration as a proxy for how effectively a business is
managed.
It follows, support needs to be garnered from CFOs, and their teams, as they see
operations from a purely nancial paradigm. Such a view reveals that a circular approach
to economics will track the interdependent environmental, social and economic costs.
When systemically integrated with impact accounting foregone opportunities can be
seen. This reveals economic weaknesses and opportunities. As a result, the management
of both nancial and resource waste becomes ubiquitous with reduction of risk.
Importantly, such accounting highlights areas of innovation and value enhancement.
SUSTAINABLE VIABILITY
Decision-Making Reimagined
CFO’s
For CFOs to become more engaged with sustainability, it is necessary to holistically
connect all operational functions. This action can deliver assurance of current and future
energy and resource project savings claims. Furthermore, since “green or low-carbon”
technology is seen as a key to eco-efficiency, to reduce waste and optimise their use, it’s
important that the procurement of such technologies is systemically coupled to all
organisational processes. As a result, since eco-efciency spans not only energy intensity
and energy efciency, but also the durability and recyclability of a product or service life
cycle, teams become more comfortable with interdepartmental collaboration. Moreover,
they become energised too, as they naturally reorient from being process obsessed to
outcome focussed.
It follows that integrated life cycle analysis becomes a tool of choice as companies
become familiar with all impacts and better understand what is material. And, by
performing regular benchmarks to determine which factors render least impact,
companies develop a sensitive understanding of where material can be reused and
recycled back into another life cycle process, creating new revenue streams.
CEO’s
For CEOs to robustly integrate sustainability can deliver clear insights to environmental,
social and economic oversight. Naturally, such insights assist in the defence against
economic vulnerability from the momentum of changing market forces and enables
reliable reporting. For, merely to meet environmental and social compliance hardly allows
a company to distinguish itself from its competitors, since most intra-industry peers are
affected by compliance in a similar way. Indeed, the real benets to organisations will
come from more rigorous forms of environmental and social performance. It follows,
decision makers must take themselves on the enlightening journey of sustainable viability.
This will create experiences which help them instinctively grasp the mismatches that may
exist between what the new strategy requires and the actions and behaviour that have
brought success up to this point.
Remove the Silo’s
Furthermore, by connecting the board, senior managers and employees, there is a
support base for all inuencers to feel connected to the strategy and create a positive
halo for the brand amongst staff. Developing the right experience, chemistry and
attitudes. It creates the right spirit with which customers are engaged. Additionally, a
framework of robust and contextualised reporting can be used to rene sustainability
messages. It follows, such action supports both brand and reputation. As a result, the
increasing ethical demands and expectations of customers and other stakeholders can be
framed and met. Indeed, with reputation being viewed as a strategic asset, leveraged
correctly, sustainable viability aids gaining competitive advantage. For, is it not the rm’s
responsibility for the image projected to customers, suppliers, investors and other
societal stakeholders? To engender trust. And, society does render legitimacy for the
organisation to exist.
Attract Best Talent
Similarly, experience shows that as highly qualied eco-boomers enter the work market
from university, they are choosing whom to work for with more consideration as to the
values of the employer. This makes sustainability a major factor in decision-making. In
response, business has to adapt to attract best talent. It follows, with such talent, there is
a natural progression toward evolving eco-products and services to reduce customer
impact. Such action helps improve cost management, value creation and economic prot
over the long-term.
Furthermore, validated sustainable viability helps protect against the vulnerability of
employee instability. For example: unequal and disengaged employees foster discontent.
As a result, this applies a negative affect to productivity. It follows, optimal outcomes
require sustainability to be clear on economic performance, employee development and
cohesion. This means that goods, services, labour, resource productivity and nancial
capital are allocated in the most productive manner to deliver technological readiness,
business sophistication, and innovation. Veried sustainable viability represents both
short and long-term drivers for competitiveness.
In conclusion, repeated evidence indicates a positive relationship between validated
sustainable viability performance and higher value. As a strategy, it’s about optimising the
allocation and use of resource. Expose hidden costs and risks. Additionally, an excellent
reputation gives an organisation character, which is a strategic asset. Leveraged properly,
it delivers competitive advantage and improving economic prot. And, a company driving
eco-efcient products and services lowers the negative impact and burden on its
customers, the environment and society. A sustainably viable business is naturally one
that makes it more attractive to do business with. Such a business will reap positional
advantage in a highly charged, cost-conscious, highly competitive market place.
Revised from Leveraging Sustainability For Economic Prot, published by Environmental Leader and others 2012. ©Christopher Gleadle 2019.
BY CHRISTOPHER GLEADLE
JUNE 7, 2019
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