Businesses such as Unilever, IKEA and Patagonia already know the benefits of having a comprehensive corporate social responsibility and sustainability plan. The trend towards sustainability and business being a source for good is not new, however the speed and evolution are accelerating. Becoming a certified B Corp seems to be the next big trend. B stands for “Benefit”, and represents a new type of corporation that uses the power of business to drive change and solve social and environmental problems. There are more than 2,076 B Corporations globally in over 50 Countries spanning 130 industries. The uniting vision is for businesses to become a source for good. Patagonia, an early pioneer in the sustainability movement was the first Californian company to join in 2012. Universally shareholders are demanding more transparency. Today we now have a sustainable trading index that was created for the purpose of stimulating meaningful discussion for the full range of considerations that policy makers, business executives, and civil society leaders should take into account when managing and advancing international trade. The move away from a hyper-focus on creating short-term profits towards a more inclusive economic model has arrived and businesses that fail to capitalize will be left behind. Unilever has embedded sustainability into its corporate culture with a commitment to doubling growth while halving its environmental impact in 10 years, and diverting three-quarters of their nonhazardous waste from landfills. In order for this shift to take place businesses need to identify their reasons or essentially “find their why” and then embody three key areas to find success.

FIND YOUR WHY

You must first identify what is your driving force behind the desire to change or inversely discover how to align your employees, shareholders and customer values that are pushing for more responsible corporate citizenship. There are a multitude of benefits for sustainable businesses such as attracting and retaining talent, differentiation over competitors, higher customer engagement, loyalty as well as risk mitigation and supply chain disruptions. Further academic studies have shown a positive correlation between the adoption of a comprehensive CSR & sustainability with increased financial performance including the ability to capitalize on new and emerging business opportunities[1]. From a cost perspective reducing energy waste is one of the most effective ways for a company to reduce bottom line expenditures while also reducing their carbon footprint. IKEA has embedded sustainability into its entire business model with the goal to be 100% powered by renewables by 2020. Businesses that embrace CSR and sustainability strategies are better able to both create new business opportunities, help foster better community relationships and improve the goodwill and reputation of a company while enhancing brand value.

KEYS TO SUCCESS

Leadership

Change needs to start from the top and leadership needs to focus on creating or investing in larger long-term shareholder gains, including hiring employees who believe in the vision and are willing to push it forward. Whole Foods has implemented energy and water reduction, up-cycling and recycling as well as supply-chain improvements and campaigned for a more holistic view of business in interconnected communities.

Transparency

Transparency is key to building the trust between consumers and businesses. One of the key area which demands more transparency is business leaders responsibility for their supply chain, ethically sourcing raw materials such as supporting fair-trade economies, sourcing from non-conflict zones, paying fair wages and not contributing to rain forest deforestation. Fast fashion has recently come under a lot of scrutiny for not representing the true cost of garments and sub-contracting work in third-world countries where labor is cheap in deplorable conditions.

Trust

Business can be a powerful tool for change. In order to restore trust and consumer confidence in business as a source for good, the business community needs to act with moral integrity in order to service a triple-bottom line of people, profits and the planet. Cynthia Petterson, President of Share Hope, believes that “the highest purpose of all business activities should be to make people’s lives better. To give them dignity and a life they can be proud of”. ShareHope is one example of business partnering with the local Haitian community to create women’s athletic apparel that aims to transform the Haitian garment industry by helping to provide high-quality employment for local garment workers.

 

Each company needs to determine the extent in which they are willing to go, which can range from the basic legal compliance to limit their amount of liability and exposure to becoming a full blown B-Corporation The understanding by leadership, stake-holder and employees that a company’s long-term financial success goes hand in hand with its record on social responsibility, environmental stewardship and corporate ethics is key. Companies need to have a comprehensive strategy that balances long-term viability of both the company and the society. The paradigm of balancing creating long-term economic value while meeting the demands for short-term competitiveness and profitability is challenging. Whether becoming a certified B-Corp or simply incorporating a triple bottom-line into your business, the larger the shift towards a more inclusive society, the greater the benefit to business, stakeholders and communities.

Companies such as Unilever, IKEA or Patagonia are living examples of how weak the traditional opposition between being profitable and being sustainable is. Now, the question is no longer whether companies want to be sustainable or not, it is just a matter of when and how sustainable they want to be in order to thrive.

 

 

 

[1] Harvard Business School found that companies that incorporated a long-term corporate culture of sustainability outperform their peers in terms of reputation, net income, and stock price. Study by Eccles R., Ioannou I., & Serafeim S (2013) in ‘The impact of corporate sustainability on organizational processes and performance’.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s