Today’s businesses are confronted with a multifaceted and unique brew of technological, social, and environmental market trends that demand urban sustainability-based management. Yet for some business leaders they continue to linger on the sidelines of sustainability by holding the mistaken belief that costs outweigh the benefits of investing in sustainability strategies. Well, in the dawn of increasing digitalization, businesses now operate in a global fishbowl, with increased need for transparency. Adoption of a sustainability policy presents them a scorecard for evaluating how responsibly they are operating.
For businesses, sustainability entails business contribution to economic growth, social progress and environmental protection. Some companies have recognized the long-term profitability of coherent sustainability strategies and made progress towards defining sustainability that confronts challenges related to society and environment. Often the leading impetus for institutionalizing sustainability strategies has been the need to address increased stakeholder pressures, but executives are also realizing that sustainability strategies could improve the bottom line through lower costs and enhanced revenues.
What Benefits do Companies Reap from Sustainability?
Much of the strategic value of sustainability comes from competitive advantage. Sustainability performance is manifested in competitive position because of product differentiation. Reputational risk from unsustainable business operation reduces sales, which negatively affect business revenue. Nevertheless, a good sustainability policy could mitigate business against reputational risk. It is sad that the opposite is true, the absence of sustainable practices in a firm proves to cause trade off of one pillar at the expense of achieving another. The environmental degradation might be put on the line for an oil company for instance to reap its super profits from the excavated resources.
It is evident that that most companies have decided to wear the lens of sustainability. A large number of them are using specific sustainability goals as their framework and embedding them in their operations. Toyota has taken the lead in the motor vehicle industry and is working towards zero carbon emissions and developing recycling technologies. It recently launched global 100 dismantler project to ensure proper end-of-life vehicle proper treatment.
General Electrics, a multinational company big on technological advancement, is working on boosting wind energy by more than 20%. They predict that this would create $100 million in value and add over 100 megawatts in a lifetime of a farm. The firm argues that renewable energy is a necessity in the future and therefore its production needs to meet demand.
In Kenya, the Kenya Commercial Bank recently launched a report on the steps they’ve taken in embracing sustainability since they began embracing sustainability ten years ago. They have reported an improvement in management of resources as a result of practicing sound resource consumption and management practices. The reporting captured improved staff engagement as a reflection of increased staff turnover by more than one percent as result of sustainable practices embedded in the company. The bank, which is considered one of the largest in Kenya, is more than thrilled to be more than a profit-oriented company but also having socio-economic impact- not only in Kenya but in the East African region.
Safaricom, the biggest telecommunication company in Kenya, also reported a reduction in costs of energy to as low as US$510 monthly per site- a significant reduction to be recorded in their history of operations. The company has also employed 50% more women to balance gender and has also witnessed an increase in water consumption at 1.5meters cubic per employee thus encouraging healthy habits. Furthermore, 81% of their suppliers have signed the Code of Ethics for Business in Kenya. The report also pointed out on the mitigations of emissions, indicating the necessity of working in a clean environment safe for human health. The presence of sustainability principles given the examples has proved to inevitably bring about improvement in organizational, social, and environmental performance as reported by the Corporate Performance Index. In a report done by Safaricom it shows that they’ve discovered that Sustainable Development Goals provide a platform to discover untapped business opportunities offered as well as a common platform and language for the stakeholders.
The benefits of engaging in sustainable practices may not be felt tangibly in the short-run. However, in the long-run the results will be conspicuous. The transformation of a company will lead to the overall transformation of a nation only if sustainability is embraced, and it will consequently benefit future generations.