Sustainability is not just a buzzword, but it is increasingly becoming mainstream in business. Organizational sustainability has been identified as a “strategic priority of the future for Chief Executive Officers”. More specifically, 93% of CEOs consider sustainability issues as being “critical to the future success of their businesses”. Despite their appeal, sustainability policies are not adopted purely for public relations (PR) reasons. Research shows that sustainability reflects “substantive changes in business processes”. A more sustainable approach to business is mainly driven by “the pressures of globalization”, corporate scandals, the global economic crisis as well as greater business scrutiny imposed by external stakeholders. The impact of globalization is considered the most significant factor because it “has considerably changed the roles and relationships of business, governments and other key stakeholders”.
The definition of sustainability
A sustainable organization could be defined as the one that “[…] contributes to sustainable development by delivering simultaneously economic, social and environmental benefits – the so-called triple bottom-line”. Although this definition is useful, it is incomplete. It is worth noting that the verb to sustain is defined as to maintain or to endure, which expands the definition of sustainability by defining it as “a method of harvesting or using a resource so that the resource is not depleted or permanently damaged over an extended period of time”. Therefore, to identify whether something is sustainable, we should ask the following questions: Is it maintainable? Is it endurable? Will our resources be depleted or permanently damaged over the long term? The answer to these questions is simply Yes or No, which means that something is either sustainable or not – there are no in-between options.
A 360° analysis of sustainability
The central topic of most debates on organizational sustainability focuses on the organization’s impact on the environment. Although discussing the (mis)use of natural resources is important, other challenges should be addressed as well. To get a complete picture, sustainability should be analyzed from the perspective of 4 interrelated resources:
- the organization itself,
- its human resources (both internal and external),
- its community / society / ethno-sphere as well as
- the planet’s biosphere (the environment).
Considering these 4 resources helps determine 360° organizational sustainability: if one of these resources is unsustainable, i.e. it cannot be maintained, is being depleted or permanently damaged, problems for the other 3 will occur eventually. This means that if any resource is not truly sustainable, neither is the organization.
Practically all organizations claim on their websites or in their annual reports that their employees are their most important assets, while in fact the complete opposite is true: while most organizations invest a lot in protecting and maintaining their financial assets, production lines, information technology (IT) systems and intellectual property (IP), to name a few, still too little attention is being paid to programmes that seek to ensure employee work-life-balance or well-being. That comes as a surprise as most organizations investing in such programmes have demonstrated “financial returns on the order of 3:1 for every dollar they have spent”. Despite this, the prevailing practice is to extract the maximum from any employee in the short-term period, assuming that there will always be someone ready to take over. This practice is favoured by the increasing number of contractual workers. Consequently, many employees are being “depleted” and, in some cases, “permanently damaged” by employers who seek better short-term results, thus diminishing employee sustainability.
Organizations are no longer accountable only for their direct actions. Public demand for ethical and sustainable business practices is now also applicable to investments. That has given rise to environmental, social and governance (ESG) investing, “an investment approach that considers not only financial returns but also social and environmental implications”. In other words, sustainability is one of the core principles of ESG investing. Global ESG investing has reached $30 trillion. Moreover, consumers are increasingly looking for socially and environmentally conscious brands. This means that not only is ESG investing an ethical path, but it can also become a profitable strategy.
4 misconceptions about sustainability
Sustainability is a complex issue. To properly address all sustainability issues that might occur, organizations first need to address 4 common misconceptions about sustainability:
1. Sustainability ≠ corporate social responsibility (CSR). Organizations first need to realize that sustainability is more than just CSR and environment protection. It also includes such issues as energy efficiency, risk management, social development, reputation management, financial sustainability, business diversification, employee protection, sustainability reporting and much more.
2. Sustainability ≠ a public relations (PR) tool. Organizations truly caring about sustainability should not see sustainability as a PR tool that makes them look good in public. Positive results can be achieved if the organization’s objective is not PR but its genuine desire to achieve “authentic and holistic growth” long-term.
3. Sustainability ≠ ‘band-aid’ solutions. Organizations should also stop adopting ‘band-aid’ solutions to crucial issues such as climate change or biodiversity protection and instead should seek to find and implement real solutions.
4. Sustainability ≠ an added function. It is critical to incorporate sustainability into the business model itself. Any aspect of business – such as the source of raw materials, the production process, the choice of manufactured products or employee policies – should be planned prioritizing long-term holistic growth plans over immediate financial gains. The ultimate goal is to reach a point where every profitable company acts as a social entrepreneur.
References: Terry Wales, Organizational Sustainability: What Is It, And Why Does It Matter? | Mark Hollingworth, Building 360 Organizational Sustainability | Rebecca Scheel, forbes.com | Miniya Chatterji, entrepreneur.com