‘Sustainable development is like teenage sex – everybody claims they’re doing it, but most people aren’t, and those that are, are doing it very badly.’  – Dr. Chris Spray, Northumbrian Water Group

The concept of sustainability in business has become mainstream and at the center of the global agenda, market forces have driven sustainability strategies, also stakeholders demand, regulatory requirement, investors etc. have all demanded that companies should show commitments.

One of the most critical challenges faced by business managers today is the integration of sustainability into their core functions. The business drivers and changing landscape have made it necessary for companies to take a leap forward from the unsustainable practices and move toward rethinking, redesigning, and redeveloping business practices in a more sustainable way. Most of the initiatives in this attempt have so far emphasized primarily on the social aspects of sustainable development or only practice Corporate Social Responsibility (CSR) but overlooked the governance and environmental dimension of sustainability. For companies willing to commit to implementing sustainability holistically, here are important points that will guide them towards doing it right through the implementation journey.

 

1. SUSTAINABILITY SHOULD BE SEEN FROM THE SAVINGS PERSPECTIVE INSTEAD OF THE COST PERSPECTIVE: One of the factors that have affected the implementation and buy-in of many board and management in companies is the COST MYTH. ‘How much is this going to cost me?’ is the first question managers usually ask when the basics of sustainability are explained and the question is often put forth in a pessimistic tone implying that the cost will be too high. Unfortunately, it misses the point. It is not the costs, but the savings and potential profits that should be considered first. Yes, in many cases some capital is required to start a sustainable process, but the point of sustainability is that it can pay for itself in the long-term.  Energy-efficient light bulbs provide a good example. Efficient bulbs costs N1000 (or more) per unit whereas regular light bulbs cost around N100 (or more) per unit, we all know that N100 bulbs are the less expensive option, yet if one takes into account that energy-efficient bulbs last years longer and can save in electricity costs over the life of the bulb, the ‘cheaper’ bulb becomes the more expensive alternative. Another example can be drawn from a bank in Nigeria that has 500 branches nation-wide and spends an average of N1Million, on diesel monthly, that sums up to N12 Million per branch annually and in running the total 500 branches, such bank will be coughing-out a large sum of N6 billion naira. Such a bank could be saving much if it adopts sustainability practices by just putting few policies in place, like adopting a reduced hour shut-down time, engaging alternative sources of energy and other efficiency measures etc. For example, Yahoo saves 60% of its electricity costs by opening the doors and windows where its servers are located and letting the hot air out. Polk County, Florida School District (in the USA) saves $60 million over 16 years period by just turning off electrical equipment that is not in use. Wal-Mart – Saves $200 million every year on transport fuel because it makes the delivery truck more efficient. Wal-Mart – Enjoys an addition of $3.4 billion in savings every year by having its suppliers reduce packaging waste by 5%.

 

2. SUSTAINABILITY SHOULD BE IMPLEMENTED AGAINST RECOGNIZED PRINCIPLES AND STANDARDS: Many companies today claimed to be practicing sustainability according to their reports, but unfortunately many do not have any framework that guides their implementation. It is important to note that sustainability cannot and should not be done in isolation. It must be done against globally or locally recognised standards, principles and frameworks according to materiality and industry. For Example, the Ten Principles of the UN Global Compact, Global Reporting Initiative (GRI) reporting standards, Sustainability Accounting Standards Board (SASB), Carbon Disclosure Project (CDP), Accountability Principles, International Organization for Standardization (ISO), Principle for Responsible Investments (PRI), The Equator Principles (EPs), Principles for Sustainable Insurance (PSI), and for local principles and framework like Nigerian Sustainable Banking Principles by the Central Bank of Nigeria, (CBN) and Sustainability Disclosure Guidelines by Nigerian Stock Exchange(NSE) amongst others.

 

3. COMPANIES SHOULD FOLLOW IMPLEMENTATION STEPS AND PROCEDURES: Implementation of sustainability may not be successful if companies do not follow the right steps. The first step Companies must start from is ASSESSMENT, You Can’t Know Where You’re Going Unless You Know Where You Are. Whether your company is just getting started, has had a major operational change or is looking to evaluate its current sustainability efforts, a thorough sustainability assessment is a critical starting point. The next step is STRATEGY; a sustainability strategy is truly effective only when it’s in clear alignment with your overall corporate goals and vision. There must be a developed plan, timelines and metrics customized to meet the current and future operational, financial and sustainability goals. The next step is IMPLEMENTATION; If It Starts with a Plan, it will End With Success. The value of a great plan is only realized when it is put into action. This is the stage where existing policies will be reviewed, new policies will be developed, sustainability programs, initiatives, and programs will be established and implemented, employees are trained etc. The next step is STAKEHOLDERS ENGAGEMENT; this is very key as it obliges an organisation to involve stakeholders in identifying, understanding and responding to sustainability issues and concerns, and to report, explain and answer to stakeholders for decisions, actions, and performance. The last stage is COMMUNICATION OR REPORTING; Reporting sustainability performance is a valuable management tool for communicating your social and environmental performance to customers, suppliers, employees, and investors. The reporting process also helps you to assess your impacts, manage risk, leverage opportunities, increase transparency by better engaging your stakeholders and improve your brand image. Companies are also encouraged to assure their report to increase trustworthiness, credibility, and genuineness of their disclosures.

 

4. WASTE ELIMINATION AND RESOURCE-LIFE EXTENSION SHOULD BE AT THE CENTER OF YOUR STRATEGY: What is “Waste” Waste is an indisputable sign that business is emitting money. Waste is any substance which emerges from the business which cannot be sold. The more the business waste, the more you have to purchase. Waste could be informed of PHYSICAL FORM (Resources and materials that are discarded), or INEFFICIENCY (below optimal performance in the process, systems, equipment, and business models). Waste is found in countless forms and configuration. And whether a business is office based, service-based, factory-based, whatever it is or does, the people working in it must find their way to eliminate it and prevent it to coming back so as to increase the business ability to survive in a long term. Also, Resource-life extension or the circular economy is a regenerative system in which resource input, waste, emission, and energy leakage are minimised by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling. This is in contrast to a linear economy which is a ‘take-make-dispose’ model of production.  When you throw anything away, the materials, energy, labour and time that are used in producing it are also thrown away. The word ‘resources’ doesn’t only refer to ‘raw materials’. Indeed, ‘resources’ also pertains to information, labour, markets (customers), furnishings, machinery and so on. For examples, resource-life extension can also involve: Reducing employee turnover, Extending the life and use of a building, office or workplace (including renting or subleasing areas or equipment that are not used or are only partially used), Locking in customers or markets with optimal customer service or other value initiatives, Expanding market share perhaps via ‘inclusive business’ practices, finding new ways to use old or current data, and/or creating or extending value in the long term by reusing, reworking (modifying) or adapting what your business currently has instead of throwing it away or abandoning it.

 

5. SUSTAINABILITY SHOULD NOT BE MISTAKEN FOR CSR: It is important to note that many companies that claim to be practicing sustainability are actually practicing CSR. Here are the main differences.

• CSR Looks backward, reporting on what a business has done, typically in the last 12 months, to make a contribution to society. While Sustainability Looks forward, planning the changes a business might make to secure its future (reducing waste, assuring supply chains, developing new markets, building its brand).
• CSR is about today while Sustainability is long-term: The concept of CSR is philanthropic in nature, most projects concern is to give back to the community and solve their immediate needs without necessarily generating financial return, Sustainability programs, projects etc. will not only solve the problem of today but will help the future generation to meet their own needs. A clear example is recycling; while cost is reduced on material cost, it also helps in preserving the natural resources for the unborn generation.
•  CSR does not have to align with the business strategy, but Sustainability does: CSR is more about doing good, while sustainability is not just about being a good corporate citizen; it is also about doing good while creating new income streams and business models. The program must be in alignment with the policies, programs, initiative to achieve shared goals.

 

6. ALL EMPLOYEES ACROSS VARIOUS DEPARTMENTS SHOULD BE AWARE AND TRAINED ON SUSTAINABILITY: Many companies claiming to be implementing sustainability in operations and DNA have many of their employees who are largely unaware of sustainability issues beyond their immediate work responsibilities. In many companies, for example, only the sustainability staff are trained or aware of the sustainability issues, all other staff from other department are not aware or largely untrained. It is important to note that employees play a crucial role in transforming company’s sustainability strategy into a reality and the key to creating a vibrant and sustainable company is to find ways to get all employees from top executives to the most junior workers personally engaged in day-to-day corporate sustainability efforts. Employees need to be provided with training on sustainability topics relevant to the company’s goals, business strategy, operations and, ultimately, their own jobs and many sustainability initiatives require specialized knowledge and expertise such as talking to suppliers about sustainable sourcing or using an eco-efficiency tool to evaluate a new product, even implementing the policies such as using relevant trash bin to discard waste, turning-off electrical appliances that are not in used etc.

 

7. COMPANIES SHOULD COMMUNICATE ON PROGRESS BUT SHUN GREENWASHING: It is important for companies to report to their stakeholders and the general public about their sustainability efforts towards reducing their negative impacts on the people, planet, and profits or increasing their positive impacts on the society, environments and economy, as it makes no economic and business sense when a company invests towards doing good and nobody knows about it. Companies should also follow the internationally accepted standards of reporting like adopting the GRI standards, Sustainability Accounting Standard Board (SASB) and ASSURE/AUDIT such report through an Independent External Assurance Provider to increase the trustworthiness and authenticity of the data disclosed in the report. On the other hand, companies should shun the act of “GREENWASHING” this occurs when a company or organization spends more time and money claiming to be “green” through reporting, advertising, and marketing but actually not implementing sustainable business practices on products and services. Also when companies overestimate or exaggerate sustainability claims in reports, marketing or adverts, it is called greenwashing and this could lead to huge reputational damage on the company. An example is the Volkswagen Emission Scandal when the US EPA in 2015 served a notice to Volkswagen (VW) for installing an emission compliance defeat device in violation of the Clean Air Act. The company admitted that it rigged 11 million of its own “clean diesel” with devices designed to cheat emissions as against what was advertised. Volkswagen later offered to fix or buy back nearly half a million affected vehicles as part of a settlement reached with the EPA, California officials, and consumers. Apart from the reputational damage, it caused the company, the announcement of the “Defeat Device” scandal shaved $20 billion off of the company’s market cap and the stock dropped nearly 30% virtually overnight and the total cost to the company from the scandal is about $30 billion.

Conclusion:

Sustainability is the BIG deal, the new paradigm shift to operate in today’s world, as it is undeniable fact that companies and organisations engaging in it are experiencing overwhelming returns, corporate culture, more reliable products, and greater long-term profitability. This has been demonstrated by designing a Sustainable Business Model that creates, delivers and captures shared value for various stakeholders across the Triple Bottom Line (Economic, Social and Environmental). One thing is sure; Sustainability is here for good, has come to stay and not going away!

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By Debo Adeniyi

Debo Adeniyi is the Executive Director and the Global Sustainability Leader, at the Centre for Global Solutions and Sustainable Development, (CENGSSUD)

He is a seasoned professional, a Corporate Sustainability and Sustainable Development Practitioner, a trained business strategist, innovator with experience and specialties towards working with the private sector in implementing Sustainability in core business strategy, DNA and operations with a strong drive on values, results, creating compelling overarching aspirations and embedding them in the organisation through change management and empowered leadership to create growth, innovation and operational efficiencies.

He can be reached via debo@cengssud.org, and Full Profile on LINKEDIN