If ever there were a word that was used loosely in the business community, it is “sustainability”. This label has been applied to almost any corporate activity that shows sensitivity to human values, from charitable donations to “green” chemistry research. Traditional environmental health and safety programs are lumped in along with energy efficiency, waste recycling, labor practices, business ethics, and diversity. For this reason, many companies have chosen to avoid the S-word, and use other terms such as “corporate responsibility” and “citizenship.”
Of course, different definitions of sustainability abound. Here’s my preferred definition: “A sustainable enterprise is a company that achieves enduring growth and superior long-term financial performance by addressing the social, economic, and environmental needs of present and future generations of stakeholders.”What’s yours?To go further, I would argue that in practice there are three levels of corporate sustainability:
Passive sustainability – This is an extension of the old compliance mentality. Companies try to respond to stakeholder expectations by adopting “best practices”such as commissioning LEED buildings and purchasing carbon credits. Essentially, this is a way to stay even with competitors and does not employ sustainability as a source of competitive advantage.
Adaptive sustainability – This is a more active approach in which companies try to be alert to changes in the business environment that could represent risks or opportunities. For example, anticipated regulations or projected shortages of critical raw materials might lead a company to redesign its products or manufacturing processes in order to remain cost-competitive. This requires frequent reexamination of sustainability goals and company practices.
Resilience – This is an emerging approach that has been adopted by a few companies such as Dow Chemical Co. and Cisco Systems Inc. Resilience can be defined as “the capacity to survive, adapt and grow in the face of turbulent change.”In a complex and tightly connected global economy, with supply chains extending around the world, it is impossible to predict future changes in technologies, markets, and political conditions. Instead, resilient companies deliberately design their products and supply chain processes to overcome unforeseen disruptions and to rapidly seize opportunities. This strengthens both short-term business continuity and long-term sustainability. Of course, corporate responsibility is an essential component of enterprise resilience.
Which business model best describes your company?