Sustainability- A strategic opportunity for businesses

ABSTRACT

A sustainable firm is one that employs eco-friendly practices to ensure that all manufacturing
procedures, end products, and activities effectively address current environmental issues while
still making a profit. It is a business that "meets the demands of the present [world] without
endangering the capacity of future generations to satisfy their own needs," in the author's words.
It entails determining how to produce products that will profit from the current environmental
situation and how well a company's products work with renewable resources.

How long the environment and the market will be sustained is a matter that affects everyone. The
environment, investors, and customers can all gain from a company's dedication to sustainable
development. A sustainable company must be both environmentally conscious and able to meet
the needs of its clients.

One of the primary goals of sustainable businesses is to eliminate or drastically reduce the
environmental harm that their products' production and consumption cause. The carbon
footprint, which measures the quantity of carbon dioxide produced as a result of such human
activities in units of carbon dioxide, is a concept. The concept of a carbon footprint was first
introduced in the analysis of ecological footprints, which considers the ecological capacity
required to support product use.
 INTRODUCTION
Organizations are increasingly incorporating sustainability into their business strategies as they
come to the realization that they may prosper while doing good. According to a recent McKinsey
poll, formal sustainability governance is in place in 70% of respondents' workplaces. But what
does it really mean for a firm to be "sustainable”? In the business world, sustainability refers to
conducting operations without having a negative impact on the environment, the local
community, or society as a whole.

Sustainability is increasingly turning into a need for organizations due to altering attitudes across
the globe. Companies need to adopt sustainable business strategies more than ever to close the
knowledge-action gap. Sustainability is the provision for present needs without compromising
those of future generations in order to meet present needs.

The effects of business on the environment and the effects of business on society are the two
main aspects of sustainability in business. At least one of the goals must be achieved via a
sustainable company plan. Businesses that ignore their obligations run the risk of creating issues
like social injustice, inequality, and environmental degradation.

When making decisions, sustainable enterprises take a variety of economic, social, and
environmental concerns into account. These companies keep an eye on the effects of their
actions to make sure that short-term gains don't become long-term obligations. Sustainability
may not only reduce global problems but also promote economic success. Investors are
increasingly evaluating an organization's ethical impact and sustainability standards using
environmental, social, and governance (ESG) metrics. Investors consider a company's water use,
carbon impact, involvement in the community, and board diversity, among other aspects. [1]

A sustainable business makes decisions about its operations, conduct, products, and services by
having a complete understanding of the environmental and social context in which it operates.
Because of this, it operates within accepted environmental and social limits and reflects cultural
expectations. Additionally, it makes certain that its effects on the environment and society are
either positive or neutral. [2]
The means by which an unsustainable organization is transformed into a sustainable one is
sustainable business strategy. Such a plan should lay out a course that will support and propel the
business in order to continue operating in the long run (at least 2 decades). Describing the long-
term goals of the organization in light of the pertinent environmental, social, and economic
trends and challenges.[3]

Every business needs a plan to attract investors, whether it is publicly traded, seeking money
from banks or private investors, or neither. A strategy integrates an organization's strengths and
market positioning into a sequence of actions to be executed over time in order to attain specific
business objectives. Investors and financial backers fundamentally examine a company's strategy
and assess its capacity to carry it out. They next determine whether the company presents a
compelling investment opportunity. [4]

So, if one wants to change corporate performance in favor of more sustainable methods, one
must pay close attention to company strategy. The strategy of a company is its distilled essence,
and if it does not include or reflect that company's commitment to implementing more
sustainable business practices, investment drivers will only be concerned with slender financial
performance, not reflect and reward sustainability actions, and will not be responsive to societal
needs and intentions. [5]

Although the majority of top businesses understand how important sustainability is, many still
find it difficult to balance environmental, social, and economic concerns.

It has long been believed that sustainability specialists should be adept at using standard business
strategy and planning tools. Yet, it is still possible to come across business school lecturers who
emphasize the potential application of Porter's Five Forces as sustainability tools, as if they were
the only ones who had stumbled across a stunning new pre-sliced dough-based baked expendable
product. There is a significant distinction that has to be acknowledged here, though: very few
individuals responsible for sustainability in particular within firms actually take part in
conservative business planning and strategy formation. [6]

Only 60% of businesses have a sustainability strategy, despite the fact that 90% of CEOs believe
sustainability is vital. Companies that claim to be sustainable ordinarily fall short in terms of
implementation. One of the causes is that CEOs and business boards are not as involved in
sustainability plans as they ought to be. [7]

A corporation may make long-term investments if it has a sustainability plan, claims McKinsey.
A passivity attitude can result in a greater loss in the long run when it comes to sustainability.
The need for recycling and reuse is becoming recognized by many corporate executives, and
they are working toward the circular economy. The market for renewable energy is anticipated to
reach $2.15 trillion by 2025, making it a sizable area for growth. [8]

Even fewer have experience using commonplace corporate management tools and analysis
methods. Because of this, even while businesses may make substantial investments in these
programs, sustainability is still a secondary or parallel concern in terms of business strategic
direction.

The continuation of business as usual is clearly hampered by structural long-term sustainability

concerns. Sustainable solutions offer a technique to alter the overall risk profile of an
organization by reducing, limiting, and designing-out any flaws that are anticipated to act as
impediments to business performance over the long run. Tools and techniques for assessing and
understanding the strategic implications of sustainability for organizational success either already
exist or can be developed by altering well-established business management techniques. The
most challenging tasks for firms are to convince markets and investors that sustainable behavior
has financial benefits and to view sustainability as a transformative force rather than an
operational issue. [9]

Top reasons to implement sustainability strategies:

 The largest generation in the population is the millennia’s. According to a Nielsen

survey, millennia’s are twice as likely as baby boomers to claim they are modifying their
behavior to lessen its impact on the environment. The next dominant generation,
Generation Z, is already here and is often more concerned about sustainability than
millennia’s are.
This demonstrates how corporate brands may focus on sustainability to significantly raise
their values, and many of the top businesses in the world are already doing so. By 2030,
Apple promises to have supply network and product lines that are completely carbon
 neutral. Businesses can gain a long-lasting competitive edge by integrating sustainability
into their business strategies and corporate governance.
 81% of consumers globally believe firmly that businesses should work to improve the
environment, and 66% of consumers would pay extra for a product if it came from a
sustainable brand. The number of millennia’s and members of generation Z is rising, and
there is a growing trend among customers to support sustainability. Although social and
economic factors are also important in sustainability, the focus is on the environment.
 A sustainability plan, according to McKinsey, can significantly save expenses and have
an impact on operating profits of up to 60%. Additionally, it reduces water intake and
calorie consumption. The likelihood that a company will make money from its
sustainability efforts can be increased by integrating sustainability into business
divisions.[10]
Being open and honest about sustainability efforts is also a good idea. Puma's disclosure
of information about the water and carbon emissions generated throughout its supply
chain contributed to the discovery of 60 percent more efficient ways to use fuel, energy,
and water. Relationships with the local community and the government can also be
improved by sustainability. It may qualify the business for tax breaks and subsidies.
 When it comes to luring talent, sustainability is crucial. Nearly 40% of millennia’s have
accepted a job since of the corporation's sustainability, and they are even prepared to
forgo a pay raise to work for an organization that practices ethical business practices. Not
having a sustainability strategy could result in you missing out on a lot of talented people
as millennia’s take over as the largest segment of the workforce. Because they appreciate
what the business is doing, being sustainable may help increase employee motivation.
 Companies can enter new markets and grow in existing ones with the aid of a compelling
sustainability proposition. Through 2030, China's program to combat air pollution would
open up investment opportunities worth more than $3 trillion. Businesses that prioritize
sustainability will be best positioned to seize profitable new business possibilities.[11]

Initiatives focused on sustainability not only promote social and environmental change but
also an organization's overall performance. Spending more money on sustainable business
practices can increase a company's profitability, which may sound counterintuitive, but
studies show that the most sustainable businesses are also the most lucrative ones. [12]

Sustainability does not imply forgoing revenue or prioritizing failure. Instead, it has
developed into a vital component of any organization's effective strategy. Businesses that
ignore sustainability concerns perform worse in terms of profitability, growth, and employee
retention, among other metrics. [13]

To bring about genuine change can seem unattainable, daunting, or even alienating. That's
not the case when the most creative, prosperous, and influential businesses work together to
address some of the most important issues facing the world. Governments find it difficult to
handle difficulties with public goods, while purpose-driven businesses that collaborate to
resolve these challenges have had considerable success. [14]

According to a 2019 survey, 73% of customers worldwide are open to changing their
purchasing patterns to ensure a less undesirable impact on the atmosphere, and sales of
sustainable goods have increased by almost 20% since 2014. Particularly among millennia’s,
consumers are more prepared to pay more for goods made with sustainable components or
with social responsibility claims. By attracting customers who are interested in sustainability
and boosting sales, your company may gain market share if it commits to sustainable
processes and products. [15]

A CEO's worst nightmare is becoming the subject of a scandal that makes the top page.
Improper actions not only harm a company's reputation and drive away consumers, but
dealing with a PR crisis can take important human and financial resources away from the
main operation. You don't want to be known as the organization that permitted an oil spill or
had workers endure hazardous working conditions. You safeguard yourself from any
negative events by implementing a sustainable plan that safeguards the environment and your
employees. [16]

Companies must deal with compliance, which typically relates to regulations governing
waste management, pollution, and energy efficiency, in addition to human rights and labor
responsibility. Investors are concerned about compliance as well. According to a recent
survey, investors are becoming more wary about compliance risks. [17]
According to the 2021 EY Global Institutional Investor Survey, 74% of institutional
investors said they were more likely to divest from companies that had poor sustainability
performance, and 90% said they would now take into more consideration a company's
sustainability performance when making investment decisions.

More than just certain enterprises are impacted by the sustainability challenge. Yet it's
encouraging to see how many large corporations are developing cutting-edge environmental
regulations. Sustainability is a megatrend that is becoming more and more visible and will
never go out of style. [18]
 CONCLUSION

The 'bottom line' and profits of a firm may be impacted by the adoption of sustainable
business practices. In this era of growing environmental concern, green tactics are likely to
be accepted by staff, customers, and other stakeholders. A lot of businesses are investing in
sustainable business practices because they are concerned about the potential environmental
impact of their operations. In fact, there is evidence of a connection between environmental
performance and economic performance. Companies looking to implement sustainable
business practices must comprehend how to strike a balance between social equity, economic
prosperity, and environmental quality.

The Department for Business, Innovation and Skills predicts that the UK's green economy will
grow by 4.9 to 5.5 percent annually by 2015 and that the regular internal rate of return on large
companies' energy productivity investments is 48%. Businesses that are setting the bar for
sustainable business practices can benefit from defensible revenue opportunities. A survey found
that 27% of respondents said they are more likely than they were five years ago to buy a
sustainable good or service, demonstrating a rise in consumer demand for eco-friendly goods.
Sustainable business practices may also attract talent and produce tax advantages.
 REFERENCES
[1] Geissdoerfer, M., Vladimirova, D., & Evans, S. (2018). Sustainable business model
innovation: A review. Journal of cleaner production, 198, 401-416

[2] Fowler, S. J., & Hope, C. (2007). Incorporating sustainable business practices into company
strategy. Business strategy and the Environment, 16(1), 26-38

[3] https://en.wikipedia.org/wiki/Sustainable_business

[4] Direction, S. (2010). What does sustainability mean? Debate, innovation and advice around a
key but complicated concept. Strategic Direction, 26(2), 27-30.

[5] Hopkins, M. S., Townend, A., Khayat, Z., Balagopal, B., Reeves, M., & Berns, M. (2009).
The business of sustainability: what it means to managers now. MIT Sloan Management
Review, 51(1), 20

[6] https://online.hbs.edu/blog/post/what-is-sustainability-in-business

[7] Pojasek, R. B. (2007). A framework for business sustainability. Environmental Quality

Management, 17(2), 81

[8] Hoffman, A. J. (2018). The next phase of business sustainability. Stanford Social Innovation
Review, 16(2), 34-39

[9] https://www.techtarget.com/whatis/definition/business-sustainability

[10] OUT, L. (2006). Why all businesses should embrace sustainability.

[11] Leisinger, K. (2015). Business needs to embrace sustainability targets. Nature, 528(7581),

165-165

[12] Nidumolu, R., Prahalad, C. K., & Rangaswami, M. R. (2009). Why sustainability is now the
key driver of innovation. Harvard business review, 87(9), 56-64.

[13] https://www.imd.org/research-knowledge/articles/why-all-businesses-should-embrace-
sustainability/
[14] Fowler, S. J., & Hope, C. (2007). Incorporating sustainable business practices into company
strategy. Business strategy and the Environment, 16(1), 26-38

[15] Evans, S., Vladimirova, D., Holgado, M., Van Fossen, K., Yang, M., Silva, E. A., &
Barlow, C. Y. (2017). Business model innovation for sustainability: Towards a unified
perspective for creation of sustainable business models. Business Strategy and the
Environment, 26(5), 597-608.

[16] https://www.terrafiniti.com/sustainable-business-strategy/#:~:text=What%20is%20a
%20sustainable%20business,(at%20least%202%20decades).

[17] Rafi, T. (2021). Why corporate strategies should be focused on sustainability. Forbes.

[18] Chladek, N. (2019). Why you need sustainability in your business strategy. Harvard
Business School Blog