Sustainability in Business
The significance of sustainability in business has grown in recent years. Sustainable organisations follow the concept of a triple bottom line. The term triple bottom line was coined by John Elkington, the founder of a British consultancy firm SustainAbility in 1994, and refers to three things-profits, people, and the planet. These businesses take into account the social and environmental impact of their actions while measuring profits. Thus, along with focusing on revenues, they also focus on the responsible use of natural resources and on enabling the local communities to harness their potential.
Today, many businesses look at sustainability through a strategic point of view-
· Developing a sustainable business builds credibility for investors. The ESG ratings, based on environmental, social, and governance factors and the Global Reporting Initiative (GRI) index play a key role in influencing the investment decisions.
· It brings new opportunities for growth as there is a large market for eco-friendly products.
· It engages with all stakeholders in a positive manner and contributes to brand building. It is one of the reasons for higher levels of customer loyalty.
· It acts as a competitive advantage when it comes to attracting talent. Sustainability lays an emphasis on transparent processes that lead to greater employee satisfaction and increased productivity.
· Lastly, by centring around optimising the use of resources, it helps businesses to cut costs in the long run.
While sustainability in business encompasses many concepts, a few of them are:
1.Ethical Business Practices: The business strategies should be aligned with the core principles of the organisation. It means that values like trust, loyalty, diversity, integrity, etc. must not be sacrificed in the race to maximise profits.
For example, while sourcing raw material from factories, businesses can adhere to the ethics by pledging to source only from factories with a fair and inclusive working environment.
2.Clean Energy: It is the energy obtained from renewable, zero-emission sources and the energy saved through energy efficiency measures. A few common sources of clean energy are biomass, solar, wind, and geothermal energy. Energy efficiency models use less energy to perform the same task and thus eliminate energy wastage, making them one of the cheapest and most immediate ways to reduce the use of fossil fuels.
Businesses can switch to clean energy by taking small steps like using LED lighting in offices, using electric vehicles (EVs) for the transportation of their employees to bigger steps like combining heat and power systems to capture the ‘waste’ heat from power plants and using it to provide heating, cooling, and/or hot water to their onsite facilities, incorporating smart grids that use technology for real-time grid monitoring to improve the efficiency of electricity generation, distribution, and consumption.
3.Circular Economy: It is a model that runs on renewable energy with the goal of minimising waste. In a circular economy, materials are used in a closed-loop i.e. when a product reaches the end of its life, its materials are kept within the economy wherever possible by repairing, recycling, reusing. Thus, it leads to a recreation of value by extending the life-cycle of a product. This is a much more efficient model compared to the traditional linear model that relies on the take-make-consume-dispose pattern.
For example, companies can eliminate extra packaging, switch to reusable packaging, use eco-friendly materials like paper, cardboard, organic materials like cornstarch and bagasse in their packaging and allow consumers to return their products like worn-out clothes and shoes so that they can be refurbished and brought back into the market.
4. Green Supply Chain Management: As the name suggests it refers to incorporating environment-friendly techniques in traditional supply chain management. Thus, it includes green purchasing, green manufacturing, and green distribution Ethical sourcing of products, practicing lean manufacturing, adaption of ecological design, cleaner warehouse operations are a few of its components.
An interesting way to transition to a green supply chain is by using technology in the operations. Blockchain databases can be used extensively for tracking the materials. This not only helps in trimming excesses but also helps in responsible sourcing of natural resources Corporations are able to see where the raw materials are coming from and hence can take necessary action if they go against the sustainability principles.
5.Data Privacy: While traditionally, sustainability-focused on the above-mentioned factors, corporations today have access to huge amounts of customer data and hence data security and privacy have become important. While customer data can be mined to predict behaviour patterns and drive key business insights, organisations must ensure that they do so in a responsible and fair manner. They should obtain the consent of the customers to do so and must have policies in place to ensure that minimum data is being collected and it is being used only for the stated purpose.
One of the ways to minimise the risk of a data leak is to increase investments in cyber-security. Businesses can conduct data privacy audits to ensure that a third-party software code or a partner like an advertising company is not secretly pulling data. They should also give consumers a choice when it comes to data collection, communicate with them and provide a forum for complaints to ensure transparency in data usage.
The effect of climate change coupled with rising social and economic inequality have proved that adopting sustainability in business is the need of the hour. Many companies have designed their internal policies in accordance with the Sustainability Development Goals (SDGs) of the UN. In India, the Mahindra Group is driving the change (pun intended) through its work in the EV space, the Tata Group is practicing the Circular Economy principles by producing fertilizers through waste and reusing industrial by-products such as fly-ash in road construction and the Godrej Group is implementing its ‘Greener India’ initiative which has led to them successfully reducing the specific GHG emissions by 51%.
Greater awareness, higher incentives ,and the right policies will act as a catalyst for this change, and soon, it will be imperative for all businesses to adopt sustainability in their operations.
(Sanika is a Youth Fellow at MCCIA.)