Sustainability Is about Long-Term Thinking, Planning & Profitability (Part I)
It occurred to me recently, while working with a client on a particularly sensitive issue, that perhaps we need some reminding about what weâ€™re doing and why weâ€™re doing it. Internal politics, power plays, word spin, data manipulation, income generation, and KPIs are all part of regular business activity and therefore are naturally also part of a sustainable business. They might sound like negative things, but all of us engage in these activities on a daily basis. Theyâ€™re part of doing business. Theyâ€™re an honest look at how we conduct ourselves in our daily lives at work, given that all of our jobs are to forward the mission and vision and goals of the people for whom we work. When it comes down to it, our jobs are to maximize the financial health of the business or organization that we work for. The same goes for sustainability initiatives.
If you work for an NGO or particularly socially-minded company, then itâ€™s a little easier to say that other issues besides money are emphasized in your business. Perhaps the company has a mission statement that includes sharing knowledge, or spreading good business practices, or any number of other admirable goals. But what it boils down to is,Â if it doesnâ€™t generate income either through profit-making activities or through fundraising, your business or organization canâ€™t survive and continue to work on its mission.
A Fairtrade Example
A few years ago I was consulting with a company who were considering switching their cocoa supply to fairtrade. I was asked to use my experience and expertise to vet their conversations with suppliers to ensure that they werenâ€™t getting ripped off or caught up in marketing spin. During my interview with them in the earliest stage of the process, I made it clear that although I am a fervent supporter of fairtrade both in principal and practice, and have spent the last 15 years of my life exercising my consumer purchasing power to support fairtrade wherever I find it, I cannot always support it as a business decision.
If a company decides to switch to a fairtrade ingredient, itâ€™s very likely going to cost them more than theyâ€™re currently paying. There are ways to minimize those new costs – a process which can often be Â revolutionary to a companyâ€™s purchasing process – but thatâ€™s really the point of fairtrade â€“ to change the way the world does business (besides also guaranteeing fair wages for the workers and farmers who grow and process the ingredient in question). However, if a fairtrade ingredientâ€™s additional cost burden is going to be passed along to the consumer – who could potentially turn away from the product and perhaps the entire brand because of the extra cost – then itâ€™s not an intelligent business decision. No matter how much you believe in fairtrade and no matter how much you want to support fairtrade, running your business and your brand into the ground over the course of a few years is not an intelligent decision, no matter how you look at it.
Sacrificing for Resilience
The same lesson can be taken for sustainability initiatives. True sustainability is about the longevity and resilience of a business, a brand, a workforce, and the loyalty ofÂ a customer base. There are of course all the climate change issues, the rising prices of commodities, the destruction of natural resources, and so on. But the business has to survive in the long term by generating revenues to meet all the stakeholderâ€™s needs. Issues like â€śfood milesâ€ť and â€śbuy localâ€ť and â€średuce packagingâ€ť are all interesting in a vacuum, but as part of the larger business decision they are not always the best way for a company to go. Long-term profitability for a business may mean some sacrifice of short-term profitability, and asking the question as to whether it will be worth it in the end. Resilience means protecting the reputation of the business or the brand, reducing risks (to reputation, as well as to the bottom line), and thinking beyond the next quarterly reports. Getting caught up in the latest and greatest trend can often backfire and lead to more difficulties over the long run.
Step Back a Second
I would challenge readers to try to step out of the trees and look at the forest for what it really is. Step back from the quarterly KPIs, the pet projects that youâ€™re trying to get funded, the spreadsheets of data with teeny tiny fonts, and even the beautifully written mission statement that inspires you when you need a boost, and imagine what the company you work for might look like in 5 years, in 10 years, and even in 20 years:
–Â Â Â Â Â Â Â Will the brand that youâ€™re working for be around?
–Â Â Â Â Â Â Â Will the materials that youâ€™re purchasing still be available? And at what price?
–Â Â Â Â Â Â Â Will the business be in a leadership position, or trailing behind others?
–Â Â Â Â Â Â Â What can I implement today to ensure the resilience and longevity of my business and brand?
–Â Â Â Â Â Â Â What obstacles are in my way now that I could find a way around?
–Â Â Â Â Â Â Â What culture shifts does my company need to embrace in order to survive?
–Â Â Â Â Â Â Â What feels insurmountable today, but might be doable tomorrow?
Sustainability is about long-term thinking, long-term planning, and long-term profit making. Without profit, the business becomes obsolete. And without the business, you wonâ€™t have a job, neither will your neighbors, and neither will your children. Sustainability is about the future, itâ€™s about using resources intelligently, and itâ€™s about ensuring that youâ€™re able to maximize profit while reducing costs, and benefiting as many stakeholders (employees, customers, suppliers, shareholders, janitors, and executives) as possible.
In my August column, weâ€™ll take a look at how to get the C-Suite on board to make the sustainability sacrifice. Watch this space!
Sara Pax is the president of Bluehorse Associates, a developer of environmental sustainability metrics solutions specialized in the food and beverages industry, featuring the Carbonostics suite of web-based applications for carbon & energy accounting and reporting, product portfolio assessments, product carbon footprinting, and lifecycle analysis. Carbonostics received a 4.5 star rating in the 2013 Environmental Leader Technology Review. For more on Carbonostics â€śbest-in-classâ€ť technology, visit: www.carbonostics.com
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