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Sustainability as Economic Game Changer, Part II

For CEOs, the passport of sustainability delivers clear environmental, social and economic governance. As such, the sustainability passport assists in the protection against economic vulnerability through the momentum of changing market forces and mandatory reporting.

And, whilst most trends emerge slowly, or very slowly, sustainability is gaining traction across the globe, as its implications are felt across entire value chains. Companies tend to react to trends, or — as in the case of sustainability — continue to wait for legislation. Leave it too late, and it becomes almost impossible to mount a strategically effective response or to shape change to your advantage.

Sustainability evokes intimacy throughout the value chain, delivering functional improvement.

In addition, researchers rightly argue that the advantages resulting from social and environmental compliance with regulatory requirements are not a primary source of competitive advantage. For example: the mere fact of environmental compliance hardly allows a company to distinguish itself from its competitors, because most intra-industry peers are affected by compliance in a similar way. Real benefits to organizations will come from more rigorous forms of environmental performance that require changes in production and manufacturing processes, along with a long-view management style. Ultimately, proactive environmental performance within a company requires structural change in production and service delivery processes – such redesign involves development, acquisition and implementation of new technologies, which leads to economic advantages against competitors.

Besides, for a new era of deep customer engagement, customers no longer separate a company’s actions from the products and the brand. As such, sustainability has become part of the customer experience.

So, sustainability also buttresses the sales and marketing functions, assisting the company to move to deeper, dialogue-driven communications, strengthening the bonds the company has with its markets. After all, companies are accountable for the image they project to customers, suppliers, investors and other societal stakeholders. It follows – to an extent – that society gives legitimacy for the organization to exist, making sustainability critical for competitive advantage. Thus, sustainability becomes the key to driving business — as well as the efficiency and effectiveness of NGOs and Governments — in today’s world.

Likewise, organizations that persistently go out of their way to experience the world from their customers’ perspective routinely develop better strategies. Sustainability is a quality stakeholder engagement program of continuous improvement. Once embedded into the DNA of the company, the whole team shares and aspires to the ethos; customers and suppliers become involved in the process and support the strategy. This means decision makers must take themselves on the illuminating journey of sustainability, creating experiences which help them instinctively grasp the mis-matches that may exist between what the new strategy requires and the actions and behaviour that have brought success up to this point. By connecting the board, senior managers and employees, there is a support base for influencers to feel connected to the strategy.

Therefore, sustainability creates a positive halo for the brand amongst staff, developing the right experience, chemistry and attitudes for the staff to be proud, while creating the right spirit with which customers are engaged. Meanwhile, the development of robust reporting can be used as a business tool, leading towards managerial creativity around new ways of building brand and reputation to meet with the new customer and other stakeholder demands and expectations.

Similarly, experience is showing, as highly qualified eco-boomers come to the work market from university, they are choosing whom to work for with more consideration as to the values of the employer, making sustainability a major factor in decision-making. Business is having to adapt to the changing requirements and needs of the workforce and its ability to attract best talent as people revise their goals, priorities and expectations and as they look to make efficiencies in how and where to live and work. Moreover, with best talent there is a natural progression toward evolving products and services reducing customer impact and building further the bonds of trust and legitimacy to operate, delivering long-term value creation while moving away from the corrosive past economic and business models.

Equally, high quality human capital is a critical driver of productivity over the short as well as the long-term. Well-educated workers are able to adapt rapidly to their changing environment and the evolving needs of the production system.

Moreover, sustainability helps protect against the vulnerability of employee instability. For example: unequal and disengaged employees are more vulnerable to concerns related to job loss or age concerns, and it fosters discontent among those who are excluded from the benefits of the social and economic progress enjoyed by some. Thus, using gauges such as the Gini Index as a measure of income inequality in the business, it is also possible to measure how excessive inequality would be expected to have a negative affect on productivity. Therefore, sustainability bridges the gaps, creating cohesion, and supports sustainable competitiveness and productivity because it requires focus on economic performance, employee development and cohesion.

This further underpins the case for embedded sustainability, ensuring that goods, services, labor and financial capital are allocated in the most productive manner, which delivers technological readiness, business sophistication, and innovation, to represent both short and long-term drivers for competitiveness.

Surely, serving the best interests of the environment and communities can also be seen to be the right financial approach.

Read Part I of Sustainability as Economic Game Changer here.

Christopher Gleadle is author of Sustainable Growth Through Sustainable Business and founder & CEO of the sustainability performance agency  The CMG Consultancy.

Christopher Gleadle
Christopher Gleadle is a senior partner at the CMG Consultancy.
 
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