Is Sustainability Affecting Business?

Thursday, November 19th, 2009

Sustainability is an increasingly significant issue for us all. 

Definition is the first challenge. Is it about mitigating the impact of climate change or is it about a wider set of issues and behaviours? What’s its application in the business sphere beyond the obvious considerations for mining, resources, utilities and property development sectors? What about the rest of us as responsible consumers and users of energy? Finally, what does it mean for how we understand and measure success and what we do to achieve it?

Accepting that sustainability is now an integral part of value creation and that there is real “first-mover” advantage means that addressing it and its implications is less about joining hands in community singing than it is about finding ways of creating competitive advantage to deliver value for shareholders and investors, identifying and harnessing opportunity for existing businesses and creating new businesses and genuine benefits for consumers and communities.

This is demonstrated in the recent MITSloan Management Review report on Sustainability and Competitive Advantage published in the Fall 2009 issue, which says: “Simply put, the more people know about sustainability, the more thoughtfully they evaluate it and the more opportunity they see in it — and the more they think it matters to how companies position themselves and operate.”

Many of its findings and conclusions are unsurprising, although nonetheless significant and revealing. Key among them are:

  • Rarely has there been an issue with the potential scope and impact upon business; 
  • While there are some significant success stories, many companies are struggling to tackle sustainability decisively and successfully; and
  • Lack of information, effective definition of the business case for value creation and flawed execution are key barriers to decisive, effective corporate action.

We’ve recently seen some interesting performances from a number of Australia’s senior and most vocal politicians around the issue of climate change in the context of the debate about whether Australia needs a CPRS, what it might contain and whether it needs one in advance of next month’s climate summit in Copenhagen.

The issues at hand deserve better treatment given the extent to which many of us, business included, are taking them seriously – and rightly defining sustainability more broadly than climate change and its implications.

There’s an old adage – “the best way to eat the elephant is one bite at a time”. It’s essential for businesses to think more broadly and proactively and begin to plan and act now.  And that’s what the report finds.

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