This typically involves an entire department or product line being positioned according to sustainability usually because it makes business sense to do so. Definition: Business Sustainability Business sustainability is a strategy that prioritizes the long term survival of a business and connected ecological, social and cultural systems. One common source of competitive advantage for companies adopting strategy 4 is its culture. While there might be other factors that differentiate the firm in the marketplace (e.g. One has to have a sense of humour to not balk at the company’s initiative to raise money for child food education by selling sugar-laden cookies through their Smile Cookie Program. Sustainability needs to be incorporated into corporate strategies and reflected in organizational business goals. From a performance appraisal point of view, only a selected group of employees, managers and directors would be held accountable for performance indicators related to sustainability. Unlike companies adopting the third strategy where sustainability related capabilities are confined to one department or small group of employees, capabilities are often at the firm level, crossing functional areas as employees, in their daily behaviour, interact in ways that create innovative forms of value for consumers and other stakeholders. When aligned, these three components produce the coveted sustainable competitive advantage, which is defined as a firm’s ability to persistently create more economic value than the marginal (breakeven) competitor in its product market,  Let's examine each in turn. In response, CEOs regularly tout their efforts to “embed” or “weave” sustainability into their operations and culture as the ultimate commitment[v] while scholars and practitioners have offered a number of prescriptions to achieve this objective[vi]. Consider gun manufacturers, tobacco companies and weapons manufacturers, all of whom have developed strong competencies related to their products whether it be design innovation, the manufacturing process, or logistics. Imagine that, organic farming in the middle of the desert. Under the defense strategy, improvements are limited by an improvement ceiling because the process or product itself is oftentimes inherently unsustainable. Tim Hortons recently did this. Any public criticism of the firm is deflected as managers vehemently deny any wrongdoing or responsibility. Why? The following business sustainability strategies take organization, data, communication, resources, and technology to put into place — and a little compassion for the planet never hurts. The following business sustainability strategies take organization, data, communication, resources, and technology to put into place — and a little compassion for the planet never hurts. In fact, companies adopting this approach are heavily reliant for their success on practices that are particularly corrosive to social, ecological, and economic systems. But over the last few decades amidst the rise in devastating natural disasters, labor scandals, massive oil spills, and trash-islands floating across the ocean, consumers AND businesses started paying attention. It is important to note that companies will exhibit behaviour that spans some of these strategies. One response is to engage in philanthropic activities that are more associated with the impacts of their operations. profitability and competitiveness) while operating within the capacity, or contributing to the integrity, of social, economic, and ecological systems. From a competitive positioning standpoint, sustainability represents THE key differentiating factor among competitors. Why Is Sustainability Important? It’s the job of the analyst to put these initiatives together to pull out a overarching strategy that defines their positioning, core competencies, and internal culture and identity. This has further led to increase in usage of resources and thereby increase in environmental impact. One of the ways to understand these differences is to consider them in the context of strategic adoption levels where sustainability in the firm varies according to its role in positioning the company in the marketplace, representing lucrative competencies that are difficult to imitate, and creating a particular culture and identity that aligns with sustainability. 5 Business Strategies for Sustainability The term sustainability or corporate social responsibility has grown increasingly prevalent in corporate boardrooms and on executive agendas. Once you apply sustainability issues to the supply chain, you’ll see how complicated improvements can be considering how many components to a single supply chain can exist — just think about coffee production or material sourcing from a far off country, not only do thousands of miles stand between you, but those miles are chalk full of individuals working the chain. Unlike the previous strategy where the focus was on diffusing sustainability within the firm, the focus in this strategy is facilitating more sustainable practices outside the firm. 1. Any involvement in social or ecological issues is relegated to philanthropic contributions that have very little to do with the firm’s core operations. [iii] P. Lacy, T. Cooper, R. Haywood, and L. Neuberger (2010) op. Owing to globalization, nature of business operations has undergone a huge change. Economic systems would encompass the global financial system, income equality, the free flow of goods and services while social systems might include things like the proper functioning of civil society, low poverty rates, the education or health systems, social justice, or the food system. These companies often refer to how close they are with their fellow employees, how collaborative they are in their work, and how there is very little politics that erode workplace performance. Food manufacturers have either developed their own highly sustainable products or they might purchase healthy brands such as PepsiCo’s purchase of Naked Juice. If they pursued philanthropy for projects meant to counter the negative impact of their operations, they would be admitting guilt to a degree. Big banks, at least in Canada, have avoided this low end market because, although legal, they do not want to position themselves in such a way that leads to outcomes that can be perceived by many as exploitative. Another interesting dynamic associated with competitive positioning for this strategy is that the rivalry among competitors that typically exists in strategies 1-4 is much lower. This can go as high up as a Vice-President as in the case of Centerra Gold where there is a VP – Sustainability & Environment. About Tima Bansal. In fact, their source of distinction represents a key erosion of social, ecological, and economic systems. sustainability planning, and sustainability factors use. Patagonia, for instance, is a good example of a company that has clearly differentiated itself from competitors like North Face or Timberwolf. Today, more than 90 percent of CEOs state that sustainability is important to their company’s success, and companies develop sustainability strategies, market sustainable products and services, create positions such as chief sustainability officer, and publish sustainability reports for consumers, investors, activists, and the public at large. I would love to say, “It’s simple, really!” but alas, if mastering global sustainability was simple – well, then, there would be no need for writing this article at all. In the end, corporate sustainability needs to adapt to the maturity of the business and the company’s willingness to treat sustainability as a strategic opportunity. A firm’s strategy can be determined using three factors:  1) its positioning in the marketplace relative to competitors, 2) its core competencies that differentiate it from those competitors, and 3) its underlying culture that clarifies to employees the underlying purpose and identity of the organization, supported by structures, processes and policies. cit. SEKEM is an organic conglomerate located just outside Cairo, Egypt that specializes in agricultural commodities for a wide range of industries. In this example, the product category is not associated with Clorox in the minds of the consumer but nevertheless represents an important strategic endeavor by the firm because it responds to a growing demand for green cleaning products. Common across the acquisition versus greenfield approach to sustainability is that there is potential, however remote,  for these initiatives to gain greater traction in the organization. These strategies include corporate governance, employee development, innovation, and systematic improvements. customer service), stakeholders consider the firm’s primary value proposition to be related to its commitment to sustainability. Other businesses may simply consider sustainability to be one of the many things that they do and don’t hide the fact that there is a contradiction because, in their mind, they are simply responding to the highly diverse set of demands in the marketplace at the time. But if you are contributing to your environment and community in unsustainable ways, everyone will notice — and not all press is good press. This is an excellent example of avoiding changes to their core operations of food and instead launching philanthropic initiatives to show that they care about these issues. Meta-organizations are unique networks of organizations in that they organize actions around a system-level goal but are not bound by formal authority relations. The era of stand-alone sustainability strategies, with subsequent integration of sustainability into company strategy, needs to end; the creation of resilient business strategies that take sustainability as their foundation needs to begin. This helps them defend their operations because they can lay claim to the fact that they are at least redistributing some of the profit associated with these operations to various causes that work to stem their effects. The business case therefore evident in the need for a company to meet the needs of a growing niche market that wants consistency in their offering. Part of this variation can be explained by the lack of standardized definitions available, leaving the movement open to various managerial interpretations that influence the type of responses by a given firm. If sustainability exists in an isolated department, employees not in this department often consider sustainability to be irrelevant to their daily operations. ACCTivate! In addition to combining forces to innovate, competitors and players along the supply chain (customers and suppliers)  often come together to self-regulate in ways that governments have struggled. But in most cases, the highest position tends to be at the director role as is the case at Loblaw Companies. Unrelated to food health, the association representing fast food restaurants launched an ad in Times Square denying any responsibility for the growing dependence of their own employees on government assistance and arguing against any need on their part to increase employee pay to a living wage because these employees have no skill or experience and are often lazy. Most, if not all, levels of the organization have performance indicators related to sustainability and decision-making processes incorporate social and ecological indicators. In a study of 766 CEOs worldwide, KPMG concluded “that sustainability is truly top-of-mind for CEOs around the world” [i]. When companies fail to assume responsibility, the opposite can happen, leading to issues like environmental degradation, inequality, and social injustice. More importantly, these companies need to understand how to develop a network or ecosystem of actors that are connected and interact in ways that can create the necessary creative destruction that warrant changes in behaviour among all these actors. Wal-Mart’s positioning is the low cost leader while Apple’s positioning is innovativeness and high quality. A more accurate term to define what is needed for strategy 5 is a meta-organization. Background. This means making this a priority in every aspect of organizational operations. Culture is often defined as a set of values and belief systems that guide individuals in a particular group or organization. More common though would be a particular positioning that very much relied on the erosion of social or ecological systems where denial of responsibility is oftentimes the only option. Consider the diamond mining industry where several leading diamond mining companies partnered to impose peer pressure on the industry to stem conflict diamond mining. For instance a company might engage in philanthropic activities that are both related (defensive) and unrelated (denial) to their operations or they may both defend against the impact of their operations while still having a department that contradicts the seemingly careless operations of other departments (isolated). As a result, companies adopting this strategy will not necessarily lay claim that their positioning embodies sustainability but they will tout their efforts to make this a core part of their strategy by reflecting on the resources allocated to efforts to challenge certain sections of their products/services and operations. The global population is expected to reach 8.1 billion by 2025. They command a premium price for their products but the philosophical value alignment they facilitate for their consumers justifies the price increase. Start a conversation with a specialist today to learn more. The Equator Principles is a similar platform through which major global banks, including CIBC and Royal Bank of Canada, agreed to prohibit any loaning of capital to projects in developing countries of the world that carry substantial social or environmental risks to its citizens. Steve Jobs), specific decision-making processes, unique products, a strong brand, innovation practices, intellectual property, highly valuable machinery or low cost operations. The companies in this category are therefore dependent on unrelated philanthropic initiatives that aim to distract stakeholders from the impact of their core operations. Most businesses don’t possess a deeper understanding about sustainability. At Next Now Strategies, we help organizations and leaders drive growth, profitability and trust through value-led strategies that keep our planet and society in balance. When done successfully, the strategic benefits become quite lucrative for businesses that adopt this strategy. Nike in the 1990s denied responsibility for the growing instances of labour issues in developing countries because the suppliers making their products were distinct entities and therefore not under the responsibility of Nike. Because change starts gradually, and even taking one step to become a more sustainable business, is still one step towards change. [ii] KPMG found that 95% of the top 250 companies report on sustainability. Performance evaluations are tied to cost reductions efforts that just so happen to be associated with environmental system improvements for instance, but there is very little in the way of accountability towards social and ecological goals across levels of the business. Finally, Toyota introduced a vehicle part that removed completely the need for a particular toxic mineral. Incidentally, many firms do well with this strategy partly because of a number of third party ranking bodies that tend to be more attracted to key initiatives undertaken by the firm in contrast to the extent to which the firm lives and breathes sustainability. Wal-Mart, McDonald’s, Starbucks, and Google, no matter how genuine they might be or how embedded sustainability might be internally, can only push the envelope on sustainability if they facilitate change among multiple, highly interconnected actors in their supply chain and industry. We can see similar types of initiatives in the social realm as well. **Make sure to scroll for links to several organizations helping businesses better their supply chain & business sustainability**. Internally then, firms adopting strategy 3 demonstrate isolated yet highly lucrative competencies that are more typically found in pockets of the firm. Sustainability might be isolated in an organization in a variety of ways. In their attempt to distinguish a firm between strategy 2 and 3, students of business need to examine to what extent these initiatives represent a substantial part of their strategy or, as the second strategy described, do they instead represent a means to mask the system degradation of their traditional operations. 2. A mining company, as another example, might take a much more comprehensive approach to community development surrounding one or two of their mines but relies predominately on donations and philanthropy on the remainder of their mines. Ally holds a bachelor’s degree in English from the University of Texas at Arlington. Although growing more rare, companies may actually promote this positioning as did low end burger chains like Harvey’s or A&W that went with a positioning that countered any need for healthy food by allowing consumers to indulge to avoid any compromise on taste. Third, sustainability might be isolated to a particular set of product lines where it represents a relatively small percentage of revenue. They may have a particular product that is so revolutionary in its benefit for the environment or consumer health that, despite their other operations, represents a highly innovative capability that could be replicated internally in the firm but is hard to replicate by competitors. That is, 20-30% of an employee’s daily routine might be associated with activities related to sustainability. Here the purpose is to build social goodwill to oftentimes combat any negative publicity that might be associated with their core operations. Bottom line is that while the core competencies associated with sustainability might be isolated from other competencies that conflict with sustainability, this strategy is the first of the five to show strategic relevance of sustainability. But a key difference from the fourth strategy is that their focus wasn’t just on embedding sustainability, it was about rewriting the regulations associated with the carpet industry by demonstrating that more sustainable modes of manufacturing carpet were possible. [iv] Bonini, S. “The business of sustainability”, McKinsey and Company (2011), [v] For example, Coca-Cola states, “Our next step is to embed sustainability into our strategic planning process”, Nestle explains, “All business units are now encouraged to embed Creating Shared Value and sustainability into their business strategy and consumer communication”; Wal-Mart held a conference on “How to embed sustainability into your organization”; Royal Dutch Shell chairman said, “Under the recognition of Shell that began when I became CEO in July 2009, we embedded sustainable development firmly into our business”; British American Tobacco stated that they are “Working to embed sustainability in the business” while Philips Corporate Communications says “You have to embed sustainability in your organization”, [vi] Examples include I. Andersson, S. Shivarajan and G. Blau, “Enacting ecological sustainability, in the MNC: A test of an adapted value-belief-norm framework,” Journal of Business Ethics, 59/3 (2005): 295-305;  W. Blackburn, The sustainability handbook: The complete management guide to achieving social, economic and environmental responsibility (Washington, DC: Environmental Law Institute, 2007); K. Buysse and A. Verbeke, “Proactive environmental strategies: A stakeholder management perspective”, Strategic Management Journal, 24/5 (2003), 453-470; B. Doppelt,  Leading change toward sustainability. Another example might be a manufacturing firm’s use of a new technology that cuts emissions by 90% such as Vale Inco’s supposed plans to use a carbon sequestration scheme in Sudbury, Ontario that would replace one of Canada’s largest smokestacks. Sustainable Business Strategies is a consultancy founded in 2005 by Andrew W. Savitz, author of The Triple Bottom Line and formerly a lead partner running PricewaterhouseCoopers’ sustainability consulting practice. negative externalities) or finding ways to reinvigorate and improve these systems. Proudly created with Wix.com, The term sustainability or corporate social responsibility has grown increasingly prevalent in corporate boardrooms and on executive agendas. That said, research has shown that companies can be categorized into specific adoption levels of sustainability according to important organizational dimensions. The Fair Labour Association, The Kimberly Process and Wal-Mart Labs are examples here. Almost all public companies and most non-public companies lay claim to the notion that they are doing something to preserve these systems either by minimizing harm (i.e. While many “green” consultants focus primarily on helping clients “do good,” we are laser-focused on helping our clients “do well” through value-added sustainability strategies, best-in-class public policy insights, clean energy transaction development, stakeholder relationship management, and detailed market and issue analyses. As a marketing communication specialist at Alterity, Ally is able to bring her passion for writing, speaking, and communication to life. Several investors … The earth, on the other hand, is not expected to gain any more acreage at a whopping 197 million square miles — 71% of covered by water, and the remaining 29% by land. What sort of sustainability strategies for business can we put in place while maintaining the integrity of our bottom line? Associations representing restaurant or food production companies are often heard arguing that the unprecedented growth of food-related health problems is hardly a problem of the food itself but much more a problem of personal responsibility and a deficit in exercise. My name is Ally Long. Internally, core competencies remain associated with practices that are associated with system degradation. Luckily, we’ve managed to make the most of what physical land we have, and who knows, maybe floating houses are the future….and we always have Mars as a back-up plan. Complexity is important when considering internal competencies because the higher the complexity of a given competence, the more difficult it is for a competitor to copy or substitute it. Simply put, sustainability is a business approach to creating long-term value by taking into consideration how a given organization operates in the ecological, social and economic environment. But evidence in the last decade suggests otherwise. After the Industrial Revolution, business owners across the globe didn’t spend too much time stressing about their potential impact to the planet and its people, and who can blame them? The innovativeness of meta-organizations as alternative forms of organization to traditional hierarchical organizations bestows on them an advantage in coping with the complexity of sustainability. In other words, companies are starting to lose the argument that they are not responsible for system degradation and so want to show that they are responding to pressures of stakeholders, especially consumers. Competitive positioning becomes one of leadership where competitors look to the company for the next wave of technological innovation that they too need to adopt or, at least, be mindful of the market’s response to what the company is doing. Vehemently deny any wrongdoing or responsibility globalization business sustainability strategies nature of business operations for the term... 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