How Does Your Organization Rank? Three Types of Sustainability-Oriented Businesses

When it comes to corporate sustainability, businesses often fall into three different categories. How would you categorize your organization?

Business leaders increasingly agree sustainability is here to stay. However, sustainability can be a daunting topic, leaving many businesses left in the doldrums wondering where to start. This article exists to guide businesses through sequential steps (with actionable items) to consider starting their sustainability journey.

This is the first article of a 10-part series titled “Nine Beacons to Chart Your Business Towards a Sustainable Future”. Download the full publication here.

The Starting Point: Anchors Away

For a variety of reasons, businesses are beginning to recognize the value of the sustainable enterprise. Whether you’re receiving pressure from customers, employees, or the global marketplace, the timing for a sustainability makeover couldn’t be better.

For example, did you know that 70% of young professionals would be more likely to stay with an employer containing a strong sustainability plan? Moreover, 40% of young professionals chose their last job based on corporate sustainability. Savvy business owners understand the advantage sustainability provides in attracting top talent through their doors.

Sustainability looks different for every business based on industry, size, and geographic location to name a few. There are infinite approaches businesses can take to address sustainability. Business leaders don’t need to have all of the answers right now. The most important part is signaling interest and a readiness to start.

A Sea Change

Have you ever altered the course of a 75-foot racing yacht? I haven’t either, but I’m told it can only happen with a coordinated team effort and tactful execution. And like that yacht, effective organizational change can only occur if everyone is on board. It takes a coordinated effort to agree to head toward the new direction together.

For a multitude of reasons, companies differ in their degree of integrating sustainability principles into their practices and culture. This is because the core corporate sustainability obstacle stems from balancing a Business’s operations, goals, and business model to meet the demands and expectations of its external stakeholders – as well as the aspirations of its employees.

As a result, sustainably-oriented organizations typically fall into one of three categories:

  1. Sustainability Leaders: Characterized by a balanced triple bottom line (TBL) approach. TBL means economic, environmental, and social dimensions carry the same weight of importance in all business decisions. Leaders have built strategies and practices around sustainability from the corporate level down through the supply chain. These organizations understand profit and sustainability are not opposing forces, but rather synergistic.
  2. Sustainability Practitioners: Acknowledge the importance of sustainability but don’t adopt a TBL-balanced approach. For example, agendas may be extremely focused on a single facet such as the environment or social challenges, but do not execute a balanced TBL strategy.
  3. Traditionalist Companies: Keep sustainability separate from business performance. For example, a company may decide to keep CSR initiatives independent from business operations, approaching sustainability through a philanthropy lens.

Recent research from MIT Sloan and the Boston Consulting Group found that, “over 90% of executives consider sustainability to be important. While 60% of companies have a sustainability strategy, only 25% have developed a clear business case for their sustainability efforts.”

This may explain why traditionalist companies represent the long-standing model for corporate sustainability. But does a traditional approach position your business to compete in a global marketplace as societal values continue to evolve? An increasing amount of business leaders don’t think so.

New Signals

The case for corporate sustainability is only growing. In recent years, we’ve noted monumental entrants to the sustainability conversation. For example, Larry Fink, CEO of Blackrock, raised investor’s eyebrows in January 2021 after issuing an open letter to CEO’s calling for action on “capital management, long-term strategy, purpose and climate change.” Blackrock manages a tidy $7 trillion investment portfolio.

He went on to conclude, “I believe that the pandemic has presented such an existential crisis – such a stark reminder of our fragility – that it has driven us to confront the global threat of climate change more forcefully and to consider how, like the pandemic, it will alter our lives.”

Research by CDP, a non-profit, discovered a link between business leadership on climate change and profitability. The report concludes, “Corporations actively managing and planning for climate change secure an 18% higher return on investment (ROI) than companies that aren’t – and 67% higher than companies who refuse to disclose their emissions.”

The benefits don’t stop at earnings. The report also cited a link to lower risk, concluding, “Companies investing in carbon reductions achieved a 50% lower volatility of earnings over the past decade and 21% stronger dividends than their low-ranking peers.”

The Tides are Shifting

Behemoth investors are calling for sustainability throughout the business community. The latest U.S. administration is calling on corporate emission reductions. Professionals increasingly seek work with sustainable organizations. The benefits for businesses to take a stance on climate change are mounting. 

The facts are out – sustainability is in. Can your organization afford not to act?

So how would you characterize your organization today? If you don’t claim “Sustainability Leader”, that’s OK! Is your organization interested in further embracing sustainability, but unsure where to start? Check out the next article in this series for suggestions on charting your sustainability journey.

For the entire picture, download the full publication below.

Are you ready to begin integrating sustainability into your business? Contact Solutions in Sustainability today to discuss your sustainability ambitions. We’d enjoy discussing which Solutions in Sustainability may be right for you.

About the Author

Alex Kaufman is a science communicator, clean energy specialist, sustainability nerd, professional engineer, travel enthusiast, and resident of San Diego, California. When not helping clients, you can usually find him cycling, hiking, reading, spending time with loved ones, or planning the next big adventure. He is open to speaking engagements. Contact him at alex@alexkaufmanpe.com.

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