6 Reasons to Invest Strategically in Sustainability (Whelan and Fink)


 
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6 Reasons to Invest Strategically in Sustainability (Whelan and Fink)
Anneke Zwart, Student (University), Netherlands

Businesses are increasingly implementing sustainability in their operations. However, executives often remain reluctant to put sustainability at the heart of their business strategy, mainly because the business case for sustainable business can still not be made according to them. In other words, they believe that the costs of doing business in a sustainable way outweigh the benefits of doing it.
However, integrated sustainability efforts can create a positive impact on organizational performance. Whelan and Fink (2017) aim to support the business case for sustainability by drawing up following list of benefits.
  1. STAKEHOLDER ENGAGEMENT: Traditional organizations aim to create value for their shareholders, often at the expense of other stakeholders. On the contrary, new business models aim to incorporate all stakeholders of the business. This includes employees , supply chains, society and nature. It also aligns with the idea of Porter and Kramer of generating ‘shared value’, where economic value can be created by detecting and addressing social or environmental issues related to their business. The strategic value for sustainability comes from considering all stakeholders, and interacting with them on a regular base. Through continuous and regular dialogue with them, organizations are able to better position themselves and foresee changes on all dimensions when they arise. Falling short of considering the needs, concerns and desires of your stakeholders increases the chance of conflicts and reduces stakeholder collaboration. This in turn affects an organization’s overall performance. In that way, the aim for sustainability is in an organization’s own interest rather, than just being just an act of CSR.
  2. IMPROVING YOUR SUPPLY CHAIN, PRODUCTION PROCES AND DIMINISHING ORGANIZATIONAL RISKS: Supply chains nowadays are far more complex than before; they often involve multiple organizations and cross national borders. This implies that they are vulnerable to risks like climate change, national disasters, and other types of environmental, social and economic risks. Risks that manifest over the longer term, that are outside’s an organization’s control. They can disrupt supply chains and whole manufacturing and other production processes. Addressing social and environmental threats is needed to increase an organization’s ability to prevent and/or react on those risks. And this makes a case for sustainability, as it builds on long-term capacity and adaptive strategies.
  3. DRIVING INNOVATION: Investing in sustainability means investing in innovation when it leads to the redesign of invention of new products to meet social and environmental needs also lead to new business opportunities.
  4. FINANCIAL PERFORMANCE: Investments in sustainability can foster financial performance, for example by increasing competitive advantage. This may sound as a surprise, because it has long been the perception that sustainability cannot go together with financial improvements. But increasing the degree of sustainability can actually lead to costs reductions through increasing operational efficiencies (for example by better managing natural resources) and reducing waste. A focus on sustainability may also open opportunities for improved logistics and process efficiencies. There are plenty of other examples of sustainable investments driving financial performance.
  5. CUSTOMER LOYALTY: Consumers’ interest is shifting towards more sustainable interests: honesty and transparency are central values that are considered when choosing between products or services. Besides this, product performance of sustainable products is generally is high.
  6. EMPLOYEE ENGAGEMENT: Investments in sustainability with the aim of increasing environmental, social and governmental performance can increase statistics on employee retention, engagement and morale. Even more if we consider that employees emphasize moral purpose more than ever.
These six points help make a strong business case for making sustainability a core value and part of your business strategy.
Source:
Whelan, T. and C. Fink (2017) “The Comprehensive Business Case for Sustainability” HBR October 2016
 

 
 

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