By Richard Spencer, the ICAEW’s Head of Sustainability and a Shortlist Panel judge for the National Business Awards
Sustainability is not just about switching off lights, recycling paper or even allowing staff to volunteer for local charities. A truly sustainable business is one that looks at every aspect of their business and considers what needs to be put in place to ensure that the business as a whole is put on a sure financial footing, does not harm the planet, invests in staff and has the sound basis for growth.
This might sound daunting but the rewards for developing and embedding sustainable practices will have a direct effect on the bottom line.
Yet some business people still think that sustainability initiatives are just distractions from the real social responsibility of business: making profit. They worry that being ‘socially responsible’ will harm the company’s bottom-line edge and damage their competitiveness.
Many businesses have a legitimate fear: if they go ‘beyond compliance’ and take on a mantle of responsibility then it will squander resources on activities which produce a weak return, if any. Then the company will lose out; blunt its competitiveness and waste shareholders’ money.
But sustainability issues affect shareholder value in both the long and short term. The opportunity is to lead the market so that actions which make business sense also make sustainability sense. Some of this is about sensible risk management. It is also about spotting the opportunity for new markets.
To date, the business case for sustainability has sometimes been weakened because it is based on the marginal improvements in eco-efficiency. While these investments often pay their way, companies could often get much greater returns by investing elsewhere. Many companies are now realising that that there are much bigger gains to be made from more radical repositioning. The opportunity is to lead the market so that actions which make business sense also make sustainability sense.
There are a range of reasons why companies are slow to embrace this agenda. Some have major amounts of capital sunk in old ways of doing things from which they want to extract maximum gains. Other factors include organisational inertia, culture, and training or education that only equips people for the current ways of doing things. Often the current approach may be producing good enough returns so they feel there is no reason to try harder. But this ignores any changes that are just around the corner. There is money to be made in positioning well. And there is plenty of money to be lost through getting it wrong.
Finally, when we look at future trends it is plain that the question of sustainability is a fundamental part of the operating context for any company. Businesses can choose to ignore that at their peril. Or they can use it as an opportunity to build the best future for their business.
The hunt is on for organisations that can demonstrate the impact of their sustainability policies on people, profit and planet. For information about the ICAEW Sustainability Award, and how to enter, call the Entry team on 0207 234 8755, email email@example.com or visit www.nationalbusinessawards.co.uk
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