What is the purpose of business?
The traditional answer to this question is quite simple. The purpose of business is to make money. Yet in today’s complex economy, the operations of businesses significantly impact our world beyond the simple idea of the bottom line.
Firms in any industry touch our livelihoods, the economic well-being of our communities and the health of our planet through their everyday operations.
And yet, how’s a leader supposed to deal with this added complexity? Aren’t we all busy enough already?
Paying attention to a broader scope of responsibilities probably seems impossible and possibly even unnecessary. Not the case. The challenges of the 21st century are requiring businesses to develop fundamental changes in the way they operate.
Many organizations recognize that the continued ability to carry out their operations is occurring within a system (our world) that has limits. Issues such as climate change, natural resource depletion and the energy crisis are hitting organizations head on and require attention be paid to aspects of the business beyond quarterly financial results.
It is no longer acceptable to simply maximize short-term shareholder value — instead, firms must pay attention to the economic, social and environmental impacts of their operations — often referred to as the “triple bottom-line” or sustainability.
Sustainability is a fairly new concept in the business arena. The most frequently cited definition of sustainability, adapted from the “Our Common Future” by the U.N. World Commission on Environment and Development, 1987, is “Operating in ways that meet the needs of the present without compromising the ability of future generations to meet their own needs.”
John Elkington, author of “Cannibals with Forks: The Triple Bottom Line of 21st Century Business,” states “Sustainability is the emerging 21st century business paradigm” because it provides solutions for the overwhelming and increasingly complex issues facing our local, national and global organizations.
Some call sustainability the “price of entry” for businesses looking to compete for the long run.
Sustainability’s scope addresses all aspects of an organization — from research and development of new products that do not emit toxins or use non-renewable materials to innovation and creativity, where organizations figure out ways of utilizing or minimizing waste to marketing and advertising that addresses or supports local issues and social causes to increased stakeholder engagement, creating dialogue with community partners, suppliers, competitors and customers.
Sustainability is quickly becoming a fundamental market force — ignited through customer, shareholder and stakeholder demands. Wall Street has awakened to the need for sustainability and is paying more attention to issues relating to environmental impact, business ethics, social responsibility and social equity.
An example is the development of the Dow Jones Sustainability Index. Companies like Nike, Hewlett-Packard and British Petroleum recognize that sustainability offers a strategic competitive advantage and have made significant changes to modify their supply-chain, product development and manufacturing strategies — as well as many other company processes.
Locally, we have organizations that have been named to the Global 100 Most Sustainable Corporations in the World (www.global100.org). These include: Agilent Technologies, Hewlett-Packard, Toyota, Volvo and UPS.
And yet, the view that sustainability is an imperative for business is not limited to Wall Street companies.
The U.S. Army has linked its ability to carry out its mission to adopting sustainability practices and has undertaken a major effort to ensure sustainable operations at each of its installations. Our local Army post, Fort Carson, actively embraces the sustainability agenda and has a comprehensive sustainability program with aggressive goals such as “reducing the total weight of solid and hazardous waste to zero” and “reducing the total weight of hazardous air pollutant emissions to zero.” Visit http//sems.carson.army.mil for more information.
The post has held an annual sustainability conference for the past five years, inviting stakeholders from the state, local community, government, education and business organizations to discuss and collaboratively learn more about the workings of sustainability.
The University of Colorado at Colorado Springs is integrating sustainability into both the operational and educational side of the school. Linda Kogan is the sustainability officer, managing efforts to bring sustainability to the facilities, operations and culture of UCCS. On the educational front, a sustainability minor is now being offered to undergraduate students.
Other local organizations addressing sustainability include Wisdom-Works (www.wisdom-works.net), a leadership and executive development firm who’s goal is to “develop 21st century leaders and the companies they lead toward progressive thinking and authentic business practices through a healthy, sustainable and holistic approach” and the Center for Creative Leadership (www.ccl.org), currently conducting research about “Leadership for Sustainability” and including a focus on sustainability in its executive leadership development programs.
Indeed, we might be reaching what some call “the tipping point” for sustainability.
Hopefully you’re asking, “How do I get started with sustainability in my own business?”
Many of the organizations pursuing sustainability utilize frameworks to help guide them in their journey, offering practical advice for implementing sustainability.
The first framework, mentioned earlier, is that of the “triple-bottom line.” John Elkington suggests “the triple-bottom line focuses organizations on the economic value they add, but also on the environmental and social value they add — or destroy, demanding a whole set of values, systems and processes that take into consideration the needs of all the organization’s stakeholders — shareholders, customers, employees, business partners, governments, local communities and the public.”
Of course, paying attention to the triple-bottom line factors is not necessarily easy; it is important for leaders to recognize the emphasis on each factor is not always the same or equal for each component. These factors are integrated and require different levels of consideration at different times and in different situations.
The important thing is for leaders to rethink and reconfigure their organizational processes in ways that pay attention to triple-bottom line impacts. As an example, many balanced scorecards now incorporate a triple-bottom line perspective.
Another framework that is helping many organizations implement sustainability agendas is “The Natural Step,” (TNS — www.naturalstep.org). Based on the premise that sustainability is “fundamentally about maintaining human life on the planet and that life is fundamentally supported by natural processes,” TNS has developed four principles, or system conditions, to help organizations put sustainability into practice.
The Natural Step sustainability principles are based on science and supported by the analyses that ecosystem functions and processes are altered when nature is not subject to systematically increasing:
1. Concentrations of substances extracted from the Earth’s crust (oil, coal and metals such as mercury and lead)
2. Concentrations of substances produced by society (dioxins, DDT and PCBs)
3. Degradation by physical means (over-harvesting trees or fish), or by other forms of ecosystem manipulation (paving over fertile land or causing soil erosion).
Recognizing that social and economic factors drive actions leading to environmental impacts, the fourth TNS principle is “meeting human needs worldwide as an integral and essential part of sustainability.”
These principles offer frameworks for organizations to view the “whole system” of their organization — resources, impacts, throughputs, outputs and relationships. They also offer a common language and helpful lens for decision-making and strategy setting.
Organizations that work with TNS and TBL have used these principles to achieve significant competitive advantages and benefits that include:
Other helpful sources of information addressing how to bring sustainability to your business include the World Business Council of Sustainable Development (www.wbcsd.org) and Business for Social Responsibility (www.bsr.org).
Within Colorado the CORE group (www.corecolorado.org) is the “leading sustainable business trade association that enhances the economic vitality and competitive positioning of its members by assisting them in integrating socially and environmentally responsible business practices into profitable commercial enterprises.”
Marcel Proust once said, “The real voyage of discovery consists not in seeking new landscapes but in having new eyes.”
Hopefully, the sustainability agenda will provide your leadership and your business with new eyes, hope and a new purpose for business.
Laura Quinn Ph.D. is a senior associate with the Center for Creative Leadership and leads the center’s research efforts on “Leadership for Sustainability.” She can be reached at firstname.lastname@example.org.