Sustainability – a key driver for Kiwi companies - part one

by Dr Mark Wade

People often ask me exactly what sustainability means for companies. Put simply, it is about making sure you operate responsibly with regards the environment and society, and in doing so reap the benefits for your business. 

These include: reduced risk and costs; products that meet evolving customer expectations and regulation; enhanced brand and reputation; and a motivated workforce proud of what it does.

Those companies that can demonstrate their sustainability credentials will be more likely to be chosen by retailers and consumers and to differentiate themselves from the competition.

Sustainability is also a source of innovation necessary to meet the demands of the markets and regulators for cleaner, more ethical products and services.  Increasingly sustainability is not a “nice to have” but a market requirement in both developed and emerging economies.

So what is behind all of this? Right at the core is that the world simply can’t go on the way it is - using up resources at ever increasing rates and burdening the environment beyond its capacity to deal with waste. 

This is becoming ever more apparent as we face up to the fact that there will be a lot more of us very soon - up from 6.9 billion now to over 9 billion in the next 40 years.

This rise will be mostly in emerging economies. As people here strive for a better standard of living, there will be at least a doubling of energy demand (at a time of increasing concerns over climate change) and huge additional demands for basic resources such as food, water and other materials.  There will be increasing competition for these resources as supplies reduce.

The World Business Council for Sustainable Development (www.wbcsd.org)
has recently published its Vision 2050 which is for “9 billion people living well, within the resource limits of the planet.” 

It presents new opportunities for business in a broad range of business segments as well as spelling out the “must haves” – the things that must happen over the coming decade to make a sustainable society possible.

This shows starkly that we have to do things differently - to use resources much more efficiently, to recycle more and to find alternative energy sources.  In response, the world is starting to put a cost on carbon, to limit the effects of climate change, water, biodiversity and waste.

Companies are a vital part of the solution and they are under pressure to measure up from various quarters:

• Society is demanding that companies produce goods and services that address the needs of a sustainable world in a responsible, transparent and accountable way.
• Governments are introducing new policy and regulatory frameworks to manage resource use, limit environmental damage, ensure sound labour practices and drive social improvement.  Companies need to work within these strictures.
• Retailers and their procurement managers (the gate keepers to the shelves) increasingly demand sustainability credentials and proof of these along the whole supply chain. Suppliers that match up will be preferred.
• Consumer attitudes and buying habits are shifting to reflect their values – people want to feel good about what they buy and they are increasingly ready to ‘vote with their wallets’. 

Companies and CEOs that recognise and respond to these market realities will be best placed to survive and thrive.  Those that don’t, risk an erosion of their competitiveness.