3 dimensions of sustainability
As a small business, what can you do to make a positive contribution to the wider world when you are so focused on meeting the next deadline or paying the next bill?
Sustainable business is a big thing these days, but has many facets and is discussed differently by different communities. At policy level, outcomes are sought in three headline areas: economic, social and environmental. For investors, the focus shifts slightly to environment, social and governance (ESG). Coming down to company or individual levels, we must find practical steps to make a meaningful difference. For sustainably-minded companies, there is no shortage of guidance, action plans and even some certification schemes that set out paths to success. They tend to deliver first on the social or environmental gains, but we can’t afford to overlook the economic.
We see companies declare themselves as ‘driven by the environment, not by profit’ or similar. Whilst a noble thought, there is a risk that profit becomes demonised, and leaves a bunch of companies that are not sustainable economically, and so ultimately fail.
A practical response
To help companies form a practical strategy, I ask them to consider themselves against three balanced dimensions.
What the business does
Does the business sell products or services that are environmentally or socially positive? Whilst not everyone can make a device that sucks up carbon or magically repurposes plastic bottles, there are marginal gains that can be made across the wider range of non-directly-constructive products or services.
If your product is necessary in the market, then can it be designed in such a way that it is less damaging than its peers? If yes, then the company is evolving in a good way, or perhaps doing a least-worst thing whilst the customer need is still there. The business leaders should, though, pay attention to long-term risk management, and have strategies to pivot when the customer need disappears in favour of other alternatives.
In the services sector, there is an option to orient our services towards improving sustainability through our customers, and favour the net-positive companies to succeed with our help. This is a force multiplier, where our contributions can have a disproportionately positive effect.
How the business behaves
Regardless of the product, good choices in how the company does what it does can make a big impact. There are options all around us, with possibilities in sustainable sourcing, energy saving technologies, eco-friendly packaging and reduced waste. In the social dimension, there are choices around employment policies, working conditions, training and development that can be added to the good behaviours.
This is where most of the action is, but with so many options, it is possible to not see the wood for the trees. A lot of decisions can be made in this space, but they don’t have to be made all at once, and some may not be worth making at all, no matter how worthy they sound on the surface.
Good business management responds to a series of decisions that are well researched, logically made and implemented with purpose.
How the business performs
If the business has achieved some good credentials, there are competitive advantages that can be gained if they can be shared and promoted effectively. Certification schemes such as B Corp status help in this, and will evolve over time as the ‘kite-marks’ of responsible business so that like-minded customers can make informed choices.
Under the covers, the sustainable choices in design or behaviour may also carry additional costs. Understanding this plays back into the decision processes mentioned earlier, where operational performance responds to selected drivers, and the value trade-offs that must be made. If increased costs make the product or service uncompetitive, in spite of the upside potential, there is a risk that the company doesn’t sell and withers away. This is sadly the case in many well-intentioned businesses, and so a degree of pragmatism is needed, even if it goes a bit against the grain.
This is where some detailed research and analysis is most useful. Building scenarios and models of the business to inform decisions, and making the best decisions at the best times is as much a part of sustainable business as waste management, light bulbs and packaging decisions.
Not all businesses will be fortunate enough to score on all three dimensions. Some never will, but every company can make the most of the opportunities where they can. Some difficult choices may have to be made, but remember that a failed business is not sustainable in any sense at all.
It may be necessary to play the long game and build the vision one block at a time. With that in mind, the sustainable businesses that do succeed will be the exemplars for all that follow. As more go down the path, sustainability becomes normalised, and creates a more balanced and constructive market.