Sustainability vs. Economic Growth

Late last month US President Barack Obama announced a plan to begin offshore drilling, putting natural gas and oil platforms in the waters along the southern Atlantic, the eastern Gulf of Mexico and Alaska. He cites the need for short-term economic growth for agreeing to the plans.

The plan has outraged environmentalists and baffled many due to Obama’s previous commitment to sustainability.

Are organisations taking their lead from Obama, has the need for short-term economic growth overshadowed the need for a comprehensive sustainability agenda?

A couple of years ago sustainability was the corporate buzzword, leaders were examining their strategies to see how they implement more sustainable operations as ‘green’ products were in high demand, even at a premium price.

As the recession raged on consumers began to feel it in their purses and sustainable products were a luxury in which many were not indulging. The same can be said for organisations. The spend on sustainability agendas became disposable, as some companies were just attempting to survive. Many, like Peter Bonfield, CEO, Building Research Establishment (BRE), believe that those that would so easily let their sustainability agendas flounder just did not understand the benefit provided.

He says: “A significant new understanding is starting to develop amongst those businesses who ‘get’ sustainability.  It is not about good PR, glossy brochures or greenwash.  Being a company that is demonstrably more sustainable than competitors means more business, better brand credibility and more motivated employees.  The basic principles of sustainability of minimising the use of resources, minimising waste, optimising efficiency all reduce environmental impacts.  They also reduce costs and improve competitiveness, leading inextricably to better business success.  For those enlightened few, the realisation that environmental sustainability and business success go hand in hand is a delightful discovery.  A win-win. “

Creating shareholder value is the mandate for any public organisation, sometimes this value is formed by practices that can be unsustainable. But for those that have fully integrated ‘green’ strategies the value is in being sustainable.

“There is no conflict between a sustainability agenda and producing shareholder value, they work in tandem to produce more with less. This is true of simple items such as reduced energy consumption simultaneously saving the planet and business cost, more subtle issues such as customer perception as well as the generation of new technology or other business opportunities. To fully understand this it is often necessary to re-evaluate the timeframes and sources of value generation under consideration,” says Ian Stewart, Veolia Water Solutions & Technologies.

Although some consumers have forgone green products for cheaper versions, many organisations, such as Marks & Spencer, believe that their large push towards sustainability keeps consumers coming back.

Richard Gillies, Director of Plan A at Marks & Spencer says: “We believe sustainability is a key ingredient of business success. Plan A, our eco and ethical programme, has helped M&S become more efficient, develop new markets and build customer loyalty. It is therefore not just the right thing to do environmentally and socially but it is also the right thing to do for the business.”

It would be unwise to let go of one’s sustainability agenda, according to Claudine Blamey, Head of Sustainability, Segro, “In the current economic environment, sustainability provides another means to add value and reduce costs, so that organisations continue to be attractive to existing and prospective customers, employees and investors.”

If you are interested in the topic of this week’s newsletter please see the Insights pages for more articles and Write-ups. In Can we imagine an economic model where sustainability is the goal of business participants discussed the future of sustainability strategies.

Please get in touch if you have any comments about the issues in today’s update.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

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