Nathan Ball

Organisations are facing increasing pressure to devise and introduce a sustainability strategy. Or a ‘corporate social responsibility’, ‘creating shared value’, ‘environmental’, ‘workforce and/or integrated’ strategy. There’s mounting evidence that simply being a good corporate citizen that identifies, prioritises and acts on aspects of business beyond conventional profit making and cost margins makes sense financially, aids reputation, can assist in increasing market share, and appeals to the growing ‘conscious consumer’ class.

Regulation has often been used to protect or conserve ecologically sensitive areas, or wind back damaging practice. For many years product stewardship laws in Europe and Asia have been strict and aspects of these have filtered to other parts of the world.

It was worked out pretty quickly that CFC production and their release into the atmosphere was leading to the breakdown of the ozone layer. Some swift international diplomacy saw the Montreal Protocol introduced in 1987 and government, private organisations and the public embraced the scientific evidence and moved quickly  to implement the changes required.

Today, the ozone is in much greater shape thanks to this action. Less fortunately, it’s  difficult  to find an environmental or sustainability issue that Australia is leading the world on.

The recent passage of the clean energy future legislation package (aka, ‘carbon tax’), highlights the reality that regulation is likely to become more onerous both domestically and internationally. Organisations that can identify likely regulation changes in the future, spot the opportunities and act on these, are likely to be well placed to succeed financially and ensure their own long term sustainability.

The recent and ongoing financial woes around the world has led to investors having an increased interest in the performance of organisations that perform well in their communities, conscientiously manage resources, map and understand their supply chain, and develop robust and meaningful CSR or sustainability strategies.

‘The Impact of a Corporate Culture of Sustainability on Corporate Behaviour and Performance’ (Eccles, Ioannou and Serafeim, 2011) examined the performance of ‘high’ and ‘low’ sustainability groups and found that those in the high bracket ‘are able to significantly outperform their counterparts in the low sustainability group’.

This study found that organisations with a corporate culture that of sustainability and supporting policies and plans resulted in ‘significantly higher profits and stock returns’.

Transparency through reporting,  to investor groups and fund managers, but also through meaningful two-way stakeholder engagement with employees, communities and suppliers, requires time, effort and resource from an organisation. However, it generates credibility in the organisations operations and can help improve market performance.

The energy and resource sector has faced, and still faces, some critical social licence to operate issues. Recent deforestation, phone hacking and executive pay scandals around the world are driving a desire for insight into decision making and the decision-making e, no matter how sensitive or divisive this may be.

For other organisations, the desire to differentiate themselves in the market, either through an ethical approach to running their business and making decisions (almost always coming from the very top), an incisive view to what the future holds, or simply the business case of doing more with less (see ‘The Sixth Wave’), drives their sustainability agenda.

There are plenty of organisations in Australia and globally who have implemented successful sustainability or CSR strategies. There are also plenty who weren’t so successful – these are often the stories that CEOs, CFOs, Boards and Senior Managers are likely to remember and bring up when the topic of sustainability is raised for the first time at their workplace.

Auden Schendler, in his great book ‘Getting Green Done’ tells his story from the ‘frontline’ of sustainability, where every success is met with many challenges and setbacks. As he says, ‘if sustainability was easy, everyone would be doing it’.

The day when every organisation is driven by ethical decision making and putting stakeholders (including future generations) at the centre of decision making is still some way off. Still, credit must be given to those who have made the decision to become a sustainable organisation and blaze a trail  divergent from conventional business thinking.

Some of the leading sustainable organisations in Australia and around the world include Westpac, Stockland, Samsung and PepsiCo International through a range of initiaitves that have become core business including sustainable supply chain systems, improved environmental standards for development, reduced the use of pollutants and/or established broad community investment or social partnership programs. Each has taken a different approach to managing sustainability issues within their business, with varying motivating factors to do so. Each are examples of how a business can make a conscious decision to work more ethically, not only considering but embracing stakeholder engagement, and managing environmental and social risks, while maintaining or improving financial performance.

On the other side of the fence sit a number of offending organisations and industries. As mentioned, the energy and resources sector continues to face enormous challenges, tobacco has launched a high court battle to prevent plain packaging legislation to make their product less appealing, while the live export trade controversy of 2011 brought to the public’s attention an often unrecognised or ignored environmental and ethical topic.

Understanding what is sustainable and delivering it can be more difficult depending on the type of business, and the product or service it delivers. However, continuing to ignore, minimise, refute or challenge a sustainability issue is increasingly dangerous to the long term viability of that business and could be harmful to the industry as a whole.

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About the author

Nathan Ball
Nathan is a sustainability practitioner with a passion and interest in the interconnectedness of corporate decision making and the broad range of environmental and social impacts. He lives in two worlds – a consultant at Banarra on weekdays and ageing cricketer on the weekend. He is motivated by a vision of a sustainable future and the opportunity to reduce inequality and preserve the natural world.

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