Sunday, 1 March 2009

Time to Get Altruistic?

Over the last couple of years we have seen the notion of sustainable growth emerge from the woodworks of academia into the real and robust world of business. The sustainability game is changing from one of reluctant compliance to that of business gains in the green space.

The notion of triple bottom line (People-Planet-Profit) or 3BL has given a new perspective on what a carbon-constrained world might look like; not a negative cramping of human and business potential but the sort of paradigm shift offered by the digital revolution - only bigger. Evidence of this business potential is today visible all around. One estimate has China’s clean-tech market increasing to US$186 billion by next year and a massive US$555 billion by 2020. Japan is busy working on a solar-powered ship. The Netherlands is developing neighbourhoods based on cradle-to-cradle concepts. Cisco Systems is building a water system for the community in a developing country where it is expanding. Greenpeace is advising the Chinese national government. Dr. Nick Axford of CB Richard Ellis, who coauthored the CoRE 2010 research, refers to the acceptance of 3BL as “altruistic self-interest.” Companies as significant as AT&T, Dow Chemicals, Shell, and British Telecommunications, have used 3BL terminology in their press releases and annual reports.

Our expectations from workplaces are changing, and an increasing number of prospective employees pre-assess the social and environmental commitment of companies before choosing an employer. The pride shown by the winners of employee benchmarking initiatives (such as Fortune’s ‘Best Companies to Work For’) highlights the importance attached to workplace issues as a source of corporate reputation. While there is little evidence that people apply for jobs on the basis of CSR ranking, the quality of performance on benchmark issues, and the organisation’s contribution to the environment and society are important criteria for more and more employees.

Sustainability is not a window-dressing or peripheral programme that can be deferred or discarded in tough economic times. It is a vital and robust strategy for tough times. Over the short term, it offers quick, money-saving fixes with significant return on investment. Over the long term, it cuts costs and generates revenue, giving your company a competitive advantage over less sustainable rivals. Green buildings reduce energy costs by about 35%, water use by 30-50%, and waste costs by 50-90% when compared with conventional buildings. Sustainable facilities also help companies make money by improving productivity by 6-16%, according to several studies.

But - and it is a big ‘but’ - in today’s difficult economy, businesses must focus on embedding genuine sustainability in their corporate culture, not just in their press releases. No more self-congratulatory announcements about the branch manager who sometimes rides a bike to work to reduce the bank’s carbon footprint. Environmental issues are understood to be more serious today than they were during the first iteration of green marketing (think climate change), and consumers are shopping with a vengeance - and a conscience. The industry has been duly warned to adopt more responsible marketing courses or risk inviting regulation on dubious green marketing practices. Note the rise of grassroot bans on polluting products such as bottled water, supermarket shopping bags, and the like.

Is sustainable growth for real or are its benefits exaggerated? The mounting trends and results suggest it is not overkill. Profits must happen but not at the cost of people or the planet. The business case for 3BL is crystal clear; it simply is a better business model.

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