Enterprise Integration
In its original form, business sustainability reflected a change in the marketplace. Per the text, market forces are compelling businesses to focus on sustainability through various managerial channels and functions.
This all started with government regulation during Nixon’s era, and then throughout the 80s and 90s, it included insurance companies, investors, consumers, suppliers, buyers, and others.
External pressure from numerous sources can lead to market changes, such as: pressure to meet domestic and international regulations and court rulings; pressure from suppliers, buyers, shareholders, investors, banks, and insurance companies for resource changes; pressure from consumers, trade associations, competitors, and consultants for market changes; and pressure from nonprofit organizations, activist groups, the press, religious institutions, and academia for social change.
Companies have tried to improve their competitiveness by making sustainability part of their corporate strategy.
This translates the issue into more business-friendly language: operational efficiency, capital acquisition, strategic direction, and market growth. This makes the issue easier to discuss and understand for those in the business world.
In every case, the company has a pre-existing model that it can use to understand the problem and come up with a solution.
This means that sustainability is a market threat, where if companies don’t change with the times, they will go out of business. Other companies that are able to adapt will take their place.
Market Transformation
While sustainability in business has become more popular, the world has seen unprecedented damage to the environment from human activity that threatens the ability to sustain life on Earth.
The Holocene epoch is ending and the Anthropocene epoch is beginning because of the enormous influence of humans on the planet.
They have identified nine “planetary boundaries” that represent safe limits for human activity. Beyond these boundaries, the stability of global systems cannot be guaranteed.
There are a number of indicators that show how well the planet is doing, many of which are not faring well, according to Lancaster University management professor Gail Whiteman.
Though one problem (ozone depletion) is improving, scientists believe we have gone too far in harming three other areas: climate change, biodiversity loss, and biogeochemical flows (nitrogen and phosphorus cycles).
There are other problems that are also becoming more evident, such as ocean acidification, freshwater use, and deforestation. There is not enough data to assess the remaining two boundaries – chemical pollution and atmospheric particle pollution.
The disruptions are caused by system failures, which are mostly due to our market institutions. They will have to be remedied by those institutions.
Systemic Corporate Strategies
New Conceptions Of Operations
market transformation = a change in the way the market functions supply-chain logistics = the process of organizing the transportation and storage of goods reduce risks = make something less likely to happen or make it less dangerous disruptions = something that interrupts the normal flow or activity storm severity = how bad a storm is climate change = a long-term change in the Earth’s climate resource availability = how much of a resource is available emissions = pollutants that are released into the air resilience = the ability to recover from or adjust easily to difficult situations
The risks mentioned can have a direct impact on company assets and productivity, as well as the ability to source and distribute materials. Additionally, the workforce may be affected, as well as the company’s reputation.
For example, decreased availability of water has threatened the supply chains of Nestlé, Coca-Cola, Cargill, and General Mills. This is because water is a once-plentiful resource that has become scarcer due to climate change and overconsumption.
Instead of a linear model, in which items are created and then disposed of once they reaches the end of their serviceable life, companies are moving towards a circular model. In a circular model, items are created, used, and then either restored or reprocessed to recover energy or material that can be used again.
This is very different from the traditional model where we extract, make, use, and dispose of resources in a linear way. A new vision for a circular economy emphasises keeping products, components and materials at their highest utility and value at all times, rather than the traditional linear model of extraction, production, use and disposal.
In other words, by 2050, the company will no longer be able to afford the raw materials it needs to continue its manufacturing.
resource-smart solutions = solutions that use resources efficiently and don’t waste anything The company is trying to be more efficient with its resources and create solutions that don’t waste anything.
The company is working to help its customers reduce energy use, carbon footprint, and virgin material use, while also expanding its own opportunities for product refurbishing, recycling, and new designs.
The goal is to reduce the amount of virgin resources used by 25 percent by 2020 and 87.5 percent by 2050. In order to adopt a more environmentally friendly way of thinking, Ricoh is moving beyond its previous goals of incremental efficiency and trying to achieve “net zero impact” business operations.
New Conceptions Of Partnerships
Companies are looking for ways to shift the market beyond the standard supply chain by partnering with organizations such as nonprofits, the government, and even their competitors.
As an example, when Ford increased its research and development in hybrid and electric drivetrains, it saw an opportunity in how customers would live more electrified lifestyles overall.
In collaboration with Infineon, SunPower, Whirlpool, and Eaton, Ford created the MyEnergi Lifestyle initiative to research ways to reduce the overall carbon footprint by combining hybrid electric vehicles, solar power systems, energy-efficient appliances, and energy-conscious home design.
In addition to its partnerships, Toyota Motor is also taking other measures to achieve its goal of going “beyond zero environmental impact” by 2050. These measures include eliminating CO2 emissions from vehicle operation, manufacturing, materials production, and energy sources.
New Conceptions Of Government Engagement
There are few business schools that offer courses on collaborative and constructive lobbying. Indeed, the public perceptions of lobbying are generally negative.
Lobbying is part of democratic politics where governments seek out guidance on how to set market rules and reforms as necessary. More and more companies are beginning to see the importance of getting involved in policymaking in order to help shape the future.
Intel was very important in bringing attention to the problems with tin, tantalum, tungsten, and gold mining in the Democratic Republic of Congo.
Instead of just cutting out conflict minerals from its sourcing, the company wanted to avoid making things harder for legal mining operations.
The conflict mineral provisions in the Dodd-Frank Act were created in order to require thetracking and disclosure of where these minerals were sourced from within the electronics industry.
This is not unusual. companies are phasing out HFC chemicals in coordination with governments in order to reduce truck emissions
The business interests that helped broker the Paris Agreement on climate change were powerful. Businesses have played a responsible role in creating a sustainable change in the market through policy.
Go Beyond The Core To Change The System
It is important for a company to not only operate its core business in a way that is beneficial for society and the business, but also to be healthy and high-performing.
The world is currently facing very large and complex social, environmental, and financial challenges. No one actor can resolve these issues single-handedly.
There is a growing trend of governments and civil society organizations asking businesses to get involved. How can companies make themselves unique and contribute to society at the same time?
1. Prioritize Issues That Are Relevant To The Company Mission
We seek out issues that are important to our company and also to society.
We believe that we can make a significant contribution to the sustainability of the world’s food supply as the world’s largest grocer.
According to the United Nations, the amount of food produced will need to increase by 70 percent to feed the predicted nine billion people who will be living on Earth by 2050.
We will need to find a way to meet the challenge that is both environmentally sustainable and equitable for consumers and farmers.
The goal of this company is to make the food system healthier and more accessible while lowering the cost to the environment, customers, and farmers.
2. Draw On The Company’s Particular Capabilities
Companies can have more of an impact by using their special business skills to help solve complicated societal issues, even in areas where they are just trying to be helpful.
We try to add value to what others can do in our own efforts. This is ideally done in ways that are different from what others can do.
One is a highly productive agricultural sector that provides abundant and affordable food. Our agricultural sector is very productive and provides us with a lot of affordable food, which helps to address hunger in the United States.
In the past few years, we’ve donated 1.5 billion pounds of food to food banks in the US, including an increasing amount of fresh food that’s nearing its expiration date.
Improving nutrition among those most in need reduces the amount of food we send to landfills as waste.
Over 180 trucks and refrigerated trucks were donated, as well as time and expertise in logistics, to help strengthen the country’s charitable cold chain.
3. Aim For A Triple Bottom Line
When we work on priority issues, we create initiatives that will help society as a whole, not just businesses. We set ambitious targets, and we track progress rigorously.
We are trying to lower the environmental and financial cost of food production.
The initiative ‘agriculture optimization’ is to reduce greenhouse-gas emissions by 8 million metric tons across 10 million acres of row crops by 2020.
Other companies reducing their greenhouse-gas emissions in a similar way as us have resulted in a total of 18 million metric tons less of emissions since 2010.
We are working with the Environmental Defense Fund and other large food companies to change the way fertilizer and other inputs are used.
We see progress by tracking how greenhouse-gas emissions, water, yields, and other important factors improve when comparing the amount of food produced by different suppliers and categories.
4. Reshape The System For Lasting Improvement
In the era of long-term capitalism, companies need to do more than the kinds of improvements described above. Companies can have a positive impact on the world by using their knowledge and size to work with other groups to improve global systems permanently.
The global food system is essential to our business.
The system needs to change so that it is good for the environment and small farmers, and it also needs to produce enough food for the growing population.
Walmart is working to enable that evolution. We’ve been collaborating with the US Agency for International Development for more than a decade to improve the lives of smallholder farmers and women in the agricultural supply chain.
USAID and its implementing agencies have provided agricultural expertise, training, and capital for infrastructure to smallholder farmers in Central America, preparing them to sell into the organized retail sector.
Based on consumer preferences, Walmart provides specifications for crops and guidance on timing for different varieties. Walmart also regularly purchases farm production.
Smallholders who participate in this program gain a better price for their products, as well as a more stable income. They also develop the skills needed to improve yields and profitability. Local customers have access to a wider variety of better-tasting fruits and vegetables when they want to buy them.
The agriculture sector gains productivity and becomes more viable. In Argentina, for example, more than two-thirds of our fruit and vegetable supply now comes from farmers who sell their product directly to us, rather than through a middleman.
We depend on small and midsize farmers for approximately $4 billion worth of agricultural products in our private-label supply chain in the United States alone.
5. Engage Partners In Transforming Systems
We have learned that it is essential to engage and collaborate with other leaders of the systems we seek to strengthen to achieve lasting solutions to complex social and environmental challenges.
In order to achieve the goals that organizations such as the United Nations, World Wildlife Fund, and CDP have set for the food industry – such as a reduction in water usage, a 3 percent annual decrease in private-sector greenhouse-gas emissions, and a 15 percent increase in yield in the next ten years – leaders of the food system must take coordinated action.
There has been a recent increase in the number of partnerships between different groups with a stake in the food system, including the Consumer Goods Forum (which works to get retailers and manufacturers to source 100% of their palm oil and soy from sustainable sources), the World Economic Forum (with its Grow Africa and similar programs), USAID’s Global Development Lab (which uses the private sector to address development issues), and the Clinton Global Initiative (which uses corporate commitments to effect change).
Embed The Values In The Business
This commitment should be a company-wide effort, not just something that is done through corporate philanthropy. It should be part of the day-to-day business activities.
This means that the leaders of the company are responsible for setting the agenda for social and environmental issues that their departments are dealing with.
The company establishes goals and passes them down to their employees to use as benchmarks in their personal performance evaluations and professional development meetings. The planning process that deal with a city’s capital explicitly addresses the social and environmental agenda.
Conclusion
A company’s business interests will eventually align with the best interests of society. Companies, communities, individuals, and governments: we are all interdependent.
Every high-performing company has an obligation to help society and each can do so in ways that also improve the company.
Companies can improve their methods and processes in many ways to have positive effects on their stakeholders and the communities they are based in.
Although it takes time, large-scale change can have big rewards.
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