Why Sustainability And Economic Growth Should Go Hand In Hand

By CSR Pulse, 16 June 2014

In the past, there was one recipe for running a large company. It was all about setting profit targets and getting human and physical resources to achieve them. Today, however, things have changed. It’s no longer just about making profits. The question of how they are made has gained importance too.

One major factor that brought about this change is the fact that our planet’s resources are limited and can no longer be subjected to aggressive exploitation. The other factor is that neither business nor society can withstand the effects that a profit-only approach brings forth, as the financial crisis taught us.

Business theories nowadays circle around a new concept, according to which business profits should be achieved by addressing social and environmental issues. Companies are beginning to understand that by embracing sustainability they also embrace innovation and improve their relationship with their customers.

That said, companies go about sustainable growth in various ways. A select few choose long-term sustainability over short-term profits. US outdoor clothing manufacturer Patagonia is one such example, telling customers to repair their apparel instead of buy new one. This policy created such a buzz around the company, that in the end, it did experience a rise in sales.

At C-level, corporations today circle around discussions about mutual benefit and ways to create value – value for business in the form of profits as well as value in terms of a more socially just and environmentally friendly world.

US non-profit organisation B Lab provides a good illustration for how such value can be achieved. A certification provider, B Lab has accredited almost 1,000 companies which publicly commit to mobilising the power of business to create benefits for the community. These companies, called “B-Corporations,” adhere to stringent standards regarding social and environmental responsibility, accountability and transparency and that doesn’t stop them from generating economic value. Though most of them are small companies, they are setting a good example for the larger corporations to follow.

Multinational giants Unilever, Celtel and TATA are three such followers that joined together to form a non-profit alliance by the name of B Team. Its goal is to change the way business success is pursued and perceived and to show that it should promote long-term value for everyone.

Though it’s important that companies implement individual measures to achieve sustainable growth, in order for sustainability to really take root, overall corporate strategies need to be re-evaluated. Like the UK communications company BT has done, launching a 3-1 Net Good plan aiming at neutralising its carbon emissions impact by encouraging reductions among its customers.

Though profit pursuit and maximisation has been the number one goal of companies for years and years on end, sustainable growth is little by little paving its way into corporate policies. It will require no small amount of effort, of course. But it holds great rewards for those who are willing to make that effort, improving their business and the world as well.