Sustainable business practices

“Sustainable development, in today’s times, goes beyond environmental sustainability only. Good sustainable business practices, contrary to the popular belief, should be embedded into organizations’ regular activities rather than taken up separately. In fact, increasingly the corporate sector is also recognizing longer run profitability of such practices.” a. Do you agree or disagree with the above statement. Justify with appropriate reasons. Answer)In 1972, the then Prime Minister of India, Mrs. Indira Gandhi emphasized, at the UN Conference on Human Environment at Stockholm, that the removal of poverty is an integral part of the goal of an environmental strategy for the world.

The concepts of interrelatedness, of a shared planet, of global citizenship, and of “spaceship earth” cannot be restricted to environmental issues alone. They apply equally to the shared and inter-linked responsibilities of environmental protection and human development. Yes, I agree with the above statement. Sustainable Development is not only restricted to environment but it is way above this. Yes, whatever activities we undertake we should keep in mind the environment. The commission’s report, “Our Common Future”, popularly known as “The Brundtland Report” that coined the term sustainable development suggested that economic development cannot stop, but it must change course to fit within the earth’s ecological limits.

Corporate sector must make money; and staying in corporate sector and prospering is a fundamental value of any for-profit enterprise. At the same time, corporate sector is required to take into account the interests of all stakeholders that include customers, employees, investors, vendors, government and the society. The companies should incorporate sustainable business practices with their regular activities.

Sustainable development contributes to shareholder value in a variety of ways-not only through tangible contribution such as risk reduction and profitability improvement, but also through intangible asset creation such as brand equity, human capital, etc. Operating Corporate by pursuing the sustainable development path strengthens an organization’s intangible assets in a number of ways that in turn leads to tangible shareholder value creation. A growing number of companies believe that sustainability issues will have an increasingly important bearing on the way in which economic activities are organized and run in the future.

They also recognise that the integration of these considerations into their business strategies could offer a pathway to long-term growth and prosperity. Some companies also conclude that their ‘license to operate’ is conditional upon behaving in a way that is aligned with social values and expectations. These companies are likely to have declared their values and to be taking positive steps to examine their wider accountabilities to environment and society. The vast majority of companies, however, tend to view sustainable development issues as a diversion from their mainstream activity.

Talking about the profitability, sustainable development plays a major role in achieving long term profitability in a business. The need for sustainable business practices is rapidly approaching a tipping point in many organizations. Companies both large and small are learning firsthand the value of integrating eco awareness into their operations, business strategies, and product deliveries to the end consumer. This in result will fetch a larger customer base and that to satisfied customers thereby increasing the revenue of the organization. Business sustainability is now both a top-line and bottom-line company focus.

Companies are implementing business sustainability plans that target revenue as well as cost reduction. The sudden surge in business eco awareness is being largely driven by consumers. Consumers are raising their own eco awareness and holding business accountable for sustainable actions. This has required companies to incorporate true business sustainability to capture consumer favor.

It is now globally recognized that following sustainable development path makes good corporate sense. This entails various approaches. For example, eco-efficiency is based on a common sense proposition that reduces waste and inefficiency in production processes, saves money and protects the environment at the same time. Life Cycle Analysis (LCA) offers a framework for understanding material flaws and potential impacts involved with providing services or products in a closed loop. Sometimes referred to as ‘cradle to cradle’ or ‘cradle to grave’, LCA looks at an enterprise in terms of input, throughput and output. This helps to identify inefficiencies that drain profit and produce waste including pollutants.

Many of these approaches: e.g. eco-efficiency, LCA, full cost accounting, industrial ecology, systems – based pollution prevention, etc. are new to the Corporate world. Businesses keen to benefit from transition to sustainable development path therefore need to prepare themselves and have a longer time horizon and a broader set of goals than traditional companies. Realization and recognition of the significance of sustainable development approach usually starts from the top management.

However, best intentions are meaningless if these are only lodged in the minds of a few individuals. Values of sustainable development have to permeate throughout the organization. Changing a company’s culture and outlook requires a contribution from everyone – starting from the chief executive officer and permeating through senior, middle, junior management and staff and all working as a team.

b. Choose any Indian company that has adopted or is planning to adopt sustainable business practices. Evaluate the challenges that can arise in the process & suggest strategies that a practicing manager should implement to overcome the identified challenges. Answer) In the world which has become Hot, Flat and Crowded, sustainability becomes very important practice to survive in the market.

Sadhana, Assistant Brand Manager, Idea Cellular Ltd – September 21, 2009 Idea Cellular, part of the Aditya Birla Group which is India’s first truly global conglomerate, is one of the oldest players in the Indian telecom industry and has played a key role in the development of mobile telephony, particularly in rural India. As part of a socially responsible corporate group, Idea has and continues to adopt policies, and business strategies to effectively integrate emerging environmental, social and economic considerations.