In meeting the needs of the present and near future, companies have asserted business sustainability as their primary goal. Sustainability encourages businesses to consider their long-term impact in areas of environmental and social life. On the other hand, it discourages businesses from running on short-term gains that merely focus on profits.
What is business sustainability?
Business sustainability refers to a condition in which a company meets its customers’ needs and at the same time treating the environment and society well. For instance, a wheat flour company can be sustainable if they pack its flour in paper bags. This helps to meet its customer’s needs while at the same time treating the environment.
Key drivers of business sustainability
1. Competition for resources
The first key driver of business sustenance is the struggle for resources. It is estimated that by the year 2050, the world’s population will grow to more than 9 billion people. Meanwhile, by 2025, there are 67% of the world’s population will suffer from water shortage. This poses significant risks to the economy and social stability around the world. Eventually, it will greatly affect company setups around the globe too.
One of the risks will be the rise in living standards. The markets for goods and services will rocket while at the same time we are running out of resources. Many of them that once considered affordable is likely to become expensive.
2. Climate change
The second driver of business sustenance is climate change. This issue has attracted a large group of businesses and investors to come together. Therefore, teaming up with governments, companies agree to put in place a comprehensive climate policy.
For example, this group includes Business for Innovative Climate and US CAP in the USA, The Prince of Wales Corporate Leaders Group on Climate Risk, and the Institutional Investors Group on Climate Change IN UK. They realize that it is important to adopt technologies in business operations. Not only that it brings more profit, but technology also helps them reduce emissions and provides a practical solution to global warming.
3. Economic globalization
Economic globalization is also the key driver that promotes business sustainability. Businesses are eager to contribute to the national economy and help the country be more competitive in a global scale.
However, this comes with significant risks. Many companies operate in or source from many countries. Without tight regulation that meets environmental and social standards, it can widen inequality. That is why some countries start enforcing companies to resource ethically and commit to the locals’ welfare.
4. Connectivity and communication
The fourth driver of business sustainability is the need to connect and communicate. The emerging technologies have successfully reduced time to complete various tasks. However, at the same time, another request is arising.
While societies become more aware of climate issues and social justice, they demand radical transparency. They can bluntly question many companies’ credibility on social media platforms. Considering how easy it is to make viral content, businesses should start thinking about how they communicate their business processes and impacts to the mass.
Principles of business longevity
To help businesses achieve sustainability standards, there are five principles that they need to take into account.
The first principle of business long life is adhering to business ethics. This principle requires the company to restart, promote, and observe how they operate. It also involves maintaining ethical grades and practices in the company. This principle discourages vices like telling lies, fraud, and dishonesty in business.
Secondly, good governance is the principle that directs business sustainability. Companies are forced to organize their board with clear responsibilities. As a result, companies are expected to have clean practices as well.
The third principle of business sustainability is transparency. This principle requires the company to provide timely disclosure of information. It should include complete information on the organization, business processes, results, and their potential impact on its surroundings.
4. Business relationships
Next, the business relationship should be taken seriously here. In this context, this principle enforces the company to engage in fair trading practices that involve suppliers, distributors, and partners.
5. Financial return
The fifth principle of business sustainability is financial return. It encourages companies to offer providers of capital with a competitive return on investment and the protection of company assets.
6. Community involvement
The community living nearby the companies assets should not be left behind. That is why engaging with them is essential to build a relationship that is sensitive to the culture, context, and needs of the community
7. Value of products and services
The seventh principle of business sustainability is the value of products and services. Companies should provide a solution for the needs, desires, and rights of their customers. However, simply providing is not enough. The products and services should be of high quality before they can deliver true benefits.
8. Employment practices
Lastly, companies should consider their employment practices. The principle requires the company to engage in proper human resource management practices. Therefore, personal and professional employee development, diversity, and empowerment should be promoted.