A growing environmental movement against plastic products and irresponsible waste management are the signs on how buyers start to take into account sustainability factors of the service or products they use. But what does that mean for the business? Is it merely a change of trend?
We all heard about the traditional business mindset that a company’s main goal is to maximize return on investment capital, emphasizing on financial performance. However, maintaining business continuity is so much more than a rise in revenue.
Reflecting on the increasingly depleting natural resources and social issues that arise among the society (including the labour force) globally, some key factors that affect business operations will be disrupted, specifically related to the supply chain. Thus, sustainable business innovation becomes essential.
Sustainability in business: more than just about the environment
When we talk about sustainability in a business, it is more than the environment--though it’s also a focus. Sustainability is a confluence of economic, environmental, and social responsibility. The first one, which is the main focus of most businesses, addresses the financial needs of shareholders, employees, partners, and other entities that provide the capital for the production of services or products.
The second is environmental responsibility, which includes leaving as small an environmental footprint as possible and ‘give back’ (i.e. replantation) to keep the natural resources available for future generations. Many businesses rely a lot on finite resources that will eventually run out with the rising demand and continuing exploitation without proper revitalization.
Finally, there is social responsibility, which addresses the moral, ethical, and philanthropic expectations from society towards a company or organization. Issues such as violence to labour safety and cultural exploitation are highly regarded.
In order to put the three elements into account, there are problems within the older business models that need to be tackled first—for example, the supply chain. Usually, a big manufacturer or retailer would pressure its upstream suppliers to get their costs down, while also frequently placing orders that exceed the suppliers’ capacity with unrealistic deadlines. They refuse to tell their customers of their limitations, fearing that the customers will only find other suppliers who can. Thus, it leads to massive overtime for the supplier factories workers and perhaps underpayment. There is still little trust within the relationship, let alone creating a space to innovate together.
Even when a business is deemed “responsible”, sometimes it doesn’t necessarily mean “sustainable”. A company may operate within legal and ethical parameters, but it doesn’t affirm sustainability. A sustainable business model requires all partners to consider how their processes and actions affect and support nature and society for the long term.
By using the concept of “borrow-use-return” (where businesses “borrow” resources to “use” them for their benefits and “return” the resources back through programs like replantation or corporate social responsibility), businesses can practice sustainability.
Keeping a balance is key to a sustainable business. There is no way to outsource the non-profitable (environmental and social) responsibilities, and there is no way to escape the damage of business irresponsibility. Companies can and must use their power to improve the quality of life in the markets and supply chain in which they operate. What companies often forget is that they are thriving because of the supporting communities around them.