By now, it’s no longer a novelty for businesses to be launching sustainability initiatives. In fact, it’s now an imperative for companies to re-evaluate the way they do business. They should not only be ensuring they’re taking action to lessen their negative impact on the environment, community or society as a whole, but also working to leave it in a better condition than it was when they started.
So, why is it such a necessity for businesses to be sustainable? Well, aside from the obvious benefit of it being better for the planet and society, there’s actually a financial inventive for them, too. When deciding if they should get behind the company, potential investors look at its carbon footprint, water usage, community development efforts and board diversity, reports Harvard Business School.
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Research also showed that companies with high ESG ratings, which measures company’s exposure to long-term environmental, social and governance risks, have a lower cost of debt and equity, and that sustainability initiatives can help improve financial performance. Consumers also feel more favourably — and therefore are more likely to buy from — companies they know are prioritising sustainability. Not to mention, customers demand more transparency from companies these days, so companies need to have something to show for themselves.
But what’s the reality behind-the-scenes? Are businesses actually following through on their sustainability promises? A group of consultants who witnessed the development and implementation of dozens of companies’ sustainability programs said that though they observed positive beginnings, most sustainability programs got stuck and were unable to scale.
“Without scale, long-term goals are simply not attainable — or are delayed for years, which reduces credibility and increases external pressure from customers and other stakeholders,” they wrote in the HBR piece.
They identify four internal, “hidden enemies” of sustainability: structure and governance, processes and metrics, culture and leadership, and methods and skills.
“The internal enemies of sustainability are strong because they are deeply and widely ingrained in organisations,” they write. “They inhibit the progress of transformational initiatives, making it difficult for companies to live up to their ambitions and pledges.”
An article in International Institute for Management Development also identified two critical gaps companies needed to bridge to address sustainability appropriately.
‘The knowing – doing gap’ was identified after a study by found that while 90% of executives found sustainability to be important, only 60% incorporated it into their strategy and 25% into their business model.
The other is the ‘the compliance – competitive advantage gap’, which suggests management address sustainability as a competitive advantage and sustainability to be compliant separately, rather than mesh them together.
Bottom line here? Though companies are aiming to be more sustainable, there are quite a few roadblocks they’re facing as they attempt to scale those efforts and make them last long-term. With an increasing amount of data from companies’ sustainability efforts over the last few years, we’ll be better able to identify these hurdles and understand how to overcome them.
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