Creating a Sustainable Future

Businesses already know a thing or two about sustainability. Sometimes, just keeping the doors open can be a challenge. Fending off competition, dealing with downturns, meeting payrolls, finding new customers, making profits—it’s all about sustaining the organization into the future.

So, the modern concept of “sustainability” has a certain commonsense element to it. It’s obvious that organizations need the financial wherewithal to sustain operations, just as it’s obvious that they’ve got to have the right kind of workers to make it happen. What might be a little less obvious to the average business leader, however, is that companies are part of a larger system, and the well-being of that system has a direct impact on the well-being of all the organizations in that system.

Let’s say you’re in food distribution, for example. The price of fruits and vegetables is directly related to the health of the larger agricultural system. If farms are suffering through a drought or encountering a virulent strain of pests, they’ll have a hard time growing things and the prices will go up. The same thing occurs if energy prices rise and the cost of shipping goes up. This can influence the food distributor’s bottom line and, over time, perhaps even his or her ability to sustain the business.

So organizations are dependent on and impact larger systems, which themselves are at risk. In other words, sustainability means more than what is ordinarily understood. The primary goal of sustainability is ensuring that whole systems remain healthy so that people—as individuals, societies, and organizations—improve their overall chances of well-being. “At its core,” notes one major report, “sustainability is all about behaving in a manner in which current efforts to improve lives and conditions can be continued indefinitely” (HRH The Prince of Wales 2003, p. 11).

This means expanding the organizational viewpoint beyond the short-term need for profits or qualified employees. Sustainability encompasses these, of course,but also the wider social and environmental systems. A shorthand description for these systems is sometimes “people,” “planet,” and “profits.”

This report examines the history of the sustainability paradigm, the factors that are making the paradigm more compelling, the degree to which organizations value and engage in sustainability-related practices, and the future outlook for sustainability. Canadian Management Centre commissioned the Human Resource Institute to conduct the global survey on which the study is based. The 2007 CMC/HRI Sustainability Survey of 1,365 respondents looked at not only the degree to which organizations are using sustainability approaches but also how this differs among higher-performing and lower-performing organizations, as determined by self-reports in the areas of revenue growth, market share, profitability,
and customer satisfaction. Below is a quick review of the some of the main findings:

Respondents personally care more about sustainability issues than they think their organizations do, especially when it comes to social and environmental issues. Major gaps between the importance that people personally give sustainability issues and the importance that they think their organizations give such issues are in areas such as safe and reliable food sources, worker job security, climate change, well-being of employees, and poverty and homelessness.

Sustainability-related initiatives are not yet deeply ingrained in most organizations.

• About a tenth of respondents think their organizations are implementing a sustainability strategy to a very great extent, and another 25% think their organizations are doing so to an aboveaverage extent.
• Twenty-eight percent said they see measurable benefits from sustainability initiatives to a very great or above-average extent.
• Twenty-four percent said their organizations supply and/or review information that is used to develop sustainability-related metrics to a very great or above-average extent.

Organizations that use sustainability strategies are more likely to be high performers in terms of reported progress in the market place. Although correlation is not causation, this suggests that sustainability might provide competitive advantages to organizations. Compared to lower performing organizations, higher performing organizations are more likely to:

• Engage in sustainability practices to a greater extent;
• Attach greater importance to qualities associated with sustainability;
• Have all sustainability qualities, as defined in the survey, to at least a moderate degree.

Reducing or managing the risks of climate change was not highly rated in terms of its ability to drive key business issues, either today or in 10 years.
In fact, it was ranked 24 out of 25 sustainability-related issues today, and 23rd when respondents were asked to look 10 years into the future. On the other hand, “effectively addressing regulatory restrictions” was viewed as a key factor driving business issues. This suggests that future regulations could drive up the importance of gas emissions issues, for instance.

There’s a correlation between the degree to which firms implement sustainability strategies and the degree to which they see measurablebenefits from sustainability initiatives. That is, the more firms implement such strategies, the greater the extent to which they see measurable benefits.

 There are three qualities that are most important to successfully implement a sustainability strategy:

• Top management’s visible support for sustainability;
• Deeply held corporate values consistent with sustainability;
• Sustainability’s placement as central to overall corporate strategy.

There are major gaps between the extent to which certain qualities are important for building a sustainable enterprise and the extent to which companies have these qualities. This suggests that companies have made only moderate progress toward sustainability, with definite room for improvement.

Out of 17 sustainability-related practices, the most widely identified were four: (1) ensuring the health and safety of employees, (2) ensuring accountability for ethics at all levels, (3) engaging collaboratively with community and non-governmental groups, and (4) supporting employees in balancing work and life activities.

There are no particularly strong barriers to making organizations more sustainable. None of the barriers asked about was seen as very strong. The ones with the highest rating were a lack of demand from consumers and customers, a lack of demand from managers and employees, a lack of awareness and understanding, and a lack of standardized metrics or
performance benchmarks

Will the sustainability paradigm become more broadly and deeply ingrained in organizations in coming years? This report indicates that a variety of social, economic, and environmental trends are giving it a kind of momentum. The CMC/AMA/HRI team has created three scenarios about how the world might look in the future in terms of sustainability, but it’s clear that no one has a crystal ball on these issues. Whether the business environment will become more sustainable tomorrow will largely depend on the degree to which employees at all levels—but especially organizational leaders—adopt and demonstrate sustainability principles today.