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12 June 2014

Five Reasons for Understanding why Sustainability is Here to Stay

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Despite the increasingly successful results obtained by companies and organizations all over the world in sustainability issues, many businesspeople and entrepreneurs are still torn between becoming involved and remaining outside the “green trend”. And although it is true that the commitment is not entirely enticing due to the difficulty in measuring returns on investment, or simply because it does not generate gains in the short or medium term, the doubt remains. Is it worth waiting? No, I don’t think so.

Emerging markets are beginning to set the standard in matters related to Social Responsibility and sustainability. Thousands of companies, especially those with an international presence, are convinced that to be more competitive they need to incorporate sustainable practices into their productive activities. The efforts made in this area are far from being considered simple philanthropic acts or green marketing strategies. Quite the opposite, they are part of the business strategy and the costs are internalized as innovation to improve competitiveness.

The phenomenon is becoming increasingly apparent all over the world. Whether through individual (company or group) or collective (government) initiative, or imposition (suppliers), companies are under pressure to, at least, catch up with basic environmental management issues. This situation becomes clear especially when companies start to expand and their growth forecasts change, mainly because they start feeling the influence of their suppliers and stakeholders more strongly. International trade policies also have an influence (I recommend reading the work by Juan Rodrigo Walsh, “International trade and its implications for sustainable development: challenges and opportunities”).

The bad (or good) news for speculators is that sustainability is here to stay, and the longer they wait, the longer it will take them to join the rest. This is why five reasons for understanding why sustainability is the future of businesses and not simply a passing fad are detailed below:

National laws and programs

In many countries (France, India, Denmark), CSR has been institutionalized as a legal requirement, and not simply as a suggestion. In others, the State is encouraging companies to adopt country or regional targets intended to reduce the environmental impact or the carbon footprint (Costa Rica, European Union). Tax incentives and benefits for companies that implement Environmental Management Systems and certify their production or quality processes abound throughout the world. In addition, the United Nations watchword is clear: to achieve the Millennium Goals, the productive sector needs to become fully involved in development (Global Compact recommendations).

The technology boom

Technological advances have been significant in recent years, and not only in the field of telecommunications. The processes related to production, packing, transport and resource use have been optimized considerably thanks to the use of more efficient machinery and higher-performing devices or accessories (LED technology, for example). This has made it possible to cut costs, reduce electricity, water and fuel usage, and improve savings, among other aspects. The trend suggests that in the coming years environmental innovation will set the agenda of businesses across all the headings.

International trade

Whether for reasons of country commitment or citizen pressure, or simply to protect the environment, several countries which are major players in international trade are beginning to strengthen their sustainability requirements. The case of Holland is emblematic: in 2014, 20% of the companies that export products to this country must comply with certain sustainability parameters. By 2020, this requirement is expected to cover 100%. In addition, some multinational companies like Walmart, Unilever and Kimberly Clark are likely to reinforce their chain value by demanding that their suppliers enhance their business practices, or directly rewarding those new business partners that stand out for their social and environmental commitment.

Consumers

In most cases, even in less developed countries, citizen participation in matters related to sustainable development is increasing. The pressure is not only directed to the government. The demands placed on companies to be more responsible in environmental and social issues multiply, supported by consumer associations and related groups. As quality of life increases, people expect the products they consume to be better quality, but not at the expense of degrading the environment. This is not a passing fad, but a lifestyle that in countries with a medium or high level of environmental awareness like Sweden is totally incorporated into society. This example is very likely to be replicated around the world, as current sustainable development efforts and initiatives start to bear fruit.

Climate change

In view of the increasingly evident effects of this phenomenon, many governments are incorporating stricter sustainability parameters into their development programs, since the projections on the consequences of the problem are hardly encouraging. This means that the productive sector should, and will, implement in the medium term more effective and innovative measures aimed at mitigating or adapting to climate change. What used to be a presumption has become a reality that can no longer be ignored, especially when certain industries (agricultural, forestry, fishing, energy, etc.) depend on or may be seriously affected by climate variability.

If the situation is so obvious, why are some companies and shareholders still refusing to adopt more responsible socio-environmental practices? There can be as many answers as justifications, but in the last analysis the doubt or indecision remains an economic issue: obtaining an ISO certification, developing an Environmental Management System or implementing a CSR program means investing without knowing what the return or the quantifiable benefits will be. The problem is that while the doubts are being cleared up, others invest, innovate and make improvements in quality and performance, setting themselves apart from the competition and gaining access to new markets. It’s a fact: sustainability is not a passing fad, it’s here to stay.

I-Ambiente

This text is a contribution by Pablo Fernández S. published originally on the webstite I-Ambiente.

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