Top 3 Sustainability Challenges in Business
The mounting public concern for environmental sustainability and the impact of global climate change has driven businesses to try and modify their daily operations. There are a number of reasons for this, not the least of which is the possibility for businesses to reduce costs through a number of methods. Some have chosen to explore alterations to their supply chain to make the process more efficient and environmentally responsible. Others simply adopt company-wide policies to reduce waste and encourage employee action.
Corporations around the world are also beginning to recognize consumer support for businesses that take environmental stewardship seriously. A growing number of customers are choosing brands that offer transparency into their production practices over those that don’t, preferring to understand the impact their purchase has on the environment. Slowly, the market is beginning to demand sustainable business practices of companies. This is great news for the environment, but there are plenty of advantages to businesses that manage to adapt to the new shape of commerce.
That said, change isn’t an easy process in any organization, and for major businesses, sometimes sustainable practices don’t seem particularly cost-effective. The challenge of experts in sustainable business is to drive and oversee these changes to ensure safe, responsible impact on our natural resources. In that task, a number of factors frequently stand between ideas and execution.
Sustainability Challenges in Business – Supporting the Triple Bottom Line
Any corporate sustainability initiative has to balance its impact on three things: people, planet, and profit. This concept is known as the triple bottom line, and it shapes the environmental efforts for many corporations worldwide. Here are 3 of the biggest sustainability challenges in business.
Making the Business Case
Often, the rhetoric surrounding sustainability and “green” practices is associated with increased costs to businesses that get passed on to consumers. Sometimes, however, the exact opposite is true. Increased efficiency, whether in energy usage, operational resources, or at some point during the supply chain, can often result in decreased costs while creating a more environmentally responsible organization.
Making those plans can sometimes be a matter of understanding and impacting consumer behavior more directly, with some consultancies suggesting that businesses try to drive sustainable lifestyles and, as a side benefit, more profitable business practices. Sprint, for example, introduced a Buyback program in which they purchased aging phones from current customers for recycling. Consumers received over $100 million dollars since 2001, turning in over 53 million devices. Meanwhile, Sprint itself has saved more than $1 billion dollars in costs since beginning the initiative, recycling components, keeping harmful materials out of junkyards, and setting the stage for increased profitability.
The problem for your company might be more fundamental. Sustainability can be difficult to value from a monetary stand-point, making it challenging for CFO’s and other executives to understand the importance of environmental stewardship. Data-driven metrics can help smooth this process, making it possible for finance and sustainability teams to work together to create new, cost-effective plans.
Developing Metrics to Assess Initiatives
Providing those metrics, however, can be difficult. The risks of not providing for a new, sustainable world aren’t fully understood, yet. However, a great many companies have come to recognize that water supply shortages and climate change could represent significant costs when and if disaster strikes, making preparedness and environmental stewardship a necessary goal. Some companies have created indices used for just this purpose, including the Valuing Natural Capital initiative, which aims to facilitate a greater understanding of the business value of sustainability.
That said, once a program is in place, monitoring employee engagement and the effect on the company is simply a matter of watching the numbers in the right places. This is where the triple bottom line comes into play. If targeting energy efficiency, monitor monthly costs for a notable change. If you’re aiming to reduce solid waste generation, gather insights into your current levels and then compare to post-initiative data. Consider impacts on not just profitability, but also on the planet and the surrounding community. The central point is to create a clear picture for executives, leadership, and the finance team to illustrate the importance of sustainability and its positive effects.
Engaging Management and Colleagues
In a recent survey of 700 businesses done by sustainability consultancy 2degrees, 65% of respondents said that convincing senior leadership and management to stand behind sustainable practices was the greatest challenge in making a change. However, the survey found that once the central arguments had been made and the merit of sustainability established, leaders remained engaged in the mission of creating a greener business.
Then the challenge becomes engaging colleagues and employees to execute on sustainable practices. 47% of respondents said this was their greatest challenge. Encouraging employee buy-in can be incredibly difficult, but it can be addressed through unilateral communication across the company, or even incentives to those that participate in new programs. Sustainability consultants or internal employees might find themselves supporting new plans through employee education, the leading of cross-disciplinary committees, and the creation of effective internal marketing materials to drive home the company’s objectives.
Looking to help companies address these challenges? Learn the skills you need with the University of Colorado-Boulder’s online Non-credit Certificate in Business Sustainability Management.