When people talk about sustainability they are usually doing so in the context of environmentalism, as we seek ways to avoid further depleting the earth’s natural resources. However, true sustainability is the balance between the environment, equity and the economy, and we as a species need to look at the way we move throughout the world as less like a sprint and more like a relay race –- whatever we create will be passed on like a baton to the next generations. In today’s day and age, the way we look at ourselves, our governments, and our businesses must all be through this holistically sustainable framework.
As the leader of a large organisation in the steel industry (which is among the three biggest producers of carbon dioxide in the world), I am acutely aware of the fact that the decisions made for my company will have a ripple effect on millions of lives. It is my passionate belief that it is no longer enough for businesses to operate in the best interest of their shareholders. Instead, across the globe we must all take action to instead consider our respective stakeholders –- our employees, our customers, the communities in which we operate and the world as a whole. A sustainable business is one that supports the community and economy dependent on a healthy planet by working to find that balance between the environment, equity and the economy. They are able to see beyond maximizing profits, recognising that the sustainability of their business is dependent on the sustainability of the earth and those who live within it.
A business can only truly thrive when it contributes to the health of the structure in which it operates, and companies that implement sustainability into their strategies can create long-term value by being socially responsible and protecting our use of the planet’s resources. I believe wholeheartedly that sustainability isn’t just good for the environment or society at large, but also for businesses themselves.
To many leaders it may seem that prioritising sustainability would reduce a business’s ability to make a profit, but in actuality developing sustainable business practices can lend itself to more efficient operations. Businesses can improve productivity while also reducing cost by streamlining efforts and conserving resources. For example, Dow Chemical has invested less than $2 billion since 1994 to improve its resource efficiency, but has saved over $9 billion to date from the reduced energy consumption and water waste in its manufacturing process. Wal-Mart’s global supply chain was able to save $12 billion through a program to reduce packaging at a global scale. Within my own industry, the electric arc furnaces which use electricity to recycle scrap metal to make new steel are smaller and much more efficient than the blast furnaces which use fossil fuel to create virgin steel from iron ore.
Providing examples from large corporations makes for an easy way to show the impact sustainability practices can have, but efforts are incredibly scalable and can really be applicable to businesses of every size. For example, reducing cost can also encompass energy conservation strategies as simple as switching to energy efficient light bulbs, or replacing old computers. While efforts that have a greater overall impact such as installation of geothermal heating and cooling systems may be more expensive for an everyday business to implement, the long-term results often justify the investment. Solar panels, for example, can save the average commercial property owner around $6,000 a year, and my business is currently working to utilize solar panels to support our operations.
Additionally, as governments work in their own way to ensure we are building a more sustainable world there are an increasing number of financial incentives such as tax credits, accelerated depreciation for certain capital expenses, exemptions from taxes and rebates for operating a business with responsibility to the future generations. Employees are also much more likely to be retained when they feel that the company they are working for aligns with their own purpose, adding value to it as a whole.
Like employees, consumers are also interested in supporting businesses that are working toward a holistic view of sustainability. They are increasingly viewing it not as an advantage, but a necessity when deciding where to purchase goods or services, and as a result are more likely to patronise and support companies that practice sustainable habits. A business that takes sustainability seriously is showing the world that it is interested in more than simply making a profit, and the positive recognition is imperative in a time in which social media is used as a tool toward accountability.
In 2018, Lego announced plans to produce pieces of its building blocks using plant-based sources instead of plastic, and have since announced that they will use sustainable materials for all of their core products and packaging by 2030. As a result, it was named number three in the Reputation Institute’s annual list of “World’s Most Reputable Companies for Corporate Responsibility.” Shoppers also took notice when Colgate used their highly expensive air time during the Super Bowl to run a public awareness ad promoting water conservation and practices. As individuals are making a concerted effort to navigate their lives in a more sustainable manner — recycling, changing their consumption and eating practices — they want to know that the businesses they are supporting are also doing their part.
From the perspective of businesses that aren’t providing consumer products such as toys, the public’s view is still having an impact as industries reassess their relationship with fossil fuel companies. Some newspapers have banned advertising from fossil fuel companies, and a growing number of insurance companies and banks have stopped financing coal projects. How sustainable a business is can now even affect how they are able to work with their suppliers and those they supply to.
Another way to frame the importance of sustainability is to think about it in terms of risk mitigation. At the end of the day a good business is one that is able to accurately assess and then mitigate risk, and as energy costs rise and uncertainty grows in supply they must think about the risks environmental and economic factors may pose on the longevity of their business. From resource scarcity to climate change to community issues, these operational disruptions all have the ability to break a business that was once successful, and a company that takes this into account will better equip themselves for the future. Nestlé launched a plan in 2009 that coordinated activities to promote sustainable cocoa, in which they worked to produce stronger and more productive plants and teach local farmers efficient and sustainable methods. They also sought to purchase beans from farmers who used sustainable practices and worked with organisations to help tackle issues such as child labor, poor access to healthcare and inadequate education. These concerted efforts are a prime example of working to achieve true sustainability, simultaneously bettering the industry they work within while also ensuring their own supply chain would not be affected by a scarcity of resources brought on by unsustainable practices.
At my company we directly employ more than 5,500 people, but our impact reaches far beyond them. It includes their families, our customers, our customers’ families, the communities in which we operate. It includes every customer who purchases our steel, and every person who benefits from the use of that steel. Sustainability is bigger than the environment: it is about creating a legacy for them, and for their future generations.