Sustainability is not about people wearing sandals and mountain clothing

First of all, I must say that I have nothing against sandals and mountain clothing. Sandals are quite comfortable in summer, and I love mountain sports. Just a catchy title to dismantle stereotypes.

Some days ago I read an article about a huge well-known company where the authors referred to its sustainability department as the silo compounded by men wearing sandals and long beards. I recognise that perhaps it was true some years ago when no so many people took care of the environment. Hopefully, nowadays this perception is changing, since more and more people are starting caring for environmental issues through more responsible diets with the environment, using renewable energies, alternative means of transportation, eco-friendly products to reduce waste, recycling, and so on.  The even better news on this field is that young people, the so-called Millennials, take for granted awareness for environmental issues (most of us do so).

However, in my opinion, we are still facing a huge problem when we talk about ‘Sustainability’ and ‘Companies’, and it’s indeed the terminology. In fact, the usage of the term ‘Sustainability’ has grown exponentially in the last 30 years.

Considering what it was explained before, and what most people think about this field, the term sustainability seems to be only related to environmental issues. Nonetheless, in my opinion, sustainability is something quite bigger that includes more factors, as important as the environmental factor. If the term ‘Sustainability’ is searched in a dictionary, the first definition found is  ‘Sustainability: the quality of being able to continue over a period of time’. May be noticed there is nothing about the environment itself, environmental issues, green practices and all this kind of terms. It’s just about lasting long.

Since the first Industrial Revolution in the 18th century, companies only cared for economic growth, at any price. After that moment, the world population suffered an unprecedented increase, as well as a huge increase in the GDP per capita. In those times, only money did matter. This approach ended up, after 200 years, with a squeezed environment running out of many of the resources on the Earth, quite high levels of pollution in the air and water, as well as a tremendously harmful impact on nature. Therefore, from 20 years ago, an important rise in environmental awareness has appeared both in companies and human beings, even though sometimes looks like a trend, rather than a serious reality. Since the creation of the first companies, back in the 17th century, people have been working on them, sometimes with so bad conditions, lately presumably with better conditions (in some cases).

In short, talking about sustainability and sustainable growth for companies in the long term, three particularly significant factors are needed: social resources, natural resources and economic resources. Every company needs people working on it, even if there is only one person, natural resources or resources obtained directly or indirectly from natural resources, such as electricity, and lastly, a company needs money sooner or later.

Thus, the three pillars of sustainability are introduced: Social, Environmental and Economic, because every company needs the three of them to last long.

Source: https://www.nicepng.com/ourpic/u2q8y3w7t4a9q8r5_swish-has-been-built-on-three-pillars-of/

Social Sustainability is about having good human resources practices in the company, taking care of the employees, create suitable and safe working environments, leadership practices, employees promotion and flexibility, decent salaries, shared benefits within the company when it performs properly, training programs, leisure time and so on. However, social sustainability doesn’t consider only employees within the company, but all the stakeholders involved such as suppliers, customers and local people where the company is based. Suppliers delivering products or services enable companies to keep delivering their products or services to the next level in the value chain (final customer or another company), so companies must take care of their suppliers as much as they do with their employees. Customers are the final link in the chain, they are who pay for the services and products, and those who use them. Therefore, companies should care for customers, having suitable prices and listening to their necessities.

‘Wellness Together’ is a research project carried out by Sapio Research, where they found there is a strong correlation between productivity, creativity and profitability with employees working conditions. The research came up with some breakthroughs such as employees who consider themselves with a high sense of mental wellbeing work in companies with an average gross profit margin of 7% than those who rate themselves as mentally unfit. Regarding companies with employees physically fit, obtain an average gross profit margin of 8% higher than those with physically unfit staff. High level of flexibility and agility drive to 6% higher gross profit margins, and high rates of innovation and creativity bring on average 8% more gross profit margin than less innovative counterparts.

Environmental Sustainability is the quality of causing little or no damage to the environment and therefore able to continue for a long time. At this point, as mentioned above, it’s included the usage of renewable energies, alternatives public transportation, sharing economies, circular economies, encouragement of healthy and eco-friendly diets, reduce product wastage by suitable designs, recycling and so on. As explained above in social sustainability, all these actions must be implemented in the companies themselves, but also they must try to encourage and enable their whole value chain to follow these practices, including suppliers, customers and rest of stakeholders in the company.

Businesses accounting for climate change and carrying out actions have 18% higher return of investment that companies that don’t. Companies are able to increase productivity and to reduce costs while having more ability to comply with regulations. As mentioned before, nowadays, more and more people take care of environmental issues, so aligning environmental sustainability with the strategy of the company enables attracting employees, investors and customers.

If all mentioned above is not enough for some sceptical people, brand image is also enhanced when the company takes the environmental sustainability approach. Therefore, even if it’s only to follow trends, and give the customers what they want, it’s a good decision.

Economic Sustainability refers to long-term economic growth without negatively impacting the social and environmental aspects of the community. Companies need to pay salaries, resources, bills and dividends. They also need working capital and cash to run the business normally. This economic growth defers from the first industrial revolution economic growth, where many companies created huge amounts of money without taking care of other issues around the businesses. The long-term economic growth or economic sustainability consider as well the social and environmental factors. Responsible investments, wealth generation for all the stakeholders and not mainly for the company itself.

In order to show the current performance of companies already applying economic sustainability two indexes are compared in the last 3 and 10 years:

• 10 last years returns: The Global Dow: +4.93% Dow Jones Sustainability World: +4.83%
• 3 last years returns: The Global Dow: +8.86% Dow Jones Sustainability World: +11.02%

Data shows that the performance of these companies has been almost the same in the last 10 years than for companies in general, as well as in the last 3 years sustainable companies have achieved a higher economic growth.

Companies such as Cambridge Analytics have failed due to lack of social sustainability, Lehman Brothers due to lack of economic sustainability and other companies such as Exxon or BP are trying to reinvent themselves to cope with environmental sustainability. Examples of large companies applying the three pillars of sustainability are Unilever, Patagonia, National Geographic, Panasonic, and IBM.

Up until this day, companies have been using natural and human resources for some people wealth. Of course, these people have risked their money, time and indirect facts to reach that wealth. Nonetheless, companies should have a slightly different approach, using natural resources in a sustainable way, make society grow economically and intellectually with the company while creating wealth for the shareholders.

Summing up, for companies to reach long-term sustainable growth, they should take care of people, environment and economics, been managed with honesty, humility, empathy and common sense (the least common of all senses).