Lea Ott
There is a change in morals and behaviour in peoples’ purchase decision. Sustainability has gained a lot of sympathy. Some businesses and sellers notice and support that change. But some companies still struggle with adaptation. Where are difficulties for some businesses to be more sustainable as a part of their everyday choices?
Sustainability as an everyday part of a business. https://www.ecomatcher.com/how-to-make-sustainability-an-everyday-part-of-your-business/
Problems companies face
The IVEY BUSINESS JOURNAL describes ten hurdles for businesses that hold them back from being more sustainable. Their points are listed below.
- There are too many metrics that claim to measure sustainability—and they’re too confusing.
- Government policies need to incent outcomes and be more clearly connected to sustainability.
- Consumers do not consistently factor sustainability into their purchase decisions.
- Companies do not know how best to motivate employees to undertake sustainability initiatives.
- Sustainability still does not fit neatly into the business case.
- Companies have difficulty discriminating between the most important opportunities and threats on the horizon.
- Organizations have trouble communicating their good deeds credibly, and avoid being perceived as greenwashing.
- Better guidelines are needed for engaging key stakeholders, such as aboriginal communities.
- There is no common set of rules for sourcing sustainably.
- Those companies that try leading the sustainability frontier often end up losing.
(IVEY BUSINESS YOURNAL, 2011)
Ways to overcome these difficulties
For a company these reasons may seem overwhelming. But 62% of business owners think a sustainability strategy could be necessary to be competitive today (International Institute for Management Development [IMD], 2016) . So, it is a good idea to look deeper into these reasons and discuss ways to tackle them.
Firstly, many indexes to measure sustainability can be confusing. As someone who isn’t a specialist in this topic it might be hard to decide which index suits best for their industry. With indexes as “carbon footprint”, “energy consumption”, “product recycling rate”, “supplier environmental sustainability index” listed by the website IMD in their article Why all businesses should embrace sustainability (IMD, 2016), choosing a fitting index clearly can be challenging. But having this many measurements can also be a chance. Because there isn’t “the right solution”, companies can choose what aligns best with their industry and their strategy goal (Compareyourfootprint, 2017). Everyone should do what they can do. So as example, while a business struggles with the “supplier environmental sustainability index” they may exceed in “product recycling rate”. So also, without a clear universal index and overall regulations businesses can align their strategy with a fitting index.
This brings us to our second point, that the government is not always clear about sustainability. The government should represent the whole society. The society is very heterogeny so many different interests must be represented. There are already some laws, taxes and subvention that support sustainability. As climate change debates arise governmental regulations become more relevant. So even if right now a business thinks the government is not supporting sustainability strong enough, support becomes stronger.
Thirdly, even if customers do not always purchase the most sustainable option, their decision always consists of a trade-off. As the trend is leading towards more sustainability this factor weights more and more. So as companies invest in improvement in quality and price, investing in sustainability is sensible for the long run.
Fourthly, companies seem to not know how to motivate employees for sustainable action. But job seekers prefer companies that align with their morals [Stanford Graduate School of Business, 2007] . With that said, if a company makes efforts to improve sustainability, they will attract employees that align with that strategy. Also, as sustainability rises in the society, employees will be willing of choosing sustainable initiatives, if they are actionable without big timely or monetary efforts from their site.
Fifthly, the Ivey Business Journal describes that sustainability does not fit neatly into the business case. Sustainability-related investments are based on long-term rewards rather than short-term, so how is it rewarding for companies? As most agree that sustainability and climate change measurements are important, companies need to act responsible even if sustainability isn’t a key issue for their industry.
A similar reason is the sixth, that companies have difficulty differentiating and deciding between different future opportunities and threats. Businesses probably always have more urgent problems than becoming sustainable. But sustainability should be a constant companion while solving arising problems and making decisions.
Seventhly, Organizations have trouble communicating their good deeds credibly, and avoid being perceived as greenwashing. Greenwashing is a big problem nowadays. Some companies want to profit from the good reputation of a sustainable business without making efforts to actually become greener. These companies should be criticised for such actions. However, if a company makes efforts to being greener and communicates clearly where their strengths and weaknesses lay, and also updates about planned improvement, being perceived as greenwashing shouldn’t be a problem.
Eighthly, universal guidelines may be missing for communicating with stakeholders like aboriginal communities. The Article Towards guidelines for survey research in remote Aboriginal communities (Practioners’ Forum, 2022) gives some good guidelines that help with interaction with aboriginal groups and can also be transferred to interacting with other stakeholders. Most important is that companies try to understand the views of stakeholders on sustainable development and interact with them regarding those topics.
Ninthly, there is no common set of rules for sourcing sustainably. This may be true. But as a company builds its sustainability strategy they can use some basic steps, that help in sourcing sustainable described by the website ecovadis. Summarised, it is important to already integrate sustainable policies in the finding process of suppliers, then communicating clear expectations and monitor the supplier’s performance (ecovadis, 2022).
Tenthly, those companies that try leading the sustainability frontier often end up losing. Being a frontier to sustainability, as example investing in new promising technologies which then turn out to be disappointing, can carry some risk. But right now, many companies already made a step towards sustainability, so it is more about not getting left behind and loosing competitive strength.
Conclusion
Companies face difficulties in becoming more sustainable. Some solutions are easier to align with a company’s strategy, for others they will have to go more out of their way. But eighter way it is important that sustainability is everyone’s business so we can tackle one of our biggest issues. While some companies try and do well in transforming into a more sustainable industry others lay behind. For me the important question is whether the reason for that variance is caused by the differences of the industries rather than the mentality of the individuals leading the company. Because if two companies are in a similar service industry and are also regionally similar, then I don’t see, why big differences could arise in implementing more sustainable performance. Therefore I think it could be interesting to enhance research in the industry, geographic location, and target group of businesses that don’t do well in transforming into a sustainable company.
References (needs cleanup, BW)
Pamela Laughland, Tima Bansal, Tima Bansal (2011). The Top Ten Reasons Why Businesses Aren’t More Sustainable. Ivey business journal. https://iveybusinessjournal.com/publication/the-top-ten-reasons-why-businesses-arent-more-sustainable/#:~:text=However%2C%20sustainability%20is%20more%20than,by%20individuals%20around%20the%20world.
Knut Haanaes (2016). Why all businesses should embrace sustainability. International Institute for Management Development (IMD). https://www.imd.org/research-knowledge/articles/why-all-businesses-should-embrace-sustainability/
Measuring Key KPI’s for Sustainability as a Business. (2017). Compareyourfootprint. https://www.compareyourfootprint.com/measuring-key-kpis-sustainability-business/
Montgomery, David B., and Catherine A. Ramus (2007) Including Corporate Social Responsibility, Environmental Sustainability, and Ethics in Calibrating MBA Job Preferences. Stanford Graduate School of Business. https://ink.library.smu.edu.sg/cgi/viewcontent.cgi?article=1938&context=lkcsb_research
Robert J. Donovan, Ross Spark. (2022) Towards guidelines for survey research in remote Aboriginal communities. Practitioners’ Forum. https://onlinelibrary.wiley.com/doi/pdfdirect/10.1111/j.1467-842X.1997.tb01660.x
Ecovadis. (2022) What is Sustainable Sourcing? https://ecovadis.com/glossary/sustainable-sourcing/