Sustainable Business: Fad or Fact?
Even though the current economic climate has forced businesses to concentrate on other things, carbon footprint, sustainability and corporate social responsibility (CSR) are still being used by many of them to sell to consumers.
These are buzz-words that would have been unfamiliar to the general public five years agoin but are in common business parlance today. The question is whether the companies spouting them are only paying lip-service to consumer fad, or are they really committed to reducing their use of natural resources?
Unfortunately companies that are beefing up green credentials don't seem to be winning agains rivals with poor records on CSR -- up to now.
Whilst Marks & Spencer is doing great things with its Plan A initiative, its business is not doing well in the short term. Primark, who has been criticised on multiple occasions for its approach to labour standards in the supply chain is thriving. British Airways has a website full of worthy CSR material but is suffering, whereas Ryanair, who seems to have numerous complaints from its staff, suppliers, business partners and customers, is doing very well.
So is it worth it? A number of factors can drive businesses down a more sustainable path:
- Legislation - government clearly has an appetite for green legislation such as landfill tax, climate change legislation and the sustainable communities act. Some measures are no more than stealth taxes, some are genuine attempts to change the way we live and do business. All influence behaviour. For example, the drive for zero carbon homes by 2016 is likely to drive property developers to sites where sources of renewable energy are available to avoid the cost of developing them.
- Shareholder value: during the current recession it is difficult to tell whether businesses with a better record of corporate responsibility will win in the long term. The Ethical Corporation argues that "leading companies that truly follow a path of corporate responsibility coupled with an intense focus on the real drivers of shareholder value will uncover innovative approaches to increase economic earnings" and there is evidence from the Social Investment Forum that ethical investment vehicles out-perform their conventional counterparts.
- Risk: companies like Ryanair and Primark may be the exception when we consider risk. Although these companies seem to thrive on bad headlines, many do not. The sportswear industry suffered badly in the 1990s as a result of poor labour practices and the leading companies now have exemplary controls over their supply chain. Other global corporations have significant percentages of their revenues highlighted in their risk registers with respect to failure to live up to their social or environmental commitments.
- People: there is a lot of research indicating that today's generation of graduates are much more aware of these issues than their predecessors and that companies wishing to attract the best talent need to show their green credentials as well as attractive employment conditions.
What do you think?