Business sustainability has been a concern for most organizations since the 1970s when the environmental movement and social change became corporate concerns. Now, sustainability is a popular topic in business leadership circles: How does a manager plan for sustainability today and in the future?
As more leaders commit to sustainable business practices, businesses will likely need to adapt to a new era of sustainability — a second phase in which more widespread sustainable practices revolutionize not just how individual organizations but how entire markets function. Emerging business leaders will need to consider both phases of business sustainability, which will include:
Phase 1: Enterprise Integration
The health of the environment first became a concern for businesses in the middle of the 20th century. Beginning in the 1950s, research from various sources began uncovering evidence that human industrial activity was causing intense harm to the environment. Journalists like Rachel Carson published influential works detailing how pollution impacts plant, animal and human populations, and the public began demanding more sustainable solutions to dangerously wasteful business practices.
As a result, President Nixon made environmental policy a main pillar of his campaign. Nixon formed the Environmental Protection Agency (EPA), which was responsible for enforcing other environmental regulations created and passed during the Nixon administration, such as the Marine Mammal Protection Act, the Safe Drinking Water Act, the Endangered Species Act and more. Many of these laws forced businesses to control their operations to prevent pollution and waste.
Pressure from domestic and international regulations is one driver of enterprise integration of sustainable practices, but it isn’t the only one. Businesses can feel pressured to invest in sustainability by their suppliers, shareholders, investors, banks, insurers and buyers, and their surrounding market, to include consumers, competitors, activist groups, the press and others.
Often, the source of the sustainability pressure will determine a business’s first moves. For instance, when an insurance company applies pressure, a firm will likely consider sustainability as an issue of risk management. But when consumers apply pressure, leaders recognize sustainability as an issue of market demand. In any case, most businesses strive to link sustainability with corporate strategy, and in this way, leaders don’t necessarily need to understand the science of culture surrounding sustainability to grasp its importance.
Ultimately, this first phase of enterprise sustainability has led to many organizations making unprecedented changes to their business practices — but it hasn’t exactly been enough to curb the worsening status of the environment. Thus, business leaders need to usher in the second phase of business sustainability: market transformation.
Phase 2: Market Transformation
In the 21st century, climate scientists have identified nine environmental factors that describe how humans can live with safety and stability — in business jargon, they are the key performance indicators (KPIs) of the environment. Already, humanity has overshot the boundaries of three of these factors and are on the verge of exceeding five more. Worse, these environmental disruptions are almost wholly the fault of market institutions, so it is the responsibility of market institutions to remedy them.
The current pressing need for sustainability should drive the market to transform in critical ways. For example, business leaders must reframe their understanding of the environment’s purpose in a capitalist system. Previously, many organizations viewed the environment having value only insofar as it could provide economic growth: as a limitless source of materials and as a convenient deposit for waste, for example. Decision-makers within corporations must drive change in their market by rejecting previous practices and policies and developing new conceptions of operations that involve sustainability at every level.
The second phase of business sustainability will not be easy for many business leaders to enter, but market transformation is essential for the safety and success of the environment. It might be useful for executives to enroll in a business sustainability management online course, which provides leaders with the knowledge and tools to navigate various sustainability challenges within an organization. With the right goals, skills, attitude and strategy, corporations can make the fundamental changes necessary to become truly sustainable.