01 Feb 2008  What Do YOU Think?

How Sustainable Is Sustainability in a For-Profit Organization?

Online forum now closed. For managers, sustainability can mean the integration and intersection of social, environmental, and economic responsibilities. The concept is admirable, says Jim Heskett, but does it also confuse managers entrusted with the bottom line? How should they make trade-offs? Jim sums up reader responses.

 

Summing Up

How will sustainability be achieved? To sum up responses to this month's column, the question is not whether global sustainability will be achieved but how.

One school of thought could perhaps be characterized as enlightened self-interest, a realization on the part of managers and investors alike that, as Gaurav Goel put it, "Sustainable businesses have lesser risks associated with their future earnings ... triple bottom line (economic, social, and environmental sustainability) reduces uncertainty." Or as P. Nanjunda Pratap said, "Sustainability defines the life line of any organization." Carol Holding associated brand value with sustainability: "As brand value will soon be included in a company's valuation ... we can more than ever monetize sustainable behavior."

Others see the market working its effects on behavior to lead us to a sustainable future. Gerald Nanninga, for example, commented that "If we deplete resources too quickly, the shortage of supply ... will make conservation issues more financially viable."

Some felt that the free market might need some help. Elizabeth Doty put it this way: The "invisible hand" may not lead us to the greatest common good ... without government action(s).... These might take the form of incentives." Richard Eckel expanded on this idea, saying that "To suggest that for-profits embody any form of moral restraints is to infer an attribute foreign to the concept and history of these entities.... When it is monetized" (whether by competition or government) "the for-profit enterprise will select the lowest price alternative." But Allen Howlett expressed reservations about this approach, saying, "To do nothing will invite social pressure and 'one size fits all' legislation."

All of this will take time. Adrian Gonzalez commented that "There's a limit to what can be accomplished ... because today's products, manufacturing processes, and supply chains were not designed with sustainability in mind." Wole Fayemi added that sustainability is more achievable "if the concept is integrated into the business model at inception." And as Laura Howard put it, "This works best in small companies who can design their entire business and brand around a set of coherent sustainable values .... (They will) "change the conversation in the industry."

There was a less hopeful tone to some comments. Peter Maxson said, "... we don't have a common vision of where we need to go as a global society, and even if we did, we don't have a viable means of getting there."

A former associate and sometime contributor to this column, Stever Robbins, was provoked to send me an email that helps sum up the further questions that these views pose for us. In his words, "One way or another, we will become sustainable. I just hope we do it ourselves ...." (Should we call this the doomsday school of thought?) His questions were: "Here's a deeper puzzle: What would a sustainable economic system look like? For starters, how would you define 'success'?" What do you think?

Original Article

Recent word that Google's leadership has identified sustainability as an important business initiative has given the issue new visibility alongside Al Gore's Nobel Peace Prize. At the same time, it raised some eyebrows among investment analysts who asked what sustainability has to do with Google's core business of making the world's information universally available. Will Google sacrifice focus and profitability in the name of sustainability? It remains to be seen whether this initiative is overblown, representing little more than solar panels on the roof of corporate headquarters.

This topic comes at a time when an interesting paper with the unfortunate title "A Framework of Sustainable Supply Chain Management Moving Toward New Theory" has crossed my desk. I receive these occasionally with a request for my blind (authors unknown to me) review for a juried academic journal with the equally unfortunate title International Journal of Physical Distribution & Logistics Management, which concerns itself with research in supply chain management.

The paper attempts to provide some context for those addressing issues of sustainability. Its intent is to get us beyond questions such as, Is sustainability desirable? or Does it pay to be green? Because supply chain management depends heavily on the sustainability of everything from energy sources to low-cost sources of products and services to security, it is not particularly surprising that for some of the most interesting thinking concerning sustainability we might turn to this field. The paper calls our attention to the fact that "68% of the Global 250 firms generated separate annual sustainability reports in 2004." Whether that represents a "management revolution" remains to be seen, but it's something that puts a number on a trend toward management attention to sustainability.

One oft-quoted definition of sustainability was provided in 1987 by the World Commission on Environment and Development: "development that meets the needs of the present without compromising the ability of future generations to meet their own needs." In their paper, the authors, citing the practical difficulty of implementing such a broad definition, support the idea of sustainability as the integration—and intersection—of social, environmental, and economic responsibilities that are borne by managers. In for-profit organizations these responsibilities converge in what has come to be known as the "triple bottom line." The authors posit (but do not prove) that organizations that satisfy all 3 criteria in their decision-making will realize greater economic success than those that fulfill only 1 or 2 of them. By extension, one could argue that decisions intended to support sustainability that satisfy all 3 management responsibilities are likely to be made first and without outside (governmental) encouragement.

In fact, some researchers claim that these decisions, representing "low hanging fruit," have already been made. This prompts the question of just how decisions will be made in the context of significant trade-offs among these criteria that may lie ahead. Will this prompt a continuation of the proliferation of board committees on sustainability or its first cousin, risk? If so, will this just confuse management entrusted with a single bottom line? Will further progress in this realm require government intervention, even if this proves more costly than proactive efforts on the part of management? Or does government intervention tend to negate the competitive benefits for those who have acted proactively? How sustainable is sustainability in a for-profit organization? What do you think?

Comments

    • Anonymous

    It was Paul Gilding, formerly head of greenpeace international but now a sustainability consultant, that suggested that businesses have only one bottom line - and that is to make money. Each "sustainability" initiative must be able to stand up on it own to be accepted. on saying this, I believe that the timeframes that many decisions are currently made under are too short - looking at quarters rather than years. with this change in timeframe many projects would begin to look quite attractive.

     
     
     
    • S. Balasubramoniam

    I endorse the doubt expressed by author. The stock market recognition route to encourage sustainability practice, which is the normal bait offered, alone may not be a suffcient driver; governments ought to give preferences. But to come out with a transparent yet fair method of measuring sustainable performance of a for-profit company is difficult. Current methods only provide benchmarks against own performance or help to balance trade offs.

     
     
     
    • Gaurav Goel
    • PGPX, IIM Ahmedabad

    Any sustainable business model is more valuable than short term focused ventures. Value of any venture depends on expected returns and risk associated with returns. Sustainable businesses have lesser risks associated with their future earnings. Triple bottom line reduces uncertainty in availability of factors of production and also accessibility to potential customers. Hence in long term, a sustainable business would always comes out as a winner.

    One can argue that investors can move from one short term gain to another to maximize their profit, but such an approach assumes that such investment options would be available all the time. Market forces make sure that returns from any investment are proportional to the risk it carries. Some investors may make quick bucks in short-term focused business but there are always risks of losing such profits if they do not exit at right time or if they put wrong bet in their next investment.

    For a collective good, we need to spread the awareness that sustainability is essential for long term prosperity of the individuals. Some of us would continue to believe that social benefits are different from individual benefits, but market would prove otherwise.

     
     
     
    • Anonymous

    A year ago I made the decision to identify and then commit the funds to deploy several alternative fueled vehicles in daily service within my trucking division.

    Deployment of both electric powered and CNG fueled trucks will begin this year by the end of the second quarter. The basics of the economics of this decision are that initial cost is 2X as much as comparable diesel fueled vehicles.

    The mandate for this decision is that the technology must be cost effective in the marketplace and of benefit to efforts to provide energy security and reduced emissions. The universal and constant reply to any of my existing customers when I have outlined these plans has been,"How much will this cost us?"

    My reply has always been, nothing. The service we provide has to be good and cost effective to remain competitive. The point of this is that all the questions raised at the conclusion of your article are still unanswered and of real concern in the marketplace.

    Sustainability, despite it's real world importance, will remain a question for "discussion", review and consultancy growth unless there is a commitment on the part of each individual business and individual business manager to move from discussion to action.

     
     
     
    • Ulysses U. Pardey, MBA
    • Managing Director, Am-Tech, S.A., Panama, Rep. of Panama

    How sustainable is sustainability in the for-profit organization?

    A workable definition for my comment.

    Let's say that business wise, sustainability is to manage for profit growth considering that, economic growth and adequate ecological improvements to support long-lasting social progress and fairness for social peace, can favor business.

    This is like adding to a regular management for profit growth a new set of considerations in order to favor additional profit growth for my business.

    If someone other than the company is paying for these additional considerations then sustainability can be profitable. One way to do this is that customers' needs are within these further considerations of the company.

    Why would we like future generations to live together a good or better life in peace? I believe that the answer would be a choice of way of life. How selfish are we? Do we value sharing for better results? Truthful answers to these questions could accurately help frame our reason why of these added considerations.

    In general terms, sustainability growth ( managing more and more like this ) could mean additional profit growth because of superior care of nature, most of our needs solved better, upgraded customers, bigger markets and therefore an enhanced quality of life which then would require sustainability from more companies. It reads as if all these items could move together in the same direction and that is additional profits.

    How to make this true for the majority of companies and markets? Are all our customers' needs within these additional considerations of our company? How to get their needs in?

    As companies are solution providers, perhaps the core business a company manages is embedded in a local-way-of-life the profit is emerging from. The question is how global is this local-way-of-life? How risky, profit wise, is it to suppose it is? Eventually and generally speaking, the matter-of-fact definition and application of a long-lasting profitable sustainability could vary according to local nuances when this set of new considerations naturally emerges from a core business embedded in a local-way-of-life (what is a superior care of nature for this market and so on, does this market need one?), hopefully generating with this approach more adequate solutions and a more competitive business. This could be the reason why it is highly useful that the practical definition of sustainability comprises all parties involved in the business such as and not limited to companies (profit-minded), costumers (needs-to-solve), the knowledge of what makes local, local, and if necessary the government as a facilitator. If what is local can be global, beautiful.

    Based on this workable definition and approach, customers' needs are within this new set of additional considerations and therefore sustainability becomes part of the business.

    It could be that the best annual sustainability report for company boards and society is a sustainable improved quality of life markets can pay for, a win-win situation.

     
     
     
    • C J Cullinane

    Sustainability to me is a method of harvesting or using a resource so that the resource is not depleted. By this definition most companies utilize sustainability just for the long term survival of their organizations.

    Cutting energy costs saves money, it sounds like good business to me. Recycling steel and aluminum and minimizing scrap again is just good business. I have been responsible for a manufacturing facilities were we looked to cut costs in energy usage, scrap, and waste on a constant and consistant basis. It saves money.

    The "buzz word" sustainability may move on to the grave yard of old initiatives but the concept will stay with industry for the long haul. Most successful organizations have used the concepts of cutting costs for years and will in the future.

     
     
     
    • P. Nanjunda Pratap
    • Managing Director, etchR India Private Limited

    Hi, Sustainability defines the life line of any Organization in my opinion. Borrowing the thought "idea of sustainability as the integration--and intersection--of social, environmental, and economic responsibilities", I would like to highlight the Toyota Motors story, of how they contributed to sustaining General Motors (Social and Economical in case of USA) and developed Hybrid vehicles (Environmental) for the same market.

    Today, everyone knows Toyota has got ahead of General Motors in terms of Vehicle production but has been making more profits per vehicle compared to General Motors for much longer time.

    This only confirms and proves that I as an entrepreneur and a Business owner of a "for-profit organization" should and must always think of Sustainability as a trinity of Social, Environmental & Economical responsibilities. My success is best achieved and my organization's longevity best attained only if I make meaningful approach to the Trinity and internalize the essence of the spirit of Sustainability in the context of the trinity as mentioned. Cheers, Nanju

     
     
     
    • Isaac Dakwa
    • Customer Care Rep, Net*One Cellular P/l

    Sustainability in my opinion is relevant in that you need to invest in businesses that are profitable for a long period of time.

     
     
     
    • H. S. Shama Sundar
    • Chief Executive, G&L Associates

    According to me talking about sustainability is a fancy word for many organisations. Many a times living up to the desired standards and following ethical values are important ingredients of sustainable growth. We have earlier heard organisations talking about sustainability and nowhere found today due to unethical practices. Hence organisations have invest time in soul searching and honest business plans before publicizing about sustainability.

     
     
     
    • Furqan Nazeeri
    • Entrepreneur-in-Residence, Softbank Capital

    Many of the sustainability initiatives undertaken by companies have the benefit of being "green" but also making good business sense. For example, McKinsey recently released a study of greenhouse gas abatement opportunities. They listed 250 reduction opportunities in 5 different categories of which about half had negative cost associated with them (i.e. implementing the program generates cash). You can find a copy of the study here:

    http://www.mckinsey.com/clientservice/ccsi/pdf/USghgfinal_report.pdf

    To be more specific, Bill Marriott, of the hotel chain, talks about some sustainability initiatives they undertook last year on his blog:

    http://www.blogs.marriott.com/default.asp?item=518336

    One he talks about is that they replaced 450,000 incandescent lightbulbs with compact fluorescent lights reducing their lighting bill by 65%. Yes, the bulbs cost more, but they last 10 times as long as incandescents so the net-net is the initiative generates cash.

    Bottom line, I think we will see all companies focusing on this more and maybe not necessarily because of the environmental impact but because it just makes good business sense.

     
     
     
    • Laura Howard
    • Bridges Ventures

    Hi Jim,

    My experience with green and ethical companies has convinced me that sustainability can be a differentiating business strategy for entrepreneurial consumer facing ventures and it is indeed possible to do well as well as being good without making tradeoffs in some cases.

    Benefits are derived in 2 ways: consumers who are more loyal and who are willing to pay more, and employees who are more loyal and who potentially may accept lower wages.

    However, this works best in small companies who can design their entire business and brand around a set of coherent sustainable values. It is much less credible to consumers and employees and more difficult to implement when it is retrofitted onto existing organisations.

    Because of this, larger incumbents may find that their decisions around sustainability are framed more in terms of a trade off between short term profits and sustainability. However although consumers and employees may not reward these organisations for "good" behaviour, they may penalise them for "bad" behaviour. Smaller innovative organisations will "change the conversation" in the industry and drive up consumer expectations, forcing larger players to follow.

    All organisations will therefore find some benefit in sustainable behaviour, although incumbents will probably be followers rather than leaders.

     
     
     
    • Matt Heinz
    • Senior Director of Marketing, Verdiem Corp

    I believe in the not-too-distant future, sustainability will be a fundamental, "table stakes" part of doing business for global enterprises. Reducing the impact companies have on the world around them will soon become non-negotiable, and a requirement for doing business with customers (commercial and consumer) that expect them to act responsibly.

    Today, that isn't the case - at least not yet. While several businesses have blazed a trail with significant corporate responsibility and sustainability initiatives, not enough of those efforts had paid off - either in increased sales or decreased operational costs. Unless such initiatives demonstrate a consistent ability to provide value to the organization, they'll be close to the chopping block in leaner times.

    That said, technologies are emerging that allow companies to "go green" and save green at the same time. Verdiem's SURVEYOR software, for example, is helping companies save up to 60 percent off their PC energy bill, while cutting associated carbon emissions up to 40 percent. That represents a high, measurable impact on both the environment and the bottom line.

    And if this kind of savings is both real and verifiable, it's the kind of thing that will get prioritized higher in lean times.

    More info on IT energy waste and profitable sustainability practices can be found at the links below:

    http://www.verdiem.com

    http://www.GreenMyPCs.com

     
     
     
    • Elizabeth Doty
    • Founder, WorkLore

    As I read further about this issue, it strikes me that there are three main drivers behind the pursuit of sustainability: long-term profitability, responsiveness to customers & third-party stakeholders, and the aggregate need to adjust the resource "footprint" of our society.

    It also strikes me that our willingness to take a long term view comes and goes with the pressures and prevailing beliefs in the financial markets and that consumer or third-party attention to the issue is difficult to sustain at a visible level (though the need or interest may be constant).

    That said, I am very concerned that the drivers currently pressing businesses to pursue more sustainable means may not be sufficient to the needs of the society. That is, the "invisible hand" may not lead us to the greatest common good, as long as there are market failures that make it profitable to externalize costs.

    This is why, though I am extremely encouraged by the tidal wave of efforts and greater shared understanding of the importance of the long view into our children and grandchildren's lives, I also believe there are certain actions that are desperately needed but cannot happen without government action to correct for current market failures.

    These might take the form of incentives, but we should be clear that this is less about "government meddling" and more about the fundamental rules of the game that lead markets to serve a society best. (We all know the list -- minimizing externalities, power to control prices, information distortions, etc.) Though I know that can be an extreme political and logistical challenge, as long as it does not pay, even in the long term, to do what is best for the greatest good, we cannot expect it to happen in a sustainable way.

    Dare I say that perhaps the greatest contribution corporations could make would be a considered and careful relaxation of their resistance to legislation, at least where traditional market failures distort the "invisible hand"?

     
     
     
    • Mark Smith
    • Owner, TMT LLC dba Midas of Central VA

    The concept of sustainability with respect to social issues, community impact and the need to maintain cash flow is one we have worked on for the last 7 years.

    We have no board to contend with and, as a small business owner, I would offer that an equally important audience to consider in your question is my peer group of small business owners. These people are the fabric of communities large and small.

    What role you choose to play in your community, how you choose to re-invest in the community and how you choose your competitive price and operating platform are things that need to be considered in as standard aspects of any business plan.

    We have seven blood drives a year at 4 of our locations where we offer free car care to anyone who chooses to donate blood to the Virginia Blood Center. These drives generate hundreds of donors per event and are a critical source of blood for Central Virginia.

    Where is the sustainability on these drives? I would argue we see it in three distinct directions. 2007 was our sixth year of same store sales double digit percentage increases in sales, this in spite of the fact we have a premium pricing strategy; the average sales per unit is significantly greater for our organization than the average system operator; and the blood drive effort is recognized several times a year thru local media. That is the "triple bottom line" as I see it -- profit & growth, community activity with related incentives and the flow of badly needed resources into the local NFP network.

    Re-investment in your community, whether you are a Fortune 500 company or a local small business owner, is a critical key to survival in the marketplace.

    Every asset we own can be bought. The sole distinctive variables any entity has are the people that are the face of your organization, the sustainable and emotional connection they offer to the public and the intersection with the attractiveness of your local brand or enterprise.

    I see this as an ongoing and continually evolving line of thought and course of action for the strategic plan of any company.

    Mark Smith Owner -- Midas of Central VA

     
     
     
    • Henry Maigurira

    Global initiatives that foster recognition of standards and values for conformity in the operational processes and completion of project outcomes certainly embedd the pillars for sustainability. For instance the Corporate Standards Initiatives a global governance call to perfect transparent accountability standards for profit making organisations validates the framework for individual corporate social responsibility program. The scope of the enterprise is crucial, prioritising openess and enhanced transparency to organisational values that circumscribe sustainibility often rewards the determinants, invariables and timeline. The organisation, its enviroment are important drivers of change to manage future dimensions and growth patterns.Sustanability is sharing and profiting now, achieving our standards and representing the future needs for equity.

     
     
     
    • Anonymous

    While sustainability is the current buzz word and I believe this is positive, it is currently viewed as a means of being a little kinder to the environment and potentially lowering some corporate costs.

    True sustainability would be to use as few resources as possible and limit the depletion of resources. Unfortunately, this creates a contradictory model. As long as our economy is based on the constant expansion of consumption and profit, a.k.a. Growth, sustainability will remain a buzz word.

    Webster's "to keep in existence; maintain or prolong. ... What is (or creates) sustainability for the US and the other major economies is often the cause a lack of sustainability (to provide sustenance for) most of the "underdeveloped" world. What is sustainable about creating a situation in which people who have been able to support (sustain) there lives for centuries become dependent on import goods to eat?

     
     
     
    • Gerald Nanninga
    • VP, Retail Ventures

    According to the laws of capitalism, money will flow to the places in the economy where it can get the highest returns. Therefore, the question is whether sustainability efforts will provide a higher return.

    On the demand side, there is an increased demand for sustainable products. On the supply side, many of the sustainable initiatives serve to lower costs. Hence, many sustainable initiative work due to capitalistic forces.

    In addition, if we deplete resources too quickly, the shortage of supply relative to demand will raise commodity prices, which will make conservation issues more financially viable.

    As always, the question is not about sustainability, but profitability. The laws of capitalism will dictate which sustainability efforts endure.

     
     
     
    • Wole M. Fayemi
    • Founder, Motorious, Inc.

    I am completely confident that sustainibility and profits are not mutually exclusive in a for-profit enterprise, if the concept is integrated into the business model at inception. Several years ago, I had created such a business model (which continues to develop), which was centered around a non-profit foundation [The Motorious Foundation], whose purpose was to 1) educate consumers about environment issues as they related to the intersection of the technology and automotive industries 2) attempt to close the digital divide and bring technology to the deprived and technophobes via the automobile, and 3) to promote and teach the building of environmentally responsible products by its manufacturing partners who created products for this segment. What made the model both innovative and interesting (and viable, among other things) was that it also integrated a novel marketing mechanism rooted in a published academic model [later termed: The GREENSPEED Index], which would, via a pricing algorithm linked to production values [Overall Impact on the Envirnoment], make more (financially) attractive to consumers the purchase of environmentally friendly products and/or services. To date, I am unaware of a (sub)BRAND STRATEGY which is solely centered on being environmentally conscious (promoting social values) in a market environment (selling of products). When the two are combined on a large scale, there is a measurable impact in the good which can be brought to society.

     
     
     
    • Isabel Rimanoczy
    • Legacy Coach, LIM LLC

    If any organization cannot make sustainability a goal, it's deemed to be short-lived. The competitive environment creates new standards - where consumers and communities are paying attention to the messages AND to the actions of the companies. That means, if you're not doing what your competitor is doing - be prepared. Then we have the savings that are hiding in the take-make-waste model, originated at the times of the Industrial Revolution. Those who have tapped into those savings opportunities, are having better margins. Finally, we are all living in the same spaceship. Our behaviors of yesterday are creating the effects we begin to see today. More to come - so it's in all our best interest to start changing behaviors.

     
     
     
    • Nick Stone
    • Doctoral Student, University of Melbourne

    Use of the term 'capitalism' often distracts from more pressing issues and attracts polarised reactions. It's just a construct that roughly connotes a range of meanings. Whichever dominant ideology is perceived to be at large, there appear to be (at least) two critical issues:

    1. We need more effective checks and balances so that corporations and other institutions have a perennial incentive to offset single bottom lines with more socially responsible outcomes. While this can happen at the national level, it seems likely that the most durable system(s) will need to also be globallly endorsed.

    2. How affordable corporate socially responsible behaviour is perceived to be depends on the chosen chronicity: short or longer term orientation. Longer term vision does not separate environmental, social and profit-making imperatives- they converge when sustainability withers away.

     
     
     
    • Anonymous

    Clearly there are many ways in which many businesses can save money by making moves toward sustainability. They may also be able to improve their image in the eyes of consumers and employees by doing so and improve their long term prospects.

    Internalization of current environmental costs, however, will never save a business money. Image improvement based on false claims to sustainable practices are not hard to find. And, the quarterly perspective of the market is surely a more powerful force than promise of out-lasting those who have failed to go green.

    Jared Diamond (http://www.nytimes.com/2008/01/02/opinion/02diamond.html?_r=1&scp=1&sq=jared+diamond&st=nyt&oref=login) points out that the first-world:third-world consumption factor is 32x and that the promise of first-world standard of living for the rest of the world is a myth. We must begin to move towards balance in consumption and its difficult to imagine that taking whatever steps are presently convenient will be enough.

    There must be regulatory involvement forcing businesses to internalize the costs of their present operation if we are to make more than piecemeal progress towards true sustainability.

     
     
     
    • a.walker
    • retired programmer, retired street-vendor

    hello mr. heskett,

    let me thank you and the harvard business school for this opportunity to comment.

    newly free of the preoccupation of our previous century, communities around the world are now looking at the surprising issues that have risen in the last 40 or so years: we are at a point in human history where the serious impact to our environment of what we do is literally global in scale.

    we find that changes are desirable and, not quite certain of what changes to make, we have centered on sustainability as the self-evident best answer to that uncertainty.

    human practices on a social scale are at the root of this global impact to our environment, and business is one of the practices offering the opportunity for change.

    thus we come to your questions which revolve around a single question: 'how does business become sustainable?' or perhaps better, 'what can be done to bring business to sustainability that is least disruptive to business?'

    i'd like to suggest that perhaps the best way to do that is to foster an atmosphere of relentless, independent, efforts on the part of businesses and industries to grow into sustainability, efforts that extend to businesses and industries helping other businesses and industries who may both need and wish help to attain sustainability.

    done well enough, i'd venture that government intervention could be limited to encouraging a long-term view, and even that might not be necessary.

    to conclude i'd like to refer you to a talk given at u.c. davis by mr. yvon chouinard, founder and owner of patagonia inc. in his talk mr. chouinard tells of how and why he came to write his book entitled "let my people go surfing: the education of a reluctant businessman".

    mr. chouinard is an extraordinary businessman, one who came to his success outside the culture that would naturally have seen him with different views here and there. please set aside what you may wish to set aside and listen to what he as to say that is of value.

    mr. chouinard's talk is one hour in length. it is available in real audio streaming video on the net at:

    http://webcast.ucsd.edu:8080/ramgen/UCSD_TV/11165.rm

    best regards,

     
     
     
    • Anonymous

    I agree with someone's comment that 'sustainability' and 'relentless economic growth' are not consistent...at least in the present state of affairs, where 'unclean' power (Coal) and 'unclean' fuel (Petrol and diesel) are many times cheaper than their 'clean' alternatives. At the same time, we cannot turn our face away from the fact that we are collectively on a 25% overdraft situation with respect to the earth's resources i.e. we are consuimg 25% more of earth's natural resources that what we are allowed to. At the cost of sounding alarmist, it does seem that our survival is at stake. So where's the question of a debate on sustainability ? Maybe, we should all just stop talking and concentrate on staying alive....till a Google or someone makes the grand announcment that RE is indeed < C ( Renewable energy costs less than Coal) as Google's manifesto states. And yes, I think that Google is doing all this because it knows that as the earth warms up more and more, people will feel too hot under the collar to bother about search for information on www.google.com.

     
     
     
    • James Egbe
    • CEO, JP Consulting

    The issue of sustainability should be viewed from the point of sustaining best practice, adding value and making profit which is actually what keeps the company running. Sustainability should not be viewed in terms of not changing a winning team rather enhancing the performance of the team to achieve goals more efficiently and in cost effective way. In effect it means to 'better your best'.

     
     
     
    • Veta Salubi
    • African Tigers Ltd

    Hello Mr. Heskett,

    I believe that sustainability is sustainable in today's for-profit organizations. It has to be for these organisations to thrive in the current and future political, social and physical climates so to speak. The trend in big organisations, which is being forced directly and indirectly by the need for accountability, social responsibility and efficient management of resources at hand is to look within first and foremost for the solutions to meeting these needs, and also creating the 'profit' with which to engineer growth or better still, adaptation to change, by creating the balance (this is the key word) necessary.

    I see the process of sustainability as an ever evolving cycle of resource management (people and things) spiralling upwards (a time variable factor of sustainability) and hopefully expanding outwards (showing growth/expansion that reflects profit). Now we have a very visually representation of what sustainable business should look like- a vortex. I prefer to call it the 'tornadoe principle' of sustainability; the strongest tornadoes are the ones with close to or cylinderical proportions. That is to say profit (outside of that used for adaptation to change) growth is slow but organisational strength is strong.

    Many more corollaries may be extruded from this principle once the imagination is let loose and build an interesting model (for example 'feeding' the tornado). Summarily, organisations need to build and emphasise their strengths- which are their people and processes and follow the model for sustainability. Its all a grand experiment that will eventaully, because for sustainability there is no end, yield the best of all worlds for all involved.

     
     
     
    • Rojan Baniya
    • Student, Unversity of Colorado at Denver

    Whenever the question comes about sustainability, to what extent and to what level will always remain tricky question. For profit organization will stand on knife's edge to make the decision, as the movement towards sustainability demands costs, but if you are clever enough as a business entity you will definitely find way to convert this cost into investment, a good undersanding is provided by Roger Martin's Virtue Matrix, which provide us a strong guidance as how to fullfill sustainability and still profit.

    One of the practicality of sustainability is the tax system of US, where the government deduct all the taxes from state resident at the source itself and return back in form of good roads, good electricity and other vital facilites. My point is rather than expecting sustainability role played by the for profit organization, it is better if the specialized institution like US Government take the necessary taxes (which can be ascertained based on different parameters), and they shoulder the necessary sustainability acts in social, environmental and other aspects. By this we are putting on focus on the issue, where as the for profit business does not have to invest their brain. Also after assessing the business, the cost will be spread among all the business in proportionate rate.

    A strategy followed by structure and a proper action plan is the prime need which must come at some level, leaving it in philanthropic manner to business is not practical and will not take us anywhere.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC (India) Private Limited

    For remaining alive and in good overall health, the basic for which is being a for-profit organisation, corporates have no alternative but to sustain their sustainability. This needs focus on improvement of the corporate policies , procedures, entrepreneurial priorities and practices. Development of the corporate environment needs close attention of the ledership. Better global practices need to be adopted.

    In the broad frame work of the Company's vision and mission, there has to be openness to concerns. There may be a need to develop and maintain, where significant hazards exist, emergency preparedness plans. Research and development plays significant role in ensuring sustainability of the organisation. In short sustainability is a key factor which would drive the company to its future growth.

     
     
     
    • Carol Holding
    • Consultant, Brand/CSR Integration Consultant

    The number one reason companies embrace Corporate Social Responsibility, aka sustainable practices, its to improve brand reputation (per The Economist and others). As brand value will soon be included in a company's valuation, it strikes me that we can more than ever monetize sustainable behavior. Even now, firms like mine are tracking financial returns for CSR via increases in brand value.

     
     
     
    • Adrian Gonzalez
    • Director, ARC Advisory Group

    If you go back a year or two ago, just about every magazine and newspaper had an article about the environment, how we're in the midst of a "green" revolution that even corporate giants, like Wal-Mart, were not only supporting, but actually leading the charge. "'Green' is good for business" was the battle cry, a logical extension of Total Quality Management, Six Sigma, Lean, and other business practices.

    But the headlines are starting to change. "Little Green Lies" was the cover story in last October's Business Week. "The Dark Side of 'Green' Lightbulbs" in the Wall Street Journal. "The Truth About Recycling" in The Economist. "The Six Sins of Greenwashing" and so on.

    So, what's going on here?

    This brings me to the first inconvenient truth about green supply chains: many 'green' initiatives are like today's pharmaceutical drugs--they have negative side effects that are finally getting recognized and talked about.

    For example, compact fluorescent lights consume a lot less energy than incandescent bulbs, but they also contain mercury. So, on the one hand, power plants will emit a lot less CO2 and mercury, but on the other hand we could end up with a huge environmental problem if millions of these bulbs are tossed in the garbage and end up in landfills.

    Using more bio-fuels will reduce our dependence on oil, but the trade-off is higher food prices and increased deforestation, as farmers race to create new feedstock plantations.

    Recycling keeps materials out of our landfills, but only temporarily. And chemicals often have to be added to recycled materials like plastics to restore their properties and make them useful again. As the authors of the book Cradle-to-Cradle state: "Just because a material is recycled does not automatically make it ecologically benign, especially if it was not designed specifically for recycling".

    There's a limit to what can be accomplished with current 'green' initiatives because today's products, manufacturing processes, and supply chains were not designed with sustainability in mind. I started my career as a product development engineer, and the first thing you're taught is that fixing problems during the design phase takes exponentially less time, money, and resources than trying to fix problems after a product is already in volume production.

    And that's essentially what we're trying to do today: we're trying to fix the environment while keeping the production lines of a fast-growing, global economy running. We're treating the symptoms, the negative side-effects, of supply chains that were not designed with sustainability as a criterion.

    Now, don't get me wrong. I'm not saying that companies shouldn't optimize their transportation operations, or reduce the amount of packaging in their products, or look for ways to conserve energy and eliminate hazardous materials from their products and processes. These and many other 'green' initiatives are making a difference. Just look at what companies like Stonyfield Farm, HP, SC Johnson, Wal-Mart, and others are accomplishing.

    What I'm saying, however, is that there's a limit to what these initiatives can accomplish compared to size of the environmental problem and how much time we have to fix it or drive it into remission.

    And this brings me to the second inconvenient truth: creating "green" supply chains that are truly sustainable will be costly and messy, and we're all going to have to pay for it, one way or another.

    Yes, it's true: 'Green' is good for business. But this is true because, for the most part, only "green" projects that are good for business (or required by law or Wal-Mart) get done. Now, I have no argument with this. Companies are in business to make money, not lose it. I certainly don't want to work for a company that drives itself into bankruptcy and leaves me jobless by undertaking "green" projects without any fiscal discipline. But we must also recognize that there's a limit to how much progress we can make, and how quickly, if "good for business" is the only litmus test we use. Eventually, the law of diminishing returns will kick in, and then what will we do?

    Thomas Friedman, the New York Times columnist, gave a speech at the Aspen Ideas Festival last July where he questioned the notion that we're in the midst of a "green" revolution. "Have you ever seen a revolution in history," he asked, "where nobody got hurt?" "We're having a green party, not a green revolution," was Friedman's conclusion, and I agree.

    At some point, the party must end if a "green" revolution is to occur, and it will be costly and messy. There will be winners and there will be losers. Some jobs and industries will suffer or disappear, while others will develop, grow, and prosper. Some countries will emerge as leaders, while others will fall behind. And each of us will have to pay more, either via higher taxes or prices, for energy, food, transportation, clothing, and other consumer goods.

    No pain, no gain--that's what my dad used to tell me growing up. No pain, no gain is also true when it comes to reducing the environmental impact of supply chains.

     
     
     
    • biswashree dey
    • student

    we have to learn to accept that natural resources are not consistent. we can not always save it for the future generation but the focus of for-profit organisations should be to innovate in new ways to use resources. innovation is a key in this processes, sustainibility is only possible through innovation. the bottom-line can be profit making but if a company wants to sustain this,it has to through one way or other harmonize with the nature. and this innovation can turn out to be a profitable business.

     
     
     
    • bernard
    • mattluc trading

    Hi Mr Heskett

    Thank you for the opportunity.

    There is clearly only one pertinent question and that is:

    WHO PAYS FOR IT.

    For the organisation to remain viable (in financial terms) the final end user has to pay for all new ideas and agenda. It is the duty of the marketers and PR to convince them to willingly part with this premium that has to be paid.

    please excuse the brevity. I shall comment later when I am much more fresh than now.

     
     
     
    • John B. Baxter
    • President, CEO, Compass Associates, Inc.

    Singular focus on profit - especially profit based on the next quarter's results, will, for the forseeable future, retard interest in, growth, and investment in Sustainability.

    Sustainability "should be" budgeted as a cost center, and NOT as a for-profit venture subject to the same metrics. We don't budget Philanthropy or other charitable donations from a profit center perspective, nor should we relegate sustainability to the same constructs.

    Or, shall we look back on 2008 in 50 years, and wish we'd actually done something proactive, rather than hide our heads in the sands of "oh ... we can't justify spending on this. It won't return 20% !!"

    Sustainability should be a core competency and strategic objective for all companies. Pay now, or pay much more ... later.

    The question should be how much now vs how much more later. Obviously, my view is now vs later. Or, do you want to roll the dice on whether it'll be reversible ... later ????

    John Baxter, President Compass Associates, Inc. Boston Grand Rapids Chicago Washington DC

     
     
     
    • Winfried Schoepf
    • Partner, LKULT communication consultants

    I am convinced that the majority of managers is at a loss when tasked to optimize financial results AND ensure sustainability. How much of each?

    The manager has to achieve objective #1 (bottom line) within a framework of law and generally accepted rules of conduct guiding her/him. The framework is designed towards sustainability to the best of our knowledge.

     
     
     
    • Anonymous

    Sustainability will be sustainable because the pressure to generate results/deliverables is coming from multiply stakeholders and the issue of resource depletion is real.

    If we were to step back from the "charge" of this word "sustainable" and simple look at the issue from the point of view of another stage in the evolution of being in business and providing products and services: what would we do?

    Our customers want it, it's trendy, the resources we use are going up in price, consumers are citizens and they are putting pressure on governments to do something, our competitor are doing it, etc. etc. etc.

    The best run businesses will find a unique approach as suggested by other posts.

    The very best run business are already looking beyond the "sustainability" trend.

     
     
     
    • Wayne Peterson
    • Sr. VP and COO neobanx, neobanx Technologies

    What are the logical extensions of continuing with a single bottom line only approach or incorporating the triple bottom line? It seems to me that the former is a short-sighted and self-serving approach that translates to, "I'm okay and that's what counts." But will it be okay for those who take this position? Ultimately this approach will not be profit sustainable because the other two considerations, social and environmental factors, will eventually impact the profit position because a destabilized market due to increasing social and environmental issues will cost the company more to operate and to offset these negative factors. What happens in one part of the world increasingly affects other parts and therfore the continual degradation of social conditions and the environment will ultimately hurt the single bottom line. The triple bottom line takes into account the interplay of these factors and presents a long view appraoch that balances and sustains business.

     
     
     
    • Paul Baier
    • VP Consulting, Groom Energy

    Let's look pass the word "sustainability" and look at very real opportunities and pressures CEO are feeling.

    1. Energy Prices are rising (oil, electricity) and firms must respond. Even if you think all global warming is nonsense, increased energy prices are a reality and drive returns for energy efficiency investments (which btw lower carbon footprint for sustainability).

    2. Customer buying criteria absolutely are changing in some markets toward "green". Firms that sell to very green consumers (Timberland, Patagonia) have already responded. Staples recent dropping of a paper supplier who had poor environment record. Sales of recycled paper are up. Some prospective office tenants in California and Boston are demanding "green" or LEED certified offices. Responding to the market driven demands causes a firm to be more sustainable.

    3. Employees and recruits, particularly at knowledge-based businesses, are demanding firms with responsible environmental investments. We are told the "greenness" of a company is factor in hiring and retaining of scarce engineering talent. Ask the VP Facilities at any college and you'll learn about the intense pressure to monitor and reduce their GHG footprints at universities.

    4. Risk reduction from pending GHG legislation, NGO pressure, possible lawsuits, or increased insurance, are driving firms to monitor and reduce GHG emissions (a part of sustainability). California recently passed a law requiring mandatory reporting of GHG for the large 800 emitters in 2009. Over 50% of the S&P 500 now report at least some information to the Carbon Disclosure Project (CDP)

    5. Increased investor activism and awareness of these efforts through efforts like Ceres, Dow Jones Sustainability Index and CDP.

    The word "sustainability" may be a fad, but these 5 drivers are not, will be with us for at least the next 10 years.

     
     
     
    • Geetanjali Patil Choori
    • CEO & co-founder, Energy-Guru.com

    Sustainability and Green Business have been latest buzzwords and needs to be used by organizations with a greater responsibility. Although green ideas might be used in business environment to cut down the minor energy costs and build environment friendly brand, I strongly believe in long-run only right, basic and true sustainable "BUSINESS MODELS" will survive.

    Consumers are waking up and starting to understand what is good for them. Just an example, consumers would pretty soon start drinking purified tap water in a reusable glass instead of sugary carbonated drinks.

    On another note, when I attend events on global warming and climate change at major institutions in Washington DC, I get surprised by the hypocrisy when I see a hundreds of lights being on in a big hall while Sun's day light blocked behind the thick curtains!

    I believe in many respects, in the name of good living standard, corporations are responsible for creating this un-sustainable living style to which unfortunately consumers have given approval through their adoption to these products. We as consumers first need to use our intellect to control our emotions before buying those non-sustainable products.

    On the clean energy side, governments need to act with greater responsibility prior to giving major incentives to certain type of energy. How does government get this money to subsidize certain industries? Tax-payers' money! According to me, sustainability may mean cultivating habit of coming back to basics while keeping continuing the path of responsible innovation.

    Sincerely,

     
     
     
    • Janice Maffei
    • Partner, VisionFirst

    Jim, maybe the question is: How sustainable are decisions that don't take into account their intrinsic sustainability over time? Do we have to make a business case for doing the right thing when we know what the right thing to do is? Maybe we can ask managers to imagine their grandchildren watching their antics on YouTube some years from now, when they have long departed this earth. It's always time, as the philospher says, to do the thing that is right.

     
     
     
    • Meenalochani
    • Organization Consultant, MindTree Consulting

    I believe an organization can sustain itself when there is a constant focus on both long and short term sustainability. It's not waking up one fine day to find that sustainability becomes a topic to discuss and debate or have a sudden strategy session. It should be a constant focus especially when profit organizations tend to grow inorganically in a short timeframe. As an organization moves from one growth phase to the other, sustainability must occupy a place of importance and must push the organization to align/realign its strategies such that sustainability is the foundation on which several other facets emerge. This is especially true for several Information Technology organizations which mostly has inorganic growth. Sustainability then acts as a "push factor" for the organization's upwardly growth.

     
     
     
    • Miron Popescu
    • executive director, Romanian Foundation for Energy and Environment

    In the liberalized globalizing world of businesses, sustainability means life-long financial success integrating environmental compliance's unavoidable burdens.

     
     
     
    • Allen Howlett
    • QA Director, Med-Pharmex, Inc

    Whatever sustainability means to you, you must get ahead of government mandates for sustainability. To do nothing will invite social pressure and "one size fits all" legislation.

     
     
     
    • Shaiful

    I think 'Profit-Organization' is heretic and destined to be 'Doomed Organization'. This is because they (Profiteers) are governed by greed and deception. They have no sense of purpose in all the actions and planning. Green, CSR and etc whatever dealing with public interest has little or virtually no meaning to them. Furthermore everyday we could see greed and deception doesn't pay. Therefore profit alone can not be legitimate factor in order to organize public society.

    The important thing to think about is how to achieve sustainability in the long run as per commercial as well as society membership, perpective respectively . The planning we have to draw is something we shall call ' creative capitalism'. This requires creative and visionary leader, creative capital spending and henceforth requires creative financial management . Easy to say than done, wouldn't it? The solution lies in whether we are willing to sacrifice our short term profit goal for 'larger than life' goal. As matter of fact business, in reality, always bear profit or loss legitimately; and that's why we comfortably design Profit and Loss Account in all our financial statement.

    Trade off problem should be measured based on time factor. Time is the prevailing factor to decide first. Therefore time management is the most important thing. Globalising mindset is required in maintaning client's account. Time factor must be made the greatest concern to every party.

    Naturally all things to be done come with cost, but, the important thing is how to give prioriy to which thing which at the given set of time. This requires knowledge. Knowledge factor must be always included in every strategic decision, cannot do without it. Hence conducive environronment which can stimulate the hunger for knowledge must be created. The top management, the owner and the government must emphasize on this effort.

     
     
     
    • Eva Benita A. Tuzon
    • Programme Officer-Research, CIRDAP

    'For Profit Organization' - the regular opinion would always be that businesses would only think first about economic gains rather than integrating the other two universal values [God saves those responsible-with-conscience companies!]. I am more interested in the role of the state [regulatory framework & extractive power] and the levels of consumers' knowledge about sustainability as businesses are keen to be influenced by what the consumers demands. If we must campaign to stop patronizing those manufactured goods that violates green, clean, and those indicators, we are yet to identify and educate people about, ... then I suppose, the issue of sustainability would be a natural standard both for the sellers & buyers. The Commission on Sustainable Development should lead us in identifying & understanding the indicators which should have been transformed into "actionable terms" where stakeholders can monitor & evaluate. Draw the best results among companies and take them for replication. The best act requires no patent!

     
     
     
    • Richard A. "Tony" Eckel
    • President, Systems Synergy, Inc.

    Sustainability is used ambiguously in the intro:

    From the for-profit Management standpoint - "sustainability" refers to the ability of the enterprise to maintain profitability (ROI) and viability over time, not the concept of being "green" or environmentally friendly. EVERY mature enterprise should have a formal periodic sustainability report, representing an objective business performance analysis or operations against business environment scenarios, as a primary risk management tool.

    Environmental "Sustainability" is a social issue in a democracy as it reflects tolerance for consumption of society's shared resource wealth; air, water, minerals (energy), etc. The tolerance of a society determines the limit to which an enterprise can exploit those resources freely and can also set a price for their consumption. Without limits, either market or government enforced, business has no restraints against consuming a resource until exhausted or uneconomic - e.g. American Bison in the 19th century.

    Government regulation performs the function of monetizing the public resource cost, through taxes, licensing, and fines, which would otherwise be net zeros on the balance sheet. In a democracy - it is the citizens who own the resources, operating through elected officials to manage resource costs to balance enterprise prosperity against quality/cost of living. In a non-democratic government, resources are owned by the individuals in power and used as income streams for those groups to control power and enrich themselves. Without arguing morality, it is obvious that a non-democratic government essentially exists to exploit the resources under its control (human, environmental, and mineral), rather like a national business.

    A very long dissertation is possible about the redistribution of profits/value based on market demand behavior of voluntary consumption restraint, and it would be a very discouraging analysis for the public and the environment. Any isolated reduction in consumption simply leads to lower market prices, which then encourages additional consumption by other consumers. E.g. If I start conserving water in the belief that I will receive a benefit of higher quality, or lower price, my expectations will not be satisfied in a market economy; my neighbors will simply consume more of the water resource at lower prices. This simple example points out the weakness in any voluntary behavior to produce sustainable consumption; those paying the price of voluntary consumption control will never receive the benefit!

    Management cannot concern the for-profit enterprise with noblesse oblige of voluntary conservation except in as much as such behavior can be monetized to their advantage. Enterprises that depend on sanctions for market advantage (i.e. patent or monopoly) have the luxury of excess profits to support voluntary conservation costs. Non-oligopoly enterprises cannot generally afford the expense disadvantage that voluntary environmental respect requires, hence the many illegal industrial waste sites traceable to successful enterprise! Oligopolies have an interesting market relationship suggesting that public benefit value is beneficial in a limited supplier buying decision, but even the Pries was not very successful against the SUV until the energy market drove sales.

    Bottom line: All enterprise consume from the common wealth of the Earth in order to operate. When it is monetized, the for-profit enterprise will select the lowest price alternative and exploit that resource to its fullest economic advantage. To suggest that for-profits embody any form of moral restraint is to infer an attribute foreign to the concept and history of these entities.

     
     
     
    • Dr B V Krishnamurthy
    • Director and Executive Vice-President, Alliance Business Academy

    It may be useful to consider the question after examining two real world examples. Back in the 1970s, there was a high demand for Indian leather from several countries. In a stretch of 15 miles along the highway between Bangalore and Chennai (South India), scores of leather processing industries came up. They made significant profits, but the wealth remained with the entrepreneurs since most of these firms were closely held. Local employment was also generated and people were happy in the short term. In the process, any concern for ecology was thrown to the winds. All the toxic waste was allowed to just flow out of the factories on to the land outside. The stench became unbearable and a Public Interest Litigation was filed. The matter went right up to the Supreme Court of India. In a landmark judgement, the Supreme Court ordered the firms to either set up effluent treatment plants or to shut down. Thanks to the tardiness of the system, several years had elapsed, the owners had made enough money, and they decided to shut down. In about 15 years, the land had been rendered so toxic that it has been projected that the area cannot have potable ground water for at least 50 years. Thus, we have a situation of economic prosperity for a few, some foreign exchange earned for the country through exports, but at what cost? We would urge all those who advocate profit as the only rational motive for business to visit the area and see for themselves the disaster brought about by human greed.

    Similarly, a rayon manufacturing plant in the Southern Indian state of Kerala had to be shut down after judicial intervention when it was found that the effluents from the plant had destroyed all marine life in the river flowing nearby.

    One of the most absurd fallacies of our time is the notion that profits and sustainable development cannot go together. The assumption flies in the face of empirical evidence shown by the architect designer William Mcdonnough in building a series of cities in China without altering the landscape at all. The transformation is truly remarkable - entire fields have been "re-located" to rooftops and the system is self-sustaining. This is not tokenism. This is proof, if such proof is required at all, that we can live in comfort without necessarily destroying the environment or even sowing the seeds for social convulsions. The fact that similar initiatives have been carried out in the U.S. as well (a Ford Motor Company plant immediately comes to mind) indicates that the effort is location-neutral.

    Solutions, as in most cases, can begin at the individual / family level. Rain water harvesting has increased the water table by nearly 50 feet wherever it has been implemented with diligence. Merely switching off lights and electrical appliances when not required is estimated to save upto 20% of electricity. One has to only look at professional events like conferences and social events like marriages to understand the magnitude of waste - of food, of energy, of all scarce resources. At a recent gathering of senior managers, a mere 40 professionals "generated" more than a thousand wasted paper cups in a matter of hours. If only the professionals had used one cup each, 960 paper cups could have been saved. In the metropolitan cities, calculations have shown that thousands of gallons of gasoline are wasted every day, while vehicles wait at traffic intersections. Investment on synchronizing traffic signals could bring about dramatic savings.

    Many profitable organizations seem to think they can use fresh water for gardening as a matter of right, when hundreds of thousands of people do not have access to potable water. Surely, it is not too much to expect profit-making firms to invest on plants for recycling water to be used for gardening and cleaning?

    Without going into all the technicalities, we need to understand a basic distinction. All resources are finite in nature. Human greed alone does not have limits. As long as this dichotomy exists, a solution to the vexed problem of sustainable development will remain elusive. We need just not the intersection or even the integration of the three dimensions - we need a virtuous cycle in which economic prosperity will lead to responsible social behavior that in turn protects and preserves the environment too. An improved environment would enhance the quality of life thus rendering the conditions conducive for better efficiency and productivity and therefore for even better economic prosperity.

     
     
     
    • Anonymous

    Business conditions are changing as a response to the biological reality of life on a finite planet. The responsibility of doing well in the world is everyone's responsibility. As the dominant institution, business cannot exempt itself.

    The change is afoot. Innovative companies that lead this effort will be rewarded as more and more customers, employees, investors, partners, etc. insist on triple-bottom line accountability.

    Quality is a characteristic we expect from well run companies. Sustainability is becoming the new quality. With the changing social and ecological conditions, the free flow of information and the changing business conditions, it is likely that triple bottom line businesses will dominate the market place and simply become the basic standard that all organizations have to meet.

     
     
     
    • Joe
    • Retired

    that's an interesting article. i go back to a professor I had at FSU. He said that all goods and services should bear their true cost, including the cost of cleaning up the mess..you could add to that the cost of depleted resources for the future. if this were done then profitability and bottom line would coincide pretty well with sustainability practices. the only reason they don't coincide right now is that businesses rather have a free ride and don't reflect their true costs to society. If they bore that cost they would act in a sustainable manner.

     
     
     
    • Shifan
    • Student, Brunel University

    well, I consider this is a very good topic because sustainability has become a crucial issue. Also, we should appreciate the google's effort because they as a information giant can take the message to every home in the world. Importantly sharing of 'best practices' in reducing the toxic waste or pollution will help the community in sustaining the environment.

     
     
     
    • Christoph Bey PhD
    • Associate Professor, ESCEM School of Business and Management Tours-Poitiers/France

    Let's turn round the question in the title for it to become: "How profitable must for-profit organisations be?"

    I think it is here that we should look. Obviously, any for-profit organisation needs to be profitable - but there are vast differences between this basic condition and the profit margins desired and attained by many large enterprises. In my opinion there is a link between the strive for maximum profitability and the fact of being quoted on stock markets.

    Thus, to mention two extreme cases, the profits of $40bn of Exxon Mobil (reported as "the highest profits in the history of capitalism") can only be qualified as "obscene" when seen in the context of the company's environmental record. On the other hand, Interface Inc., a truly visionary company with respect to sustainable development, profitable, but not quoted on stock markets.

    And then again, it could be a fallacy to think that a good environmental and social performance comes at a price for the financial bottom line (in the short or in the long run). Sustainable development very often is a strategic vector for companies that want to keep their market share, or extend it.

    The experience of the European automobile manufacturers that persuaded the European Commission in 1998 that emissions reductions should come from voluntary measures - and were found out to have done next to nothing on the issue in 2005 - is a stark reminder that government has a crucial role to play in ensuring that sustainable development becomes a strategic vector for all companies, stock-quoted or not.

     
     
     
    • Anonymous

    It's very sustainable. We were headed in the right direction under Gore's leadership in the 1990s. All of that has been undone and then some under the Bush administration. Sustainability in all forms is good for business, the environment and the communities upon which businesses are built. The longer that excessive greed takes hold in businesses, the worse off everyone will be. We need a better balance between short term benefits versus long term survival.

     
     
     
    • Dr Nicholas Fleming
    • Global Practice Leader - Sustainability Strategy & Evaluation, Sinclair Knight Merz Pty Ltd

    I believe much of this discussion reflects the fact that the sustainability and business discussion is still maturing and many businesses retain the perspective that "it's another cost to my business" or "its an environmental issue that doesn't really concern me".

    We do note, however, a growing concern amongst business leaders that perhaps they're missing something given the inertia growing around the topic of sustainability (driven in many respects by perceived climate change in many areas of the world suffering drought or other extreme events). And they're right - they are missing something.

    Dealing with sustainability is really just about business excellence within a rapidly changing business landscape. When sustainability is effectively reframed for business leaders away from a purely environmental issue, and they're helped to open their vision to the wider and more complex business landscape that they REALLY work in, the 'penny drops', often in a big way! When they witness and start to appreciate the challenges (and opportunities) in this complex landscape, the perspectives and motivations change. We have witnessed our clients radically redefine what they understand to be core business.

    So people and businesses trapped in the mindset of "its a cost on my business", "its an environmental and community consultation issue" or "its just about getting more efficient" will understandably not (truly) see or understand the behaviours of more enlightened organisations. And this is their risk ... that conditions will change around them to the point where they recognise and respond to late, or are completely blindsided.

    There's an important implication here for the cognitive abilities of leaders and new business competencies that are required in the modern business landscape, but that's a topic for another discussion I'm sure!

     
     
     
    • Peter Maxson
    • Director, Concorde East/West Sprl

    A very interesting collection of comments, of which I think those that do not respond directly to Prof. Heskett's questions are frequently as illuminating as those that do.

    I offer the perspective of someone who is a step (or more) removed from business management, as I have been developing environmental policy in the EU for the last 20 years. Having helped to define sustainability as a concept for the EU in the early 1990s, and seen those attempts become mostly an academic exercise, I can appreciate that many companies have since chosen to define sustainability in their own image.

    However, I fully agree with Adrian Gonzales that the economic (housing, transport, agriculture,etc.) infrastructure was not designed with sustainability in mind, and will have to be wrenched in that direction with exceptional vision, superior leadership and serious force - if ever we are to go there seriously. In much the same way, the US suburbs were never designed with expensive gasoline/petrol in mind, and are increasingly trying to adapt, but have very limited options.

    I have recently watched the long debate over the REACH chemicals legislation, seen the power of industry to move politicians and rewrite legislation, watched the US influence brought to bear on "European" policy matters, watched the preferred legislation get substantially watered down, leaving the EU with less than optimal legislation that is, still, significantly better than what we had previously.

    We have all witnessed the long debate over global warming and the uncertain science, Al Gore damned and then praised by turns, countries with critical levels of emissions removing themselves from the discussion, most countries missing "targets," some countries holding others to ransom, US automobile manufacturers claiming the public demands big cars with big engines while Toyota eats their lunch, and we are still far from where we need to be if we as a community of nations are planning to seriously address the GHG problem.

    The lessons I draw from all this are that we don't have a common vision of where we need to go as a global society, and even if we did, we don't have a viable means of getting there, including leadership, tradeoffs, participation of civil society in substantive debate, etc. There was a time when the US occupied the moral high ground and could have led such an effort. Now there are different priorities (to put it gently), too many entrenched interests, money talks, the threat of EU jobs lost as a result of environmental regulation is terrifying, governments are in thrall to industry that resists virtually all legislation, the public is relatively powerless to bring about change even when desired by a significant majority. If we can't deal in a timely fashion with global warming, how can we expect to deal with real sustainability, i.e., leaving behind a natural environment that can really meet the needs (and valid expectations) of future generations? I don't wish to paint the future as hopeless, but we need to recognize that in the "Anthropocene" age we need to find a way to deal with challenges that are far bigger than any individual (even large) nation states.

     
     
     
    • Zaoor Ahmad
    • General Manager, Export Processing Zone Authority

    The motive in any busiess is to make money(ies), either cash or Earning per share. The driver of the motive make it their top priority to remain viable in the market. Their survival in the market is their sustainabilty. However the Grundsnorm prevail in the long run. Good corporate governance and corporate social srtetegy make the stuff more durable.

     
     
     
    • Anonymous

    Business and the ultimate goal of money provides people with what they need to survive. Less obvious perhaps is that mankind has an inherent need to create and maintain a sustainable world. Educating managers and implementing this change many businesses to stay viable longer and I would imagine retain employees longer. While these are not immediately apparent in the bottom line of a business, ultimately both the business and the manager benefits.

     
     
     
    • Adarsh Raj
    • Research Analyst, RRD

    "Sustainablity", the word has got a new re-inforced meaning in today's business context. consumers today are not merely consumers, they've become a very important factor in business decision making. all those advocating corporate social responsibility will vouch for it. consumers are driving even those decisions today which were thought to be out of their concern and influence.

    The concept, though sounds very attractive, its practical implementation will depend on the stage in which a particular organization is operating. For example, a Toyota or a General Motors might want to positively apply the concept, on the other hand, a start up might not be in position to do it. This has got more to do with the resources an organization has at its disposal. And as such, sustainablity can be good concept to apply but newly born organizations might not have the capability to follow. after all, what meaning would sustainability hold if there's no organization left to sustain!!

     
     
     
    • Alfredo Spilzinger PhD, Dr. BA
    • Executive partner, SMS LATINOAMERICA

    Nothing is sustainable on time nor life neither businesses. How can you agree on sustain a growing program, if you dont know how and waht kind of emerging situations cold appear on your market horizon?

    Considering sustainability as a goal to be obtained is similar to believe that a human being can live for ever, young and with enough strenghs as to continue serving the market.

    Even more to the first question mentioned by professor Heskett I am attempting to assure that it is not desirable. Corportaions are quasi biological entities so thinking on sustainability is like considering that human beings could sustain their grow over time, and that is inappropriate . It would better to consider that corportaions must consider growth as a consecquence of a process of legitimation that companies must face on their own markets.

    If companies can innovate as much as the market need and they get their legitimation, growth will be a natural consequence of it.

     
     
     
    • Bill Flynn
    • CEO, Paeon Partners, LLC

    Dear Fellow Readers,

    Thanks for your comments and contributions. What I haven't seen is a view of the economy in terms of where the money goes.

     
     
     
    • Bill Flynn
    • CEO, Paeon Partners, LLC

    Sorry for the previous post. Somehow most of the text never made it to the blog. My question about the destination of the money has to do with the nature of capitalism. Little is being said anywhere I have seen about the relationship between small business formation and capital formation. The focus has been on talking about how most jobs are being created by small businesses-the Entrepreneur. Generally the small business, usually service sector enterprises, don't require the same level of capital to start up and to prosper. I suspect this is having an effect on capiital investment.

    It also seems to be true that the manufacturing economy assets of plant and equipment are being replaced by service assets of intellectual property and personal capability. It is possible that more and more investment decisions will be moving into smaller groups that the present pension and mutual fund arena to the small business organization, which may be diversified not only by services offered but by location and other yet-to-be determined decentralization techniques.

    The idea of micro finance may expand into an entirely different model, perhaps based on neighborhood or family or other foci. If this occurs, perhaps the idea of sustainability may present an entirely different face to these organizations than we see today.

    Think globally, act locally may indeed come to maturity in this kind of model. If this, or something like it occurs, we will need an entire different set of glasses and a tool box full of capabilities considered mastly unnecessary today.

     
     
     
    • Ellis Baxter
    • CEO, HiFiSSS

    The money and the understanding is upside down. Because the science disproves Grobal Warming. If those of us who want better homes, offices, that do not hurt people...our people...we have to address clear science not the nettlesome political BS. Al Gore is a jerk.

    However, making short term decisions is very bad. When working in Poland I found that the building we were working on was 700 years old. What happened? How did we address this change to 90 years now being considered sustainable?

    In our focus we see buildings that last 1,000 years. With no health problems, no security problems, no weather problems and remain maintanance free, no bugs, no rot, and zero people risk, that is sustainable if you have a good plan you do not require disposalable buildings and the money saved each year is huge. LED lighting and new wiring offers even more savings. It is not an easy soultion but were in the future do we find easy profits?

    We have a town home product that is total solar, that will last 1,000 years.

    Go and do likewise.

     
     
     
    • Deepak Alse
    • Project Leader, Wipro Technologies

    Our concept of 'Sustainibility' is based on knowledge that is evolving and will keep evolving...We clearly dont know everything that needs to be known about 'Sustainability' . However, this is the best time to start building organisation's awareness and structure towards sustainable growth. In that sense, the business decisions made around the sustainability model will keep evolving. Is the 'Sustainability' model sustainable ? ..Yes, It is. It is sustainable as long as the move into that model is well structured and sequenced towards shifting cost as well as revenue streams. Many sustainable practices require a change of mindset and NOT a change in budget outflows. The economics of 'sustainability' require government intervention in order to build the infrastructure of 'Sustainable' economy...Money needs to go in that direction..towards energy sources that are sustainable..towards systems that encourage 'reduce, reuse, recycle & recover' practices.

     
     
     
    • aleem basha. m
    • Student of management, VJIM-INDIA

    Its immense pleasure for me to share with HBR family,

    About sustainability, if we are talking about the revenue generator or cost saving mechanism then, well all will follow to it, But it is not always so.

    Since in business it's not the company's wish and decision to choose what is right and wrong, it's the total stake holders that matters. Hence it's more relevant if we talk about customer's perspective. Thought its an trend that people ready to pay extra if its environmental friendly product and service but still where is the awareness among people I am from a country where (if I am not wrong) almost 95 persons don't know the importance of the green product from 100.

    Hence for sustainable business it's important to aware the people about the risk attached with the product which affects the ecology. To aware people we need the support of media and we should have the quality education which will sensitize the current generation

    If we are talking about the protection of environment for better tomorrow then really we should be grateful that we are trying to add the value to the society. And we need the huge crowd of initiators who can take courage for adding value. How good it will be in corporate, boss will emphasize on the value created for the society rather just profits.

    The ideal system it will look like this where customer ready to pay more, government give subsidy, investor will invents based on the brand not merely on the profit motto, society will appreciate and managers will motivate to work innovatively to manage the triple bottom line.

    thank u

     
     
     
    • Manish shukla
    • Mgr

    We all know that human race has exploited earth's resources and now, time has come to payback. We have to get over oil dependencies, make our air & water cleaner etc. These are some of the benefits that are not so easily conceived by consumers of non-biodegradable products in most populous third world nations. Government is also not that persuasive and strict in those nations.

    Moreover, demographics are such that government efforts can not be fully materialized. So, awareness operations and implementations become expensive challenge. So, route to get to environmental awareness is advancing benefits of social networking. This is where the opportunity lies and large companies have already measured it and investing into it. This is why they are trying to come up with schemes such as "global-collaboration" or "social-networking". Cisco, IBM etc. are not behind Google in being part of such initiatives.

    With wave of global collaboration and with outsourcing business at its all time high levels, large conglomerates do feel need to implement social component out of "Sustainability" bracket to ensure consistent growth and profitability. Still word of mouth marketing techniques upholds its value and new tools will help make the planet connected and green. Mr. Heskett , to ensure consistent single bottom line , companies have to advance social networking around the globe and that will make it easier for companies to funnel environmental friendly products etc. into those markets. So, Investing in "Sustainbility" makes absolulte sense for FOR-PROFIT organizations.

    Start-ups are cash-constrained and have lot of uncertainities associated with their concepts. Affording huge investments as Adobe, Bank of america, Virgin atlantics or google to just make its building environment friendly may not look a good idea to start up CEOs. But who are making business out of "Sustainability" are getting enough help from government in terms of tax benefits and Venture capilists such as Kliener Perkins Caufield & Byers, who is doubling its RE fund investment, etc. giant.

    As i said: so far, benefits of social networking are intangible. It should be and will be used to prepare the mindset of X and Y generation to be ready for something new. Moreover, there are plenty of companies such as Airtricity, Google , westport innovations and many more, who are doing due-diligence to do something about growing global warming and oil problems. These companies are investing quite a lot in "go-green" ventures and hoping to reap profits in coming 10 year or so. Single bottom line is always quantifiable and other parts of sustainbility influence single bottom line. There are not enough ways to attribute benefits.

     
     
     
    • Dr. Santanukumar Ghosh
    • Professor, The University of Burdwan, West Bengal, India

    Sustainable Development Principles developed by the Global Compact do not ask any one to make a choice between the sustainability and the profitability. If the speaker( or for that matter a business) does not sustain who would earn profits and for whom?

    The process of the development of human civilization has arrived at such a stage that-1) according to some scientists, our lives are at stake; 2) according to the economists, economic disparities between persons and between nations have gone up considerably and as a result of that nearly 30% of the total population in India and also in other countries live in abduct poverty.

    Also, nearly 630 crores of people will reside in the developing nations as against those of 120 crores in the developed economies by the end of 2025. If multinational and transnational companies are to get large markets for long, they have no other way but to do something in terms of making arrangements for necessary education, health care facilities etc.( i.e., to comply with the principles mentioned at the very start) for those poor people. Thus, to sustain long term profits of business you are to follow the principles of sustainability; 3) if you look at the growing numbers of terrorists' and other ultra-left activities along with the growing incidents of human flesh trading activities etc. you can easily feel the root cause of these.

    In many cases these are the outcomes of poverty and deprivation, illiteracy etc. In order to bring down those odd incidents companies and governments should work together and this is possibly the only way out. The Centre for Human Resource Development of the University of Burdwan, West Bengal, India in association with one US-based KPO firm has been experimenting on this. The objective is to work out whether societal benefits and corporate profit earnings can be made complementary rather than considering them as mutually exclusives. And hopefully, our empirical results are extremely satisfactory.

    I cordially invite Prof. James Heskett and other interested people around the globe to visit our centre and to meet the people who have been benefited.

    Also, we have conducted an empirical study to see what the affected people are requiring/ expecting for their sustainability from the govt. and the companies when they loose their lands, occupation etc. in the event of industrialization in an area. Any such effort, it is found, can become successful if and only if their expectations are met. Therefore, sustainability of profit can not be possible under the democratic political system unless one adequately takes care of the question of affected people's(stakeholders) sustainability. Thus, once again sustainability of profit becomes dependent upon the sustainability of the people.

    Hence, the message is that the sustainability of profit should not be viewed as a competing proposition against that of sustainable development; rather it should be used as a means of earning more profit as well as a means of sustainability of the human civilization.

    Anybody wishing to contact me may send e-mail: shantanu.kaizen@gmail.com

     
     
     
    • Bill Wallace
    • President, Wallace Futures Group, LLC

    Sustainable development is an unfortunate term that points to a solution without explicitly defining the problem, at least in ways that business (non-profits, governments too) can understand and grapple with. Non-sustainable economic development means development in which resources and ecological carrying capacity are being used up faster than they can be replaced or replenished. Whether this kind of development is a problem for you depends where you're operating, what you're doing and to what extent you're thinking ahead. If your manufacturing plant uses a lot of water and you're located in, say, Pennsylvania, not a problem (at least for now). If this same plant were located in Arizona, not so good. Shifting to a worse case example, if you're a subsistence farmer in drought-ridden Sub-Saharan Africa, you're struggling to survive.

    The paper that instigated Jim's questions apparently pays homage to those for-profit organizations who, by measuring their performance against the "triple bottom line" have greater economic success than those that don't. That concept isn't all that new. In fact, the Dow Jones Sustainability Index has been demonstrating that differential for over a decade. Unfortunately, that beguiling relationship of making money by doing good has masked the real problems, the high impact and urgent consequences of non-sustainable development that are ready to blindside business and severely damage performance.

    To put it simply, we've been "eating our seed corn" in one way or another for several decades. Now the ramifications of that rather dumb economic development strategy are coming home to roost. What makes it really bad is that the problems associated with this poor choice for development are coming at us really fast. As a society, we're running into resource and carrying capacity limits at scopes, scales and speeds we never imagined were possible. Who would have thought (or planned for) a decade ago that oil would reach US$100 a barrel? Who would have imagined that the polar ice caps would recede to the extent they did last summer? (Note to global climate change skeptics: Quit drinking your own Kool-Aid and start reading the peer-reviewed climate change literature.)

    To help business and government understand and begin to grapple with the implications of non-sustainable development, what we need to do is to reframe the conversation. If for-profit organizations want to be successful (heck, if they just want to survive!), they need to identify, evaluate and respond to these problems in the context of their own operations. Are increasing energy costs a problem, and if so, how much? Are you or your suppliers highly dependent on water and are they feeling the pinch? What are your customer expectations regarding the extent you are reducing your carbon footprint? Are the local residents fighting your proposed facilities expansion because they believe their quality of life will suffer? Now, you can certainly deal with these sorts of problems case by case. However, in doing so, you will miss the interrelationships among these problems, as well as the aggregate opportunities and threats.

    Clearly, there are a lot of problems and corresponding implications, which begs the question, How do you systematically assess them and respond appropriately? A useful framework, one that perhaps business can better relate to, is the "Five Capitals Model" introduced by the Forum for the Future (www.forumforthefuture.org.uk). This model (financial, natural, produced, human and social) adds a bit more granularity to the "triple bottom line," and lets the user consider how non-sustainable consequences impact these forms of capital.

    Let me close by saying that we empower the leaders of for-profit organizations (non-profits, governments too) to anticipate and manage change. The problems of non-sustainable behavior manifest themselves as a form of change (often hellish change, but change nonetheless) impacting one or more of the five forms of capital these leaders are supposed to preserve and enhance. Placing these problems associated with non-sustainable behavior in amongst the other problems that leaders are supposed to worry about offers a much better context in which to recognize and deal with them appropriately.

     
     
     
    • Fred Hopengarten, Esq.
    • MBA '72

    You might find it interesting to study The Dead River Company, based in Maine and a VERY private company. See http://www.deadriver.com/About/DeadRiverHistory.php.

    Originally a logging company, now also in the oil distribution business, as I understand it the purpose of the company is to provide an income to heirs of the founders in perpetuity. The company's logging practices have always been aimed at sustainability. The company is over 100 years old.

     
     
     
    • Kathryn Alexander
    • CEO, Ethical Impact, Inc.

    At its heart sustainability is all about waste. Waste reduction is one of fastest and easiest ways to increase the bottom line AND improve businesses processes. I see NO conflict at all. Dr. W. E. Deming made the case for reducing waste years ago and many businesses were/are too preoccupied with "profit" to take the time to think through waste reduction. Areas to look at are: time, resources, people, and many more. Not only is waste reduction key to increasing profits, I believe it is an ETHICAL thing to do as well. The Earth offers us more than enough to meet our needs in a manner that allows for an enjoyable life style, It can't support greed or waste. Nature is designed with NO waste, we can learn from her and improve our lives a thousand fold. It may be that we MUST learn to do this to continue to live on the planet. This is SUCH a non-issue. That it is being raised at all only tells me how far we have come from using our minds to think in a critical manner about our situation. We have become trapped in language and have forgotten how to think deeply about our situation.

     
     
     
    • Tom Gloria
    • CKO and Adjunct Professor, eQuilibrium Solutions Corporation, Bainbridge Graduate Institute

    Professor Heskett,

    You posit several key questions facing companies that are beyond the low hanging fruit and are get to the meat of the challenges of sustainability.

    Will board committees proliferate?

    In my 15 years of consulting in the sustainability field, yes, the next level of significant trade-offs among the more critical and complex issues facing companies will not only prompt a continuation, but will accelerate the proliferation of board committees focused on sustainability. I would also add that this proliferation will include its cousins, risk and compliance, and their uncle, governance. Sustainability is intrinsically a multi-disciplinary field. Resolution of complex sustainability issues (for example, long term capital investments, shifts in product focus, and taking the lead on issues of social justice) require the multi-faceted expertise of an experienced board. A GRC framework that embodies the essential elements of sustainability will serve as a familiar structure to board committees to hold management accountable for implementing more sustainable measures.

    Will this confuse management?

    I don't think this proliferation of sustainability boards will confuse management. It will, as with any good management team consisting of smart and motivated professionals, provide them with the incentive to seek the tools to help them make better decisions that include sustainability criteria. To this end, I am seeing management developing and supporting the necessary infrastructure to be able to set goals, determine key sustainability performance indicators (KSPIs), set priorities, align resources, hold staff accountable, document success and effectively communicate with external stakeholders.

    Will further progress in this realm require government intervention, even if this proves more costly than proactive efforts on the part of management? Or does government intervention tend to negate the competitive benefits for those who have acted proactively?

    Most certainly further progress will require government intervention. As with any emergent paradigm shift, there will always be laggards taking advantage of the system by simply dragging their heels. Both Federal and state governments have learned that a careful balance of both market based incentives (the carrot) and command-and-control regulatory controls (stick) provides a prudent course of action. Over the past several decades, both state and federal governments have learned how to create market incentives that foster innovation (cap and trade systems) and also provide the barriers to prevent harm (discharge limits). I am encouraged that government will be able to find the right balance moving forward.

    Will this negate benefits for those who act voluntarily?

    Possibly, if companies are not engaged with government to either influence the formulation of regulatory mechanisms or if they simply don't take advantage of mechanisms that already exist - such as documenting reductions of greenhouse gas emissions prior to regulatory enforcement, benefits will be compromised.

    How sustainable is sustainability in a for-profit organization?

    Very sustainable. If done right, sustainability provides the vision, the principles, and the framework to react to the accelerating world of business challenges facing all companies. Without sustainability, companies typically turn a blind eye to longer-term aspects, when ignored, diminish a company's ability to weather the storm over the long-term. Sustainability enables a company to build and maintain a foundation to operate a truly sustainable company - providing safe and healthy work environments, attracting top talent, retaining top talent, providing long lasting value to customers, creating mutually beneficial relationships with communities, and when done well, providing strong and predictable returns on investment. Many companies already are doing some portion of what is perceived as this new thing fangled called sustainability. By formalizing more precisely what sustainability entails, companies have a context to understand where they perform well and where they need to improve.

     
     
     
    • Kamal Gupta
    • CEO, Delta Petro Additives

    Sustainability has to be economically viable, otherwise it will turn out to be a passing fad. There is a parallel in India in the early 80s. Tata Steel, one oof the most respected companies in India, had put a lot of emphasis on community development. Their ad line was "We also make steel", as if that were a marginal activity.

    As the Indian economy got unshackled and moved to free trade, they realised the folly of their ways. Privately, their executives began to say "We only make steel" as they found that the balance sheets did not support (could not sustain) such expenses and investments.

    I would much rather that business focuses on business, till such time as sustainability becomes economically viable on a at longest year-to-year time frame. The "becoming viable" road may be helped with tax breaks if the country thinks it proper.

     
     
     
    • Dr. A. K. Dey
    • Professor, Birla Institute of Management Technology, Greater NOIDA, India

    To stay competitive by creating higher value for consumers firms are in constant search for strategies and tactics that will maximize profit. Profits can be maximized by increasing per unit revenue, decreasing unit cost or a mix of both. The study published in Business Perspective Volume 9, Number 1, Jan - June 2007 (refreed journal of Birla Institute of Management Technology, Greater NOIDA, UP, India - copies available on request) has identified ten different approaches: Innovation, Brand Image, Customization - Mass customization, Customer collaboration, Long tail effect, Operational excellence, Outsourcing, Value engineering, Moving away from unprofitable customers and Reducing quality. Out of these approaches a manager should select the one that fits the situation best. Maximizing profit by reducing quality should be avoided as it threatens long term survival.

    In my opinion there is a strong trade off between maximizing profit and sustainability of business in which sustainnability always is a loser!

     
     
     
    • Appolo Goma
    • Inventory Manager, Schlumberger

    Sustinable growth requires that organisations focus on fundamentals and processes that would ensure long term maximisation of profits and cost minimization.

    For instance in retail sales business an organisation that is concerned with sustinable growth would focus on ensuring Distribution, availability, mearchandising, shelve presence and right pricing and gradually grow their market share and volumes while an organisation intrested in quick revenues and profits would focus on volume sales to Distributors and trade discounts to ensure quick revenues.

    In the short run they would get the revenue they require but the organization that focuses on fundamentals and processes overtime would outgrow their rivals in revenues. A good example of a company that have demonstrated this is Procter&Gamble where focussing on fundamentals have helped themtgrow their revenues and acheived long term sustainable growth far above their rival companies.

     
     
     
    • S. S. Rajeshwari

    Sustainability to a greater extent depends on the vision of the organization. Profit could be considered as vital tool to achieve this vision. Many organisations in the struggle to achieve profits or maximize the profits overlook the vision of the organization. Once the organizations start concenterating more on maximizing profits they sometimes get caught in routine activities without nurturing the vision. This in the long run uproot the sustainability.

    In the life cycle of an organization, once it reaches the maturity stage, the top management should constantly involve themselves in revisiting the purpose of its existence and should brain storm ideas to uphold sustainablitiy. To conclude, an organization without concrete vision cannot sustain for a long run even they are currently making huge profits.

     
     
     
    • Rogers Matama
    • Author, Family Business Practitioner and Consultant, MUBS and luckyfamily.biz

    Sustainability is easy to talk about but a very complex concept, let me bring this to light through the family business perspective; have we asked why African family businesses have not propelled over generations like most Asian ones such as the Japanese oldest family business, Kongo Gumi, which is today sustained by the 40th family generation?

    The issue of sustainability calls for alot of appreciation of the environment; here I refer to the social, political,economic, technological, and legal factors. Take for example a firm (whether family. public or private oriented) that has not built a formidable organisational culture that earmarks the most responsible person( not necessarily tall, big, short, lady or man...). Such a responsible staff or family member (family business) will be in position to understand how he or she can steer the business towards sustainability. Mind you, he/she may decide to kill some declining products for instance, the manual typewriter line if the business is in the office equipement production. Basing on the SLEPT environment factors, this responsible leader concentrates on the products that will attract more dividends; of course, this leader is bound to forfeit short term returns like profits especially if he is strategically focused at long term sustainability. like a pilot understands how to sustain lives during sky hiccups, so should the organisational leader understand sustainable business cruising over generations or decades.

     
     
     
    • Sandeep
    • Principal, Nihilent

    "Sustainability" as a concept has to be indoctrined in to not just for-profit organizations but also in to the policies govt makes and in to the citizens as we all know organizations are moving towards crafting their products and services by their customers than relying on their own R&D thus a gerater impact. We see a trend in organizations moving towards sustainability where the maturity of the govt and people are high. Organizations in the growing economies are still grappling with achieving maturities in people and perocesses and I guess it would be a far fetch thought to achieve sustainability!

     
     
     
    • Anonymous

    Sustainability is Big concept to vership by each and every organisations as well as individuals because for the servival in any socity the above discipline is needed and be followed. Mainly, customer satisfaction, social responsibility, quality, flexibility, competitiveness, satified employees, profitability, innovative products and positive thinking pattern is needed for to sustain. But fortunately or unfortunatly some people are thinking that the organisations are always facing risky situations and uncirtanities and due to the fact that the above discipline is not viable. That idea is wrong. Lord Buddha also introduce different types of machanisms for to have long term sustainability. Therefore people should and must have the concept of "BIG" instead of "SMALL" to attain sustainability.

     
     
     
    • Mayur
    • Engineer, Buro Happold

    "Development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

    I totally agree on the above definition of the term sustainability, as far as I am not running a business. But for-profit organizations make profit by redefining the "needs" of the future generations.

    How sustainable shall be the practice of an organization is generally decided by the ethics of the person or group heading the organization. Ethics are inculcated by the environment around, formed by the government & culture together.

    Sustainable solutions cannot be reinforced within a short period of time by some rules. Rather they can be worked out in terms of education & policies.

    And frankly speaking there are so many of the for-profit businesses which have come up in the past delivering products which were not absolutely necessary for present generation.

    Our environment was quite sustainable when civilizations developed as per the natural environment suitability. Now because of the for-profit businesses we are developing deserts.

    To conclude, sustainable options are to be provided by a for-profit organization and shall be left to the client to choose the solution.

    There shall be no additional charges, just for naming an option separately as "Sustainable" one.

    Thank you.

     
     
     
    • Sandesh N. Shringarpure
    • Finance Analyst

    As long as for-profit organizations are cultured or tuned to plough back to general society, the value add generated in a competitive business environment and the overall social, economic, and environmental balance bill will be met.

     
     
     
    • Anonymous

    How can Sustainability not be sustainable? It is by definition that sustainability be sustainable. You can't put forward a measure in the name of sustainability but not sustainable -- it has to be self sufficient, regenerative, durable. A green approach that is too costly, can't justify the cost benefit, is not sustainable and does not provide sustainability.