For businesses seeking to be competitive in today’s shared world, taking care of people and planet means more than merely having a good public relations advisor, or demonstrating good ethics and moral value to shareholders. That’s what Alana Bond, Head of Bravura Sustainable Development, a niche consulting business specialising in integrated sustainable development strategies believes.
Says Bond: “Although many companies initially viewed initiatives targeting social responsibility and sustainability as something of an obligation, they have come to realise that such initiatives bring strategic value to a business while simultaneously helping the environment and local communities. We call this shared value.”
Bond believes that concepts such as the triple bottom line – where businesses measure themselves on how well they are doing socially and environmentally alongside their profitability – have been around for some time, but tend to promote a compliance-only mind-set.
“In reality there is only one bottom line-profit, which is heavily affected by elements of people and planet, and it is difficult to separate or ignore these elements while aiming to sustain a profit in the long-term. From our experience of helping companies approach these issues, it is apparent that most do not realise this yet.” To help illustrate different approaches to sustainability, Bravura Sustainable Development has profiled three hypothetical companies – ExploitCo, ComplianceCo, and ValueCo.
ExploitCo is after immediate and large profits, and cares little what happens to the environment, its employees or its communities. ExploitCo may profit for a time, but will face increasing threats from its detrimental practices which will cause extensive damage to the physical, social and economic environment. It will probably eventually be unable to continue its operations, mainly from public outcry, loss of workers, depletion of resources and/or government intervention.
Largely due to the damage caused by ExploitCo’s in recent decades, governments now legislate this area and good corporate governance continues to promote focus on these issues. This is beneficial and needed, and has resulted in the emergence of ComplianceCo.
ComplianceCo realises that it must comply with local and global regulations in order to manage its legal and public relations implications, but does so in a silo-like, non-integrated way. As a result, ComplianceCo is mostly reactive and the resulting initiatives are often not self-sustaining and may make very little real impact. They also fail to create value for ComplianceCo beyond meeting legislative requirements.
ValueCo, on the other hand, understands that taking care of people and planet is plain good business and actually reduces costs and risks, and increases profit in the long term. ValueCo aims for solid sustainable profits in the medium and long term and is focused on creating a lasting business. ValueCo is proactive in its approach and is highly collaborative. It forms partnerships with government, suppliers and even competitors in order to ensure success of interventions as well as to leverage outside expertise and resources.
ValueCo wins, due to reduced costs and higher productivity. ValueCo’s community and surrounding areas win too, through sustainable economic development and job creation. Thankfully, in modern times the ExploitCo is largely a thing of the past, although we are still bearing the burden of the many negative consequences resulting from its past actions says Bond.
The existence of ComplianceCo’s in itself is not bad, as they are minimising the damage that they cause, but they are also too focused on checking boxes, which blinds them to the real benefits of sustainable strategies.
“The important thing to remember is that, like our planet, companies must constantly adapt to a changing environment if they want to remain in business, and as companies have largely progressed from ExploitCo’s to ComplianceCo’s, so ComplianceCo’s need to start the metamorphosis into becoming ValueCo’s. Although currently few in number, in our shared world where everything is increasingly interconnected, the ValueCo is the only company that will survive and thrive in the long-run. There is only one bottom line, but the ValueCo is the only type of company that can actually triple it indefinitely.”