Why is sustainability important in business recovery?

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Why is sustainability important in business recovery?

With the end of the COVID-19 lockdown came a new wave of economic uncertainty for businesses. As we battle inflation and staff shortages, how can we ensure organisational sustainability maintains its place on the corporate agenda?

What is organisational sustainability?

Against a backdrop of economic instability, businesses have focused on their Environmental, Social and Governance (ESG) commitments. Attracting and retaining both customers and employees goes hand-in-hand with ESG. Organisational sustainability focuses on reporting our business impacts on the environment.

Why is sustainability in business important?

Organisational sustainability has been proven to attract both customers and talent:

An IBM study found that 71 per cent of consumers said traceability of products is important
The same customers surveyed would pay a premium for brands that provide it.
HSBC’s Made for the Future report found that 24 per cent of organisations said sustainability improves recruitment and retention.

Recent experiences of organisational sustainability

Patxi Zabala is the Director of Corporate Social Responsibility at Spanish industrial and tech company Velatia. She says that many companies’ sustainability operations have taken a hit due to “survival mode”.

“We have had to make decisions that, economically, are sometimes not entirely sustainable.”

However as Ryan Swenson, Head of Sustainable Development at Australia’s Officeworks, points out: sustainability reduction in some areas does not have to result in an overall reduction in performance.

“Sustainability practices have to be compromised,” he says. In October 2020, Officeworks launched its Positive Difference Plan 2025. The five-year sustainability strategy has continued to progress towards its net zero goals.

How can we build organisational sustainability into economic recovery?

Velatia’s Zabala believes it is important that businesses don’t revert to bad habits as we recover from any crisis. Whether we’re responding to political shifts or economic change, we must learn from the past.

Responding to COVID-19, Zabala claimed: “In some areas, the crisis had a positive impact on more sustainable management. Businesses should consider maintaining these changes well into the future. They should identify their sustainable purpose and its associated profitability.”

He adds: “Public awareness of organisational sustainability will make it easier. We can return to some sustainable practices and develop many others.”

Looking further ahead, what can leaders do to ensure organisational sustainability?

1. Take the chance to change behaviours

Professor Dr Laura Marie Edinger-Schons, Chair of Sustainable Business at Germany’s University of Mannheim, believes that post-pandemic sustainable practices will remain the norm. “Research on sustainable behaviours has shown it is very hard to change habitual behaviours and routines.”

Companies can also look at ways to make commuting more inclusive and sustainable. Organisations should subsidise commute costs and provide alternatives to company cars, thus reducing greenhouse gas emissions. Company vehicles have been shown to increase household vehicle use by 25 per cent. Alternatives like cycling schemes will keep these costs down whilst reducing the company’s carbon footprint.

2. Challenge suppliers to be more sustainable

Businesses can also take the opportunity to revisit supply chains. Reviewing business operations at large can make companies more climate resilient in the long run. What’s more, you can focus on creating a supply chain that is fairer to society and individuals.

IKEA’s supplier code of conduct, for example, requires that suppliers meet their standards in areas including:

Working hours
Employee benefits and wages
Business ethics
The environment
Child labour
Discrimination

These initiatives are making businesses all over the world more transparent. In turn, these changes will lead to more companies needing to identify their own supply chain risks. The Sustainability Consortium is helping us to achieve this. Its commodities mapping tool assesses the risks and how they can be addressed.

3. Encourage sustainable behaviour at all levels

Within business, it’s not only the C-suite who are responsible for encouraging change. “It’s everybody’s responsibility to question the status quo. We must rebuild and shape our economy for the future. And for those privileged few of us who are not facing existential threats, I would say that our responsibility is even higher,” says Edinger-Schons of the University of Mannheim.

But the responsibility to rebuild sustainably does not lie with businesses alone. Governments have a role to play here too – something that we’re already seeing in Spain. The country has received €140 billion from NextGenerationEU, the European Union’s recovery plan. This has gone towards Spain’s Recovery, Transformation and Resilience Plan.

4. Make sustainability initiatives part of your purpose

It’s easy to see how investing in green industries creates more jobs. But what about the businesses whose existence was never based around these goals?

For example, investment banks and wealth managers are creating sustainability-focused portfolios. What about those who have little need for interaction with sustainable business practices?

“Prospective employees want the company they work for to be purpose-driven and to feel their sustainability values align with the values of the company,” explains Megan Kashner, Clinical Assistant Professor and Director of Social Impact at Kellogg School of Management, Northwestern University.

“As a result, we’re seeing an increase in jobs that are about sustainable supply chains. Organisations are no longer paying lip service. They’re investing in clean energy, diversity, equity and inclusion, and sustainable finance.”

5. Include sustainable hiring policies in your organisation

It’s also fair to expect companies to proactively change their hiring policies. “The last few years have highlighted the need for sustainable models, providing rapid responses to the most critical situations. In fact, many companies have demonstrated exemplary behaviour. They've responded to the community's productive, health, economic, material and social needs.”

Whether it’s roles in fighting climate change or sustainability-forward businesses, more jobs are coming. Zabala concludes that intelligent organisations understand this opportunity.

“They are reorienting their business models, investing millions to create new news and make a positive impact on their entire value chain.” Gain competitive advantage in your business by reducing waste and committing to sustainable business practices.