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Sustainability – easy to say, hard to enact

It’s difficult to put collaboration ahead of competition in these tough times, but therein lies an answer to the sustainability question.

aut business professor kate kearins on sustainabilityAccording to a survey by Deloitte in 2010, most executives of 48 large, US-headquartered companies across five major industry sectors were interested and getting involved in ‘sustainability’. But there was a gap between what these business leaders aspired to and how they actually went about embedding sustainability in their companies. Short-termism and financial returns on investment tended to prevail, and this pragmatism is not unusual.

Companies have made some progress on the sustainability front, but many believe it has simply not been enough. Neither has there been consistent enactment of all those supposedly well-intentioned company sustainability policies.

McKinsey & Company’s 2010 global survey of 1,946 executives found that more than half saw the management of environmental, social and governance issues as ‘very’ or ‘extremely’ important. New product development, reputation building and overall corporate strategy were obvious places to gain traction. However, most companies were not actively managing sustainability despite the fact that those doing so were apparently reaping the benefits for themselves and others.

And there’s the rub. Sustainability, if you think about it, just isn’t an entity-level concept. It’s a systems concept. It’s something companies do for and with others. One excellent company alone on the planet does not make any sense. One company cannot be sustainable if the others that supply it or buy from it are not operating sustainably.

The system falls apart when companies supply goods that are environmentally, socially or economically suspect, or use or dispose of them in an irresponsible fashion.

So we now have a concept and a related business practice of corporate responsibility that has become business critical and requires companies working collaboratively (as opposed to competitively). But all this is hard to enact – and these are tough times.

So what’s the answer? If we’re honest, we will recognise that sustainability requires massive changes in business, trade and consumption patterns – changes in the system itself. In the absence of that, smaller scale incremental change in the right direction is in order. Businesses need to do what they can on the sustainability front. It makes sense to work with partners up and down the value chain to see where they can create cost savings and other environmental and social benefits.

Ideally, companies will want these benefits to be ones that customers care about. This may mean having to educate customers about the benefits of better products and service packages, and engage with a broader set of stakeholders. Again, it’s the collaborative approach that’s recommended.

Business education needs to come on board too. And so do universities as living laboratories of sustainable value creation and places of inspiration toward better practice. As companies take on the hard task of becoming sustainable, they need committed and educated employees ready to collaborate on new solutions.

Kate Kearins is a professor of business at AUT. This article originally appeared in Engage magazine for AUT Business School