The 6 commandments of a sustainable business
Sustainability is about more than just being a green business, says Amanda Line, Regional Director ICAEW Middle East.
The business landscape in the UAE has changed drastically over the last decade. Sustainable business practices and corporate social responsibility (CSR) are now accepted as more than just a passing trend, as the growth of events like the annual Dubai Dialogue has shown. Globally, the impact of climate change and the financial instability have encouraged businesses everywhere to rethink the way forward to ensure their survival and stability, both financially and environmentally. Locally, companies are coming to recognise that businesses that adopt sustainable practices achieve more in terms of productivity than those that do not.
Failure to deal with the critical challenges for climate change will have a catastrophic effect. The UAE has one of the highest ecological footprints per capita in the world, mostly because of the need for energy and water. But this problem has been recognised and the government has taken several initiatives to discover long-term solutions, like investing in clean technologies and funding the development of Masdar City. However, if business is to avoid even more serious turmoil than that of the global economic crisis, everyone - including the private sector - must play their part in delivering the radical change that is needed.
Before you develop a sustainable strategy, take time to make a check-list of the 6 commandments of a sustainable business:
1. Not just marketing, not just nice to have
The first thing to appreciate is that sustainable business is not a bonus or a marketing exercise. Successful businesses of the future will be ones that have managed to adapt to the new landscape and place sustainability at their core. It is no good hoping that a company will be able to adapt immediately in the future, by fine tuning and re-gearing to challenges like resource shortages or more stringent regulations. These things must be factored in early.
2. Not just turning off the lights
One of the issues with sustainable business is that it is often associated primarily with "being green". Green issues are undeniably important, and businesses' behaviour can have a large impact. Businesses tend to be resource-heavy in terms of energy use, transport and even elements like stationary.
Thinking about how those resources are used and whether they could be used more efficiently - or even, in some cases, dispensed with - can lead to tremendous savings both financially and environmentally. But "sustainable business" is about far more than turning off the taps or reusing paper cups. It means thinking about resources and one's impact on the business surroundings in a whole new way.
3. Asking tough questions
In order to make business more sustainable we need a market-based system that both rewards and drives business towards sustainability, where the relevant information is accessible to the right parties, helping them make the best decisions. This means that businesses need to consider their wider role and ask themselves some tough questions.
For example: Will people still need the goods or services they sell in the future? How reliant are they on resources that could run out? This means reworking strategies in the light of sustainability rather than maintaining existing business models.
4. What does sustainable business look like?
A good example of this might be a business\'92 approach to its workforce. Hiring the cheapest possible labour might save money in the short term, but it may mean being in constant need of retraining staff. Then as staff develop the necessary skills, they will expect more remuneration and \'96 if not promoted \'96 will be likely to leave.
Whilst offering low wages might look like a good cash-flow approach in the short term, ultimately this is not a sustainable business model. The company is absorbing all the costs of staff training, equipping a workforce with skills that someone else will then pay slightly more for, leaving the company where it started!
A sustainable approach is to view good staff, and their training, as an investment in the future. This is all the more important now that the worst of the global recession is past us and economic growth is starting again. Companies that have worked hard to incentivise and retain good staff are in the best possible position to take advantage of the upturn, with the resources and skills in place.
5. Accounting for sustainability
For any business to meet this agenda it needs to be able to have the right information, whether it is considering human resources, supply chain management, or how to add value to products and services. Getting that information involves being able to measure and monitor performance, and then communicate the results. This is where accountants come in.
Accounting is all about measuring and monitoring performance and then compiling the results in a way that means that they can be used for planning and business strategy decisions. For organisations with the foresight to refocus on sustainable business, accountants have a key role to play whether they work as business advisers or in the finance function of a company.
6. The future of sustainable business
Embedding environmental and social good practice into commercial operations is not just good for the world, it is good business and should be part of the day-to-day life of any organisation that wants to survive and grow. By focusing on sustainable strategy, businesses will improve their ability to respond to new challenges, to manage risk, and to understand their priorities as markets change. As the business environment changes to reflect the growing emphasis on sustainability, organisations that have made it one of their core values will be the best placed to take advantage of new markets and to develop.
By Amanda Line
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