If the primary purpose of business is to make money, does it really matter how it makes its money? Should companies care whether their activities add to or subtract from the sum total of human happiness or of environmental health?
From such questions might discussion of business sustainability and social responsibility spring. Where it goes next could range from the economic efficiencies of reducing waste, the financial fallout of unethical business behaviour, or the market (and intrinsic) value of helping rescue cute feathered friends from extinction.
It’s big topic. And whether pulled by strongly felt beliefs, pushed by consumer pressure or embraced for its economic rationale, it’s concept gaining increased traction in the business world – both here and around the world.
Whether deserved or not, New Zealand (aka Middle Earth) already has its fair share of green-cred in the wider world. With its towering white peaks, scenic lakes, bush-clad coastline and generous tracts of under-populated countryside, the place at least looks clean and green. Plus we’re not known for mistreating our citizens or bombing those of other countries into subjugation.
We’re probably regarded as bit like hobbits – gentle agrarian souls occasionally capable of climbing the heights of heroism and undertaking noble, inspirational deeds, be they in art, sport or even business innovation. We’re also well placed to take lead in terms of putting sustainable business principles into practice – if we wished.
With our natural environmental edge and ‘speedboat’-scale economy, we could and should build an international reputation for our sustainable business practices, according to Saatchi & Saatchi’s global chief Kevin Roberts.
But is that likely scenario? To what extent has ‘sustainability’ and ‘social responsibility’ infiltrated the lexicon of New Zealand management? How well understood is it and how widely practised?
Green and/or responsible?
When an international research consortium launched its first “responsible competitiveness” index at the end of last year, l’il ole New Zealand was up there in ninth place (from total of 51) just behind bunch of Scandinavian countries famed for being socially conscious – and the UK.
The rankings are all about comparing the competitiveness of various countries with regard to both social and economic factors, and in the fairly sweeping parameters of this initial attempt at forecasting national sustainability, we stack up quite well.
How sustainability is acted out at local business level is perhaps another issue and one subject to ongoing research by the University of Waikato and New Zealand’s Sustainable Business Network (SBN). first survey of 811 companies completed late last year found that while businesses were actively engaged in environmental practices, they were generally even stronger on the CSR (corporate social responsibility) front.
Included in the latter category are activities such as job training (undertaken by 75 percent), giving time or money to local community projects (58 percent), contributing to charity (67 percent) and family-friendly policies (57 percent). More than half the respondents believed socially related issues would become more or much more important over the next five years.
On the environmental front, 56 percent of companies have recycling programmes and half consider the environmental impact of their products, processes and/or services. However, only 25 percent had put their green intentions in written form and only 10 percent reported on them.
Figuring out how local companies define sustainability – in terms of CSR, environmental practice or both – is very much part of the research according to one of the survey authors, University of Waikato professor Stewart Lawrence.
“Definitions [of sustainability] are difficult and not everyone has the same understanding of it. We’ll be asking people in depth about their understanding of those terms and practices in the second stage of our research.”
Although reluctant to draw too many conclusions from this “initial snapshot” of business sustainability, Lawrence hazards guess that company size is relevant factor both in what practices are chosen and how they’re reported. Larger firms are more likely to have recycling schemes, environmental management systems (EMS) and formal reporting while smaller firms tend to cite “management time” as hurdle to adoption of formal practice and lean more towards socially responsible activities.
Whichever track they’re taking, there’s growing sense that looking after their people, the community they work in and the environment around them are all relevant to long-term business survival, says Lawrence. Furthermore, business owners and managers are motivated more by their own belief systems – or the urging of staff – to embrace sustainable practices than they are by external influences.
So does it matter if one firm sees ‘sustainability’ as reducing electricity use while others see it as helping paint the local kindy, saving wetlands or adopting more transparent reporting of corporate governance?
Not according to Jami Williams, chief executive of the Sustainable Business Network (SBN) – an organisation born last year when Businesses for Social Responsibility merged with the Auckland Environmental Business Network.
That move reflects the reality that ‘business sustainability’ is the term now used to encompass economic, environmental, and social aspects of business – the so-called triple-bottom-line measure of organisational health.
“Sustainable business is the marriage of social equity, economic growth, environmental responsibility and ethical commitment,” says Williams. “Where businesses start on that journey is up to them – there’s no right or wrong way.”
Canterbury Employers’ Chamber of Commerce chief executive Peter Townsend believes business is now taking much more integrated approach to the various elements of sustainability.
“The interdependency between environment, social and economic sustainability is becoming much clearer to the corporate world. That doesn’t mean everyone is producing triple-bottom-line (TBL) reports or accepting the TBL gospel word for word. What it does mean is that they have better understanding of the inter-relationship.”
Often the activities companies undertake overlap anyway, says Townsend.
“I know couple locally that are doing stuff like replanting barren hills with native trees as contribution to the culture of their organisation and to society in general – but it also has an environmental ramification. So there’s an interdependency.”
He thinks overall, businesses are more accepting of sustainability concepts now.
“It’s not quantum leap but gradual change, step-by-step shift into accepting there are certain environmental, social and economic limits we need to learn to operate within.”
Is it mainstream?
Landcare’s chief operating officer Ian Whitehouse, who works with lot of sustainability reporting groups, reckons the concept is continually evolving and it’s not surprising it carries lot of different meanings, applications and approaches.
“There is an increasing appreciation of society effectively granting business licence to operate and number of companies come to it through the risk management/risk assessment/risk minimisation lens. Others come into it because of what we call ‘no-regrets’ gains – usually in energy savings or waste reduction where some quite stunning gains can be made with relatively little investment.”
Then there are those companies, such as his own, or beverage company Phoenix Organics, where sustainability is intrinsic to brand value. There’s also an increasing realisation that “people matter” and that is now major driver, says Whitehouse.
Once companies start the journey, says Williams, it’s case of continually pushing the boundaries of what can be achieved.
“So it might start with looking at how your own office operates but down the line, it’
