Sustainability issues are increasingly becoming important to both policy makers and business leaders. Organizations have learned that sustainability risks including environmental, social and governance (ESG) risks are much more than just another item in the long list of concerns that need to be managed.
Businesses have much to gain by acting in a socially responsible manner including enhancing brand value and reputation, attracting millennial talent, and achieving cost reduction.
In examining organizations that have started down this path, we have identified three basic actions that have enabled them to turn sustainability from a risk into an opportunity. In this article, we explore what each of these actions entails, drawing lessons from some organizations focused on sustainability.
First, they look ahead to understand how they can capture new growth opportunities from sustainability. The experience of Unilever over the last decade demonstrates that, despite financial headwinds, undertaking a sustainability transformation can create meaningful business value. When Paul Polman took the reins as Unilever Global CEO in 2009, he created the Unilever Sustainable Living Plan, a decade-long scheme to double the company’s revenue while simultaneously reducing its environmental footprint and increasing its social impact. During his 10-year tenure (2009–2019), the company delivered consistent top and bottom-line growth. His commitment to sustainably transform Unilever created excellent returns for its shareholders, delivering a total shareholder return of 290 percent.
Secondly, they look inside, within their business, to find ways to reconfigure their operations to help accelerate the transformation toward greater sustainability. Locally, we have seen Safaricom’s transformation and growth attributed to its sustainability strategy where the company has continuously innovated new products and enhanced existing products to address social economic and environmental issues. A major innovation is M-Pesa which continues to foster financial inclusion regionally and potentially globally. This has paved way for partnerships with other sectors yielding innovative solutions such as M-Tiba (micro-insurance healthcare product), Digifarm (farmer access to agri-input and financial institutions products) and M-Gas (clean and affordable energy on a prepaid basis).
Finally, leading organizations look around for opportunities to leverage their business ecosystem to help create competitive advantage in a sustainability-focused world. East Africa Breweries Limited (EABL) has been on the forefront of ensuring sustainable growth by coming up with initiatives aimed at reducing its environmental impact and impacting communities around them by sourcing for raw materials locally where possible and investing in projects such as the Water of Life program and other community investment programs.
It is time for businesses to transform by looking ahead, inside, and around. Not only does this help companies understand how the pressures toward sustainability could be a threat to their current business, but also identifies what opportunities may exist for their future business.