Economic advantages of environmental sustainability

In order to understand what these advantages and, by implication, challenges are, this sub- section considers the second theme and explores what economic advantages business sees as imperative for successful acceptance and implementation of environmental sustainability as an integral part of the whole. Richard Locke from MIT (Burns et al., 2009:10) argues that the best way to ensure that sustainability is deemed important is an open approach to the challenges it presents and the economic advantages it offers. One of the key conclusions mentioned in the Sloan report (Burns et al., 2009:3-6) is that sustainability is having an impact on how companies think and act. The authors’ report that companies with experience of integrating sustainability, approach sustainability from a very broad spectrum. These companies therefore consider environmental sustainability from an economic point of view and they acknowledge the importance of engaging with the suppliers across the value chain and therefore they hold suppliers to specific criteria related to environmental sustainability. The report identifies the following challenges and potential opportunities of sustainability (Burns et

al., 2009:10). The first is that it affects all aspects of a company’s operations. Secondly,

sustainability impacts value creation in the short term and long term, and thirdly, mounting pressure from stakeholders (corroborated by Esty & Winston, 2009) is increasingly important. The fourth challenge identified in the report is that there seems to be an emphasis on effective interdisciplinary collaboration, and lastly, decisions on sustainability are made against a backdrop of high uncertainty.

According to the report (Burns et al., 2009:11) the barriers that impede the integration of sustainability are that people, in particular business leaders and managers, lack a common fact base. Companies often do not share a common language or definition when discussing sustainability and the goal they work towards is frequently not clearly defined or not collectively understood. Three challenges are therefore posed in the report. The first is that sustainability must be planned for both, short term and long term impact. The second challenge suggests that sustainability is intangible; therefore how its success is to be measured is integral. The third challenge is that sustainability needs to be implementable in an uncertain economic environment. The report (Burns et al., 2009:15) highlights that companies that are deemed successful in implementing environmental sustainability, appear to define sustainability strategically and economically, adopt a system-wide view, and form partnerships. They create

57 a robust business case for sustainability and then apply it in the whole value chain, thus holistically integrating sustainability throughout the business.

Esty and Winston (2009) identified fifty companies (twenty-five American companies and twenty-five international companies) that they refer to as the ‘WaveRiders’.28 _{These companies} have been able to show considerable progress towards operating with environmental sustainability and use environmental sustainability to establish an advantage over their competitors through strategic management of environmental challenges (Esty and Winston, 2009:15-18). The business landscapes within which these companies operate are driven by a number of aspects, from globalisation to the need to make use of local markets and respond to local market needs. In addition, meeting the expectations of society is increasingly important and business needs to concern itself with poverty alleviation, healthcare and education (Esty & Winston, 2009:16; Ehrenfeld, 2008:200-201). Transparency and accountability are constructs that have become integral in business and living alike, thus full accountability is becoming the norm (Esty & Winston, 2009:18). The authors (Esty & Winston, 2009:20-21) found that in WaveRider companies the interface between good business and environmentalism is embedded in environmental consideration in all aspects of their operations. This includes reducing environmental impact, determining their environmental footprint and generating profit.

The authors (Esty and Winston, 2009) list five aspects that the WaveRider companies have in common. The first aspect is that they design innovative products and are known for their innovation in design. The second aspect is that they place an emphasis on environmental stewardship with their suppliers, which relates to the third aspect which indicates that they collect data to track progress and determine performance in all operations. The fourth aspect that the WaveRider companies have in common is that they constantly seek solutions to processes that could harm environmental practices. The last aspect identified by Esty and Winston (2009) is that these companies build an eco-advantage culture within their business structures by providing tools, structure and training to empower all employees to aspire to the company’s eco-vision.

Esty and Winston (2009) argue that the economy and the environment are deeply intertwined, and rank at the same level as other issues, such as globalisation. In this interconnected world “…environmental strategy emerges as a critical point of competitive differentiation” (Esty &

28 _{The WaveRiders were compiled through available information; Esty and Winston (2009) first narrowed the list of} 5,000 companies to 200, and then further narrowed the field to only fifty companies, which they refer to as WaveRiders. The methodology applied to develop the WaveRider list can be found in the book Green to Gold (2003:24-25). On the USA list, three textile and clothing companies appear (Du Pont, Nike and Patagonia) and none on the international list. These companies have a specific eco-mind-set (an environmental lens) that seems to be critical to managing eco-risks, driving innovation and turning environmental pressures into environmental advantages.

58 Winston, 2009:282). This requires that companies have a holistic vision of the entire company, its operations and its stakeholders, their way of thinking, adopting ways of understanding the company’s environmental challenges and embedding environmental stewardship into their core values. Esty and Winston (2009:146-147,165) argue that the WaveRiders have an eco- advantage mind-set which contains the following and is seen as the ‘eco-advantage bottom line’.

These companies have a broad view on all issues which influence everything; from investments to strategic decisions, to considering tangible aspects and intangible gains and to contemplating possibilities for adding value up-stream and down-stream. They view environmental sustainability from management firstly, thereby ensuring commitment from top to bottom in the organisation. A ‘no is not an option’ viewpoint is adopted, setting seemingly impossible tasks and refusing to accept failure. Some companies refer to this as the TINA approach (‘There Is No Alternative’). These companies recognise that feelings are facts, thereby considering all stakeholders’ opinions regarding the company’s environmental performance. Therefore they believe in doing the right thing, basing environmental decisions on core values for short term and long term benefits.

The above necessitates that companies need to take ownership of a sustainability approach. A compelling example is DuPont,29 _{who has in previous years had structured Environmental} Leadership Committees, but has moved to a Sustainable Growth Council which is led by the chairman. This approach places ownership of environmental sustainability and environmental thinking at the core of the company and reduces the need for a top-down approach. Making the environment a key part of performance reviews is an interesting view and sends a unequivocal message to all employees (Esty & Winston, 2009: 219-223). It is clear that environmental sustainability is a necessary business approach with specific advantages and challenges and it requires a strategy for successful implementation.