While almost all companies today advocate sustainability, their practices and attitudes vary greatly. What exactly does sustainability mean and what does it look like?
In the first article of this series , we explored the origins of the sustainability movement, including debates regarding long-term survival and technology (stage 1 of sustainability) and the environmental movement (stage 2). In this article, we assess the third and fourth stages — those that move beyond the environmental domain to address broader, societal aspects of sustainability.
Stage 4: The sustainable enterprise
Rather than maximizing profitability while reducing harm, the primary objective of a sustainable enterprise is to maximize social and environmental well-being through a viable business model. Environmentalism (stage 2) and corporate social responsibility (stage 3) focus on minimizing the negative externalities of organizations on the environment and stakeholders, respectively. But companies in these stages do not spend much time focusing on how they improve and develop society. It is this transformational shift to stage 4 that organizations have a much harder time grappling with — because the business case for sustainability becomes less obvious.
To enter stage 4, organizations should instead focus on a business model for sustainability and adopt new frameworks and strategies. Some innovative business models in the fourth stage have begun to emerge from the positive organizational ethics field. The focus here is on how organizations can achieve their highest potential rather than remaining entrenched in solving problems and filling deficits, which characterized previous stages of sustainability. John Ehrefeld offers a positive definition of sustainability as "the possibility that human and other life will flourish on the planet forever." This is the polar opposite of the focus in stage 1 on enabling humans to achieve long-term survival.
Taking the leap
To remain innovators and pioneers, organizations need to shift toward the fourth stage of sustainability. In the new business model we propose, we argue that organizations need to:
-Shift their missions around new business models that address social needs and the improvement of our life-supporting systems; adopt long-term stances
-Promote leadership that is committed to balancing profitability with the pursuit of a social mission
-Include stakeholders–both external and internal–into business models
-Engage employees, shareholders, and customers around sustainable agendas
-Measure their sustainability performance in an effective way
-Become accountable to stakeholders through complete transparency
-Scale in a way that is in line with their mission
-Promote sustainability innovation and continuously iterate on their business model.
If companies can work toward these nine points, we will be a long way from the gloomy outlook of Thomas Malthus in 1798.
Francisco Szekely is Sandoz Family Professor of leadership and sustainability and Director of the IMD Global Center for Sustainability Leadership (CSL). He directs Sustainability Leadership in Action (SLA), a talent development initiative targeted at leaders committed to discovering new ways to increase their performance and deliver exceptional results. Zahir Dossa is a postdoctoral fellow at the CSL.
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[This article has been reproduced with permission from IMD, a leading business school based in Switzerland. http://www.imd.org]