Sustainability key to success

Two votes in recent days suggest the public and business are warming to making sustainability the driving force in our economy. The reality, though, is more complex and less optimistic.

Last Saturday the public had their say. As a result, the Greens lifted its share of the party vote to 10.62% from 6.4% in 2008. With 13 MPs in the new parliament it will become a more powerful advocate for the environment in the political arena.

Last Wednesday business had its say. Members of the NZ Business Council for Sustainable Development voted to merge with Business New Zealand's Sustainable Business Forum. The new entity, the Sustainable Business Council, will start life with 49, mainly large companies, potentially making it a more vigorous sustainability champion in the economy.

Both votes are very welcome. After all, we are more dependent on our natural environment for earning our living than any other developed country. Worldwide, the demand for natural resources is intensifying rapidly. The winners will be those that use the resources most efficiently, innovatively and cleanly in pursuit of profits and sustainability.

Smart companies are locking on to this, as shown in the sixth annual global survey of sustainability in business by management consultants McKinsey, published in May.

The top three reasons they gave for pursuing sustainability were to improve efficiency and reduce costs; to safeguard their reputation; and to spur growth. The jumps in support for efficiency and growth were particularly strong this year as companies sought advantage in a turbulent global economy.

McKinsey judged the top 11% of respondents to be sustainability leaders, based on their breadth and depth of focus on environmental measures and the success this brought them. The leaders, for example, found it easier than the rest of the respondents to deal with the complexities of sustainability disciplines; and they were twice as likely to state they out-performed their competitors.

"Make no mistake," McKinsey said, "capturing sustainability's full value potential is complicated."

The complexity is the challenge. While companies can take many simple, quick and profitable actions on, say, energy efficiency, many don't. They grudgingly accept rising costs or believe savings are not worth the effort.

But once companies begin their sustainability journey, many get a taste for more. They learn more demanding disciplines such as efficient production, supply change management, choice of materials, product design and communications with customers.

But, as McKinsey points out, a business reaps the biggest rewards only when it has made sustainability its defining ethos and mastered the skills needed to achieve it.

This is a never-ending journey as new challenges, opportunities, technologies and skills emerge. The NZBCSD has been at it for more than a dozen years, although it was better at research reports and advocacy than practical advice and tools for its members.

This worked when Labour was in power, given sustainability was something the government understood even if it had difficulty forming policy to deliver it. But NZBCSD lost momentum and membership once National took over.

Business NZ was long dismissive of sustainability. There was nothing new in it, since all good companies want to endure, it said. Only in recent years has it begun to pick up on the resource and market disciplines at the heart of sustainability.

The forum it created in 2008 still has only 10 members, some of which are also NZBCSD members. Of its framework of 22 key performance indicators for sustainability, only five are environmental and they are generic. The rest are standard measures of the likes of finances and human resources.

Although the vote on Wednesday was billed as a merger, it is actually a takeover by Business NZ. Optimists argue the new entity, the Sustainable Business Council, will help spread sustainability in the corporate sector. To do so, it will need to develop a lot more tools and depth of knowledge.

Even if it does, the council will still face an uphill battle convincing many of the 76,000 companies in Business NZ's affiliate organisations. Business NZ still sees sustainability as an add-on demanded by some consumers rather than a fundamentally different way of doing business.

Pessimists worry the council won't deliver the leadership NZBCSD provided. A big test comes soon when the NZBCSD reports on its legacy project, a NZ version of the Vision 2050 study by the World Business Council for Sustainable Development. Vision 2050 lays out the huge, rapid shifts businesses must make if 10 billion people are to live well and sustainably on the planet in 2050. It's well worth reading – www.wbcsd.org.

The NZ version will be equally challenging. Business NZ's response will give us a sense of how bold and committed it is to sustainability in business. For the sake of our economic future, it needs to be both to help make sustainability mainstream. If it and its new Sustainable Business Council achieve that, it will perform a very valuable service. But by definition it won't be at the leading edge, since that would scare the mainstream.

That's fine because the role is being played by Pure Advantage, the advocacy group led by business leaders such as Stephen Tindall and Rob Fyfe, and by the Sustainable Business Network which has some 600 members pioneering new techniques. All three organisations need to work well together. Declaration of interest – this columnist is a trustee of the SBN.

And the politics are crucial. The Green Party was the best opposition party in the last parliament in terms of the well-researched issues it raised. It will be even stronger in this one asking the hard questions on sustainability and pushing the economic opportunities that arise from it. But it won't be easy.

The National-led government still doesn't understand those opportunities are our best hope for a high value, resilient future. Instead, it will keep pushing its old economy model at the expense of the environment.

source: stuff.co.nz