Based on my work at some of the largest and most innovative companies, I am convinced that the name of the game is business sustainability; not just environmental sustainability or corporate sustainability, but business sustainability through the entire value chain. For retailers, less than 10 percent of their environmental footprint is associated with the direct operation of their assets. Ninety percent of the environmental footprint and thus 90 percent of the potential economic benefits from innovation, and are associated with the extended business activities of logistics and interconnection of business operations with those of suppliers and suppliers’ suppliers.

Sustainability has evolved tremendously over the years. No longer focused solely on environmental and social issues in isolation, sustainability is a lens applied to decisions on how to compete and even which businesses to enter and why, For leading companies “business sustainability” is increasingly becoming a complementary strategy to that of the core business — one that derives economic value from the pursuit and achievement of enhanced social and environmental outcomes.

Best Practices

Of late, I’ve been reflecting on my past and current work to distill a set of best practices for companies pursuing increased sustainability. I find that the keys to success may be summed up with four best practices related to: the business approach or mindset with which a company engages on sustainability, the scope and sources of value addressed and the organizational structure in which sustainability is employed within the business.

1. Approach – For business, sustainability is best employed as a strategic framework for innovation, value creation and organizational enhancement. Conversely, it is largely immaterial in terms of economic or environmental benefits when managed as an “environmental” initiative.
2. Scope – A focus on the core business and its extended lifecycle of the value chain is essential. Sustainable innovation of products and services should address price, technical quality and the fulfillment of social needs, such as reduced toxicity or increased energy productivity.
3. Sources of Value – There are two general categories of benefits; those benefits derived from experiential learning or “learning by doing,” and those resulting from the enhanced economic and socio-environmental outcomes themselves, such as reduced energy use and greenhouse gas emissions, reduced waste production, disposal costs and taxes and the reduced costs and enhanced margins associated with these societal benefits.
4. Organizational Structure – To engage the core of the business, sustainability must be a component of everyone’s job. A small strategy team supporting cross-functional, multi-stakeholder networks within the business is the best way to achieve broad individual and organizational traction, learning and success. The strategy team provides strategic direction and coaching as a supporting corporate function to the business in their pursuit of sustainable.

In the Business, By the Business, For the Business

Whether you’re increasing energy productivity, right-sizing packaging, sourcing paper from sustainably managed forests or developing products that meet emerging social needs, you’re tapping into multiple sources of value. To succeed, sustainability must live within the business and become a grass-roots source of innovation and value creation.

Remember, business sustainability is not an environmental initiative; rather, it is a business strategy that derives economic value from the pursuit and achievement of enhanced socio-environmental outcomes. To qualify, initiatives must make financial sense for the business, generating value in excess of the cost of capital, while also contributing to socio-environmental goals. If not, sustainability initiatives are unlikely to be sustainable within a corporate environment.

Tyler J. Elm, MBA, MRM, RP, is vice president, Business Sustainability Corporate Strategy and Business Development at Canadian Tire Corporation Ltd. Elm specializes in employing business sustainability as a strategic framework and source of innovation for profit-seeking companies. He will be addressing Supply Chain Issues From Different Perspectives at the AICPA/CICA Sustainability Workshop, from September 30 to October 1 in New York, NY.

©Tyler Elm, August 2010.