It is difficult to give an exhaustive description of such a broad and complex topic as sustainability.
In this article, we will attempt to delve into the relevance that sustainability is gaining in the strategic direction of companies. And thus understand the opportunities that sustainability can provide in creating a successful organisation and generating lasting competitive advantages.
Corporate Sustainability Today: Several Incidental Factors
There are several factors that contribute to the relevance of sustainability today.
- These include European legislation that is becoming increasingly stringent.
- Mention should also be made of the opportunity to tune in to the sensitivity of consumers and stakeholders in general, the interest of credit institutions and institutional investors who are promoting dedicated financial products or are facilitating credit for those who have taken concrete action in this regard.
- The public actor is also playing an important lobbying role, incentivising, in line with the NRP, various interventions, including those favouring the green transition.
European directives, public financing instruments, consumer awareness, the orientation of financial investors and credit institutions: these are thus the main factors in a ‘movement’ pushing economic operators towards sustainable business. We could speak of a generalised pressure, the strength of which is in itself sufficient to induce concrete action in this direction. This ‘pressure’ also includes large private groups, which have taken concrete actions involving the players in the production chain. These are major challenges for our companies, primarily SMEs therefore, which are called upon to ‘align’ themselves with the demands of the competitive environment in which they are immersed.
But in addition to an awareness of the challenges that sustainability poses to any organisation, it is first necessary to grasp the strategic opportunities underlying these same challenges.
The strategic opportunities of Corporate Sustainability
The first consideration regarding this strategic dimension lies in the epochal transition phase that world economies are going through. It is no longer conceivable to continue with the industrial model as we had it until yesterday. It is unthinkable, unsustainable, to continue with that traditional model simply because it is incompatible with the environment in which human beings live. Therefore, the first strategic dimension lies in this: an imperative mandate to change, and quickly, towards a sustainable economy and a more harmonious relationship with the environment, the individual and nature in general.
This has triggered, in all advanced economies, an unprecedented process of innovation. New materials, green energy sources, recycling-focused supply chains are some of the frontiers of innovation that the world is initiating. And who is left behind? Those who do not engage in this comprehensive review of the production set-up, what are they up against? The answer is simple: they get left behind. They remain old and therefore out of the market. Given this strong premise, a few considerations on the strategic opportunities arising from sustainability.
First strategic opportunity: efficiency
Let’s talk about the environment and environmental sustainability (‘E’ for Enviromental in the acronym ESG). Making a company sustainable means reducing waste, making production more efficient, minimising energy consumption, seeking renewable energy sources and reducing dependence on fluctuating utility bills.
Companies committed to reducing their environmental impact implement measures for the overall efficiency of the organisation with positive consequences on overall costs. Sustainability also leads to a review of production processes through investments in digital technologies that optimise business operations.
Second strategic opportunity: people
We are at the letter S (Social in the ESG acronym). Here we talk about the multiplicity of actors that interact with the company. And among these surely must be mentioned the people who live in the company. Which organisations today can claim not to have encountered serious problems with human resources in the post covid period?
Activating policies towards employees that make the workplace more in line with their aspirations means making organisations more stable and increasing their ability to generate lasting improvement processes. The personnel policy, or personnel strategy, becomes sustainable to the extent that it is able to give the employee the right feedback and is capable of engaging him or her sustainably in the corporate project.
Third strategic opportunity: long term, not short term
Governance oriented towards the long term (this is the third letter of ESG). ESG requires framing the company in its economic, social and environmental ecosystem and does so by imposing (or suggesting) investments that look to the medium and long term. It imposes product or process innovation, it imposes investments in new production set-ups, redefining relations with reference communities and employees. This imposition is traceable to a corporate management perspective and a governance horizon that intends to build a lasting future for the company.
At Roncucci&Partners we help companies develop themselves and their business, embrace change and evolve to thrive in a world that is increasingly complicated, insidious and requires great expertise. We do this by applying punctual methods and rigorous strategies, the result of many years of experience and the richness of the numerous success stories we have conducted all over the world. Passion and method are indeed our guides to enhance the present and build the future.