Sustainability encompasses all aspects of sustainable business practices, addressing relevant social, environmental, regulatory and human-welfare issues responsibly and profitably. Suppliers, employees, customers, shareholders, governments and communities all have specific agendas that need to be understood and managed. Companies need to take control of their sustainability agenda before others try to do it for them. Doing so also means accepting responsibility for the full value chain, not just a company's direct footprint.
Buttressing the idea that sustainability is rapidly becoming a prerequisite for profitable growth are such indicators as a recent study showing that at least two-thirds of 25,000 consumers in the US, Canada and Western Europe form impressions based partly on a company's ethics, environmental impact and social responsibility—or that over 60% of employees state that a company's commitment to sustainable business practices is "extremely important."
Bain's experience in guiding clients in this increasingly important strategic area shows that:
The first step for companies is to prioritize their sustainability issues—which are not necessarily the issues in the headlines in any given week. Companies will have different sustainability issues rise to the forefront based on their industry, their strategy and operations and their geographical footprint, among other considerations. Sustainability issues need to be evaluated through additional lenses, including the implications of new regulations on your business, the cost (or savings) of addressing the issue, the impact on customer demand for your products or services and how it affects your ability to recruit and retain employees.
The second step in managing sustainability is ensuring that any moves make strategic sense and are backed up by sound business cases. In other words, by integrating sustainability decisions with traditional analysis, companies can figure out how to gain a competitive advantage over the long term.
Read more about Bain's viewpoint in our "Growth through sustainability" brief, presented at the World Economic Forum in Davos, Switzerland.