Many companies have some form of a sustainability program in place. However, many also lack deeper consideration as to how sustainability can enhance a company’s business model. What, then, does it take to transform sustainability into a competitive advantage?
When I co-founded my company in Hong Kong in 2007, there was not yet much momentum around sustainability and corporate social responsibility (CSR). I was fascinated by the concept of double-bottom-line accountability, where businesses could both meet a market need and simultaneously achieve social sector objectives. I built my business model and our corporate culture on these principles, which have been a driver of our success over the past 13 years.
In 2010, The Wall Street Journal published “The Case Against Corporate Social Responsibility” (subscription required), which critiqued the idea that companies have a duty to address social ills. It argued that this idea was not just flawed, but that it also detracted from real solutions to these problems. I exchanged research with the article’s author, and while we agreed to disagree, I concluded that companies with a strong ethical culture can make high-stakes decisions where the underlying rationale is not limited to profitability. As Peter Drucker once noted, “Profit for a company is like oxygen for a person. If you don’t have enough of it, you’re out of the game. But if you think your life is about breathing, you’re really missing something.”
In our current environment, I believe the world at large has woken up to the fact that no single organization can achieve a significant impact on its own. Formal and informal partnerships continue to flourish, and co-collaboration across geographies and industry sectors is increasing, from government agencies to investors to nonprofit organizations to private-sector companies. This is the future. I’m finding that many businesses are shifting from a cursory view of sustainability to a more nuanced understanding of what they can achieve.
The methodology an organization uses to develop a CSR program depends on where it is in its life cycle. Established businesses may identify Sustainable Development Goals (SDGs) that align with their core business models and the products and services they offer. For example, it would strengthen both branding and operational synergies for a law firm to focus on pro bono legal services or for a financial institution to focus on microfinance or financial education. My team at Lyrium reviewed one of our multinational clients’ charitable donation process and transformed it into a CSR program where the majority of its donations were reviewed against SDG goals that were aligned with its mission.
For startup ventures and scale-ups, this presents much more of a greenfield opportunity, where they can build or adapt their business models around a cause. I find that this resonates more strongly with younger demographics, such as millennials and Generation Z, and it also provides a rallying point for employees and builds an additional purpose into their existing roles.