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The Misconception of Sustainability in Business: A More Holistic Understanding

Sustainability is a crucial consideration for businesses, but there is confusion over its true meaning. This article clarifies the distinction between green ideology and practical sustainability and explores the immediate concerns that businesses need to address, such as employee treatment and community perceptions. Additionally, we discuss the economic benefits of proactive sustainability initiatives.

The concept of sustainability in business is nothing new. What is new is the growing misconception over what exactly sustainability means.

The first key to understanding what sustainability entails is to understand the distinction between practical, real-world sustainability and the often difficult to measure, quantify or even define principles of green ideology.

Thanks largely to these confusing principles, many people assume sustainability relates to environmental impact only. The reality is that there are more immediate concerns to be addressed. The good news is most business owners are aware of the impact their businesses have and are actively committed to improving how they operate.

How employees are treated directly affects productivity and ultimately staff turnover which any business owner will tell you is costly and unsustainable. Whether employees understand their rights, obligations and expectations are questions all managers should be asking. Do your employees understand the company strategy? Do they even understand the company's mission or vision? These things are vital to establishing and maintaining direction. When we consider that we spend on average a third of our lives at work, the impact of our workplace on our mental health is considerable.

The concerns of local communities have an impact on public customer and client perception and therefore sales. Whether or not the company is perceived as a fair and ethical business is becoming a more important consideration than the of cost of products and services alone.

Environmental impact is very much of public interest with global corporate financial and political levers playing a usually unwanted and often unwarranted part in how businesses can operate. The pervasive use of Environmental, Social, Governance (ESG) is pushed as an important way to force environmental and social compliance but in almost all cases it simply favours transnational corporate entities and institutional banks while making it harder for local businesses to compete.

The same can be said of carbon "net zero" initiatives which make very little sense in New Zealand with a population of our size, the reality that over 37% of land coverage is forest area and that we are surrounded by sea. The fact is that New Zealand is a natural carbon sink so whatever competitive advantage we have on price and quality is adversely impacted by unnecessary compliance costs. The economic outcome is that demand shifts offshore to less ethical, less sustainable markets. A net loss in all regards.

A more pragmatic approach to environmental sustainability is to improve systems and processes to eliminate or reduce waste and increase efficiency. Heating and cooling costs usually account for the greatest avoidable energy cost so any initiatives to manage temperature more efficiently should be addressed. Reducing the amount of travel and supply chain use, reducing the energy consumed and not flying employees all over the country for conferences and team-building activities is a good start.

With all of this in mind, the most common misconception about sustainability is that there is an inherent cost to adapting. When waste is reduced and efficiency is increased, operating costs are reduced and productive output increases. With improved public perception, sales often increase. There will always be impact to operating a business but with proactive, common-sense initiatives to reduce the impact on our people, our communities and the environmental, we can make positive and continuous progress towards real-world sustainability.

Taking a step back and properly analysing your options, formulating actions to help deliver on those expectations, is important. Need help facilitating that process, then give us a call.

Charles Davies is the author of this article. He is a director at Sustainability NZ Ltd.

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