While it’s primarily used to refer to the impact that businesses have on the natural environment, sustainability can also be viewed as a much broader guiding principle to doing business. While many businesses aim to deal with short term problems, or seek short term profit, a sustainable one takes short term benefits as well as its ongoing growth in the long term into account.
In effect, sustainability in business is about creating the conditions in which a company will operate in the future. This means approaching everything, from recruitment, to cash flow management, to environmental impacts strategically, understanding that every step should prepare the way for the future.
The pursuit of sustainability as a guiding principle gives businesses the context needed to develop strategies to competitively provide for their customers—and ensure their own success—indefinitely. While it’s generally helpful to think ahead, a focus on sustainability is particularly relevant in situations where businesses expect to operate in adverse conditions, such as during an economic downturn.
Sustainability is key to heading off future challenges
In many ways, sustainable business practices in general are reflected in how businesses approach environmental sustainability. For example, forward thinking businesses all over the world are increasingly switching to renewable sources of energy such as wind, solar, and hydropower. Some even generate their own renewable energy. In the near term, this typically represents a large investment, though the total energy costs are often reduced.
In the long term, though, it provides businesses with a major advantage. Once a manufacturer is producing their own renewable energy, their energy costs become extremely predictable. Competitors, on the other hand, remain at the mercy of constantly shifting prices as price fixing, global politics, and markets exert their influence. In the same way, businesses who embrace sustainable hiring practices and sustainable cash flow management can insulate themselves against future difficulties.
Sustainable talent management
In order to recruit and retain talent sustainably, businesses need robust onboarding practices, a healthy company culture, and excellent communication between business leaders and employees. This requires businesses to invest a lot of attention and resources up front, but it’s an investment that begins to pay for itself almost immediately.
Sustainable talent management allows employers to hold on to and make use of skilled talent longer. Critically, it also makes those businesses more attractive to potential candidates, and helps them to more easily recruit the highly skilled workers they need to grow in the future.
Sustainable cash flow management
Business leaders spend a large portion of their time battling short term cash flow interruptions. Lacking other clear options, many opt to shift funds from one budget to another, often causing cash flow issues elsewhere at a later date. A sustainable approach to cash flow management is one that offers both short and long term solutions.
For example, invoice finance and supply chain finance allow businesses to systematically address the root problem. A business can simply finance an invoice to get access to their funds earlier than the payment is due. This effectively overcomes longer payment terms. A business looking to fund a quick growth opportunity, on the other hand, can use supply chain finance to finance the project, before using the funds generated by that same project to pay for it. In both cases, businesses reach for a sustainable source of funds, avoiding the unstable cycle of starving one project to keep another going.
Sustainability boosts morale
Sustainability provides stability, making employees, consumers, and business partners feel more secure. Consumers increasingly prefer businesses who embrace environmental sustainability, viewing such businesses as being of higher quality, and being more ethical than less sustainable competitors. Lenders and investors, for their part, prefer financially sustainable businesses with clean balance sheets, who can be relied upon to manage money responsibly, and to produce reliable returns.
Employees see more, and are more affected by the sustainability of their employer than anyone else. They want to work within a culture that values them, and allows them to perform to their full potential. First, this means sustainable talent management, which helps employees feel appreciated, but it’s also about sustainable financing. Nobody wants to pour their best efforts into a project for months, only to see it cancelled due to budgeting constraints. Of course, sustainable environmental policies also play a role—after all, employees are also consumers.
Using the concept of sustainability as a guiding principle allows businesses to take control of their environment, from their financial circumstances, to the labour market, to the literal natural environment. By recognising the value this offers in terms of mitigating the effects of changing economic conditions, skill shortages, and changes in access to financing, businesses can begin to use sustainable business practices to make themselves more competitive and more successful.