Part 1: The Necessary Rise Of Corporate Social Responsibility & Sustainable Business Planning
April 29th 2021 - Author: Melina Corvaglia-Charrey
Sustainability and purpose-driven business strategies have increasingly become colloquial discussion points on boardroom agendas in recent years. In 2021, the current pandemic has escalated these discussions even further, throwing business plans off-course entirely. At a time when we are encouraged to remain socially distanced, it becomes abundantly clear just how connected we really are, and need to be – to one another, to society and to our planet.
In Part One of our Two-Part discussion about ‘Sustainability As Part of Your Business Plan’, we sit down with Paolo Taticchi, Professor in Strategy and Sustainability and Deputy Director (MBA and Global Engagement) of University College London to discuss how business leaders can best approach sustainable business planning for future success. Before we look ahead however, we are asking the question: How did we get here?
Many of the modern comforts we enjoy today, from electricity, to the way we travel, to the technology we use can be credited to over 100 years of innovation and transformation stemming back to the start of the Industrial Revolution, which spanned the better part of the 18th and 19th centuries. During this period, societies were transformed by new ways of life and new ways of approaching business. Natural resources were harnessed for mass production - electricity powered production, coal and fuel generated energy, and iron and steel were used for manufacturing goods. Business was booming. A question worth exploring however, both then and now, is at what cost? Fast-forward 100+ years and the answer to this question has become abundantly clear. The economic prosperity that was once a by-product of the Industrial Revolution most certainly came at a cost, with the highest price being paid for by our most valuable natural resource, our planet. The recognition of the negative impact that business and manufacturing was having on the environment began to emerge during the latter half of the 20th century.
According to Professor Taticchi, the concept of Corporate Social Responsibility (CSR) started to emerge in the early 1950’s and 1960’s as a recognition that business activities may have a negative impact on the environment and on society. Society was gradually coming to the realization that ‘business’ could no longer continue as ‘usual’, giving rise to the notion that businesses had an obligation to act in a socially responsible way. As a result of this growing social conscience, companies were keen to become good corporate citizens and ‘give back’ in an effort to offset the negative environmental and social impact of their activities.
Professor Taticchi cautions that although well intended, the act of giving back, under the umbrella of CSR, does not go far enough to offset the negative environmental and social impacts of business activities felt globally today. What is often perceived to be socially responsible behavior on the part of businesses, in the form of donations for example, actually detracts from the overall sustainability effort. This approach, also referred to as ‘greenwashing’, can have the opposite effect of what is intended by a sustainability strategy, as it gives businesses permission to continue as usual, compounding environmental and social issues even further.
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In Part One of our Two Part discussion with Paolo Taticchi, Professor of Strategy & Sustainability at The School of Management, University College London, we learn about how business leaders can best approach sustainable business planning and how to effectively link sustainability to the bottom line.
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Now that we better understand the rising need for sustainable business leadership, we turn our attention to our primary question: How can business leaders best approach developing a sustainable business plan? In order to address the question of how, Professor Taticchi aptly points to the why. “Sustainability is on the agenda of many executives today because there is now evidence that there is a link between financial performance and sustainability performance. There is a real business case for companies to engage more with sustainability to make sure that on the one side they perform better financially, but on the other side they also have a positive impact on the environment and on society.”
Professor Taticchi explains that this net positive relationship between financial and sustainable performance goes back to a well-known concept referred to as the ‘Triple Bottom Line’ (TBL). British entrepreneur and author John Elkington, known for his work in sustainability, first introduced the TBL phrase in 1994. The concept is based on the 3 P’s: planet, profit and people. At its core, the TBL takes into consideration that a business accounts not only for its economic performance, but also the environmental and social impact of it’s activities. In his book titled ‘Enter the Triple Bottom Line’, Elkington describes the phrase as, “In the simplest terms, the TBL agenda focuses corporations not just on the economic value that they add, but also on the environmental and social value that they add – or destroy.”
When looking at how to build sustainability measurements into a business plan, Professor Taticchi underscores the importance of examining a business’s competitive landscape as a first step. Before a business can properly build a sustainability strategy into their framework, business leaders need to first have a clear understanding of their competitive strategy and positioning in the marketplace.
Once a good understanding of the competitive landscape has been established, business leaders then need to assess the ‘risks’ of not having sustainability as part of their business plans, as well as the ‘opportunities’ that come with having a sustainable strategy and positioning. When thinking about the types of risks that a business could face, Professor Taticchi points to a few examples including the effects climate change may have on a business’s operations, a rise in consumer demands, impact on corporate reputation and ultimately, profit. When it comes to exploring ‘opportunities’, Professor Taticchi highlights a number of areas including new product innovations, new services and identifying new segments of the market that value sustainability, in turn leading to new economic growth for a company.
According to Professor Taticchi, too often businesses approach sustainability strictly from a marketing and communications perspective, without linking to their competitive strategies. Done properly, a company’s sustainability strategy should help execute it’s competitive strategy, cost-leadership positioning and goals. “A business’s sustainability strategy should lead to better financial performance. In order to enable that, you need to make sure that whatever you do in sustainability is not about philanthropy, it’s not about CSR, it’s actually smart business that will help you become more competitive”. Bottom line, committing to a sustainable business plan will pay off – for profits, people and planet alike.
In Part Two of our discussion, we will explore how to account for a sustainable supply chain as part of a business plan.
For more guidance on how to best approach building a sustainable business plan, Professor Paolo Taticchi recently published a book titled “Corporate Sustainability in Practice: A Guide for Strategy Development and Implementation. Visit paolotaticchi.com to learn more.
