Profitability and Sustainability
Sustainability is Profitable
Incorporating sustainability and social responsibility considerations into a business model often leads to a robust and ultimately more profitable enterprise. Considering social and environmental impacts are no longer a “feel good” measure for good public relations, these initiatives should be integral to all aspects of a business’ operations from supply chain to investments.
There are a growing number of entrepreneurial thinkers who perceive sustainability and making a positive social impact as a necessary part of doing business in a global economy that is often chaotic and increasingly complex, according to the World Economic Forum. A business that has investigated its sustainability pitfalls is more likely to know where its weaknesses are as a profitable entity; a prudent risk management measure in a world increasingly affected by environmental issues.
Investing in sustainability improvements and devoting resources to social impact measures can often make an enterprise more resistant to risk and be able to optimize its profitability.
Developing a More Stable Supply Chain
If a fashion company is dependent on cotton from a place that is experiencing drought due to global warming and whose factories are located in another part of the world experiencing extreme poverty; it would be prudent to develop a more stable supply chain that works to circumnavigate these sustainability and social impact issues.
Maybe the company could change their cotton suppliers and buy from farms who have innovative irrigation systems that waste less water. For their garment factories, the company could support local community initiatives for education and pay their workers a fair local wage to insulate them from their country’s chaotic economy. This holistic approach to risk management and sustainability enables this hypothetical company to reduce disruptions to its supply chain.
Profitability and sustainability are not exclusive, even for large multinational businesses like our example. While this company did not necessarily set out to become a sustainable fashion business, their sensible risk mitigation strategies do ultimately contribute to the common good of sustainability and making a positive social impact.
Systems Thinking is Essential for Sustainability
Systems thinking is a philosophy that examines a topic through the lens of interlocking frameworks that all influence each other. When considering all the overlapping factors that contribute to a business’ profitable sustainability strategies, systems thinking becomes an increasingly important model. By understanding all the factors at play, business leadership can better problem-solve their sustainability issues, delve into risk management measures and consider their social responsibility locally and globally.
One notable example of social impact efforts utilizing systems thinking is the United Nations Sustainable Development Goals. These 17 broad objectives to create a net positive social impact influence the other, with the implication that governments, NGOs and enterprises will problem-solve these social impact challenges in concert. By thinking systemically through the framework of these Sustainable Development Goals, enterprises are more likely to drive impactful change rather than offloading negative environmental and social impacts on underdeveloped economies. A collaborative approach founded on systems thinking is a key element of driving sustainable profitability across sectors and across the globe.
Joining with Other Companies to Improve Collective Impact
Consider again our hypothetical fashion company. What if they joined together with other enterprises in fashion to improve their collective impact? In October 2019, 60 fashion companies did just that, vowing to become more sustainable. Taking a systematic approach, they pledged to reduce the fashion industry’s impact on greenhouse gases, improve biodiversity and protect oceans by reducing single-use plastics.
One year later in 2020, the Fashion Pact has made progress toward more sustainably-produced fashion. Around 45% of their collective energy usage comes from renewable sources, and 70% of signatories have reduced their plastic usage. By thinking in the collective and focusing on systemic industry-wide change, the Fashion Pact is already making their industry more sustainable.
How Social Impact Enterprises Succeed
The success of a social impact-centered enterprise often depends on the full integration of sustainability and social responsibility measures into the business model. Systems thinking and the creation of clear objectives like the UN Sustainable Development Goals are two methods of achieving this fundamental integration.
In contrast, superficial sustainability measures, often called “greenwashing,” can influence consumer and stakeholder perceptions, but ultimately do not contribute to systemic change. In order for an enterprise to reap the profitability benefits of sustainability, typically deeper consideration and fundamental alterations will be required. When a business invests in measures that lead to systemic change, they are able to benefit from those sustainability changes as well as genuinely market themselves as a social impact business. This genuine commitment can grow consumer and stakeholder interest, ultimately contributing to successful profitability. Authenticity is another important marker of success for a social impact business.
Creating a Culture of Sustainability
Making fundamental investments in sustainability is also likely to create a business culture of sustainable innovation and diversity of thought which will allow a business to be more nimble and adaptable to changing market conditions. Successful social impact entrepreneurs often build this innovative culture by promoting a systems thinking mindset internally, allowing them to differentiate themselves from competitors and drive profitable innovation.
This innovative reimagining of business models across industries requires leaders who have unique knowledge of their industry alongside a deep understanding of sustainability, risk management and social impact. Many industries already have the technology to become more sustainable; they are only lacking savvy entrepreneurs and upper management willing to innovate, invest and adapt their business model to make a positive social impact. The success of a social impact enterprise is often due to the dedicated efforts of its leadership to pursue genuine systemic change alongside considerations of profitability.
Through systems thinking, purposeful goalposts, brand authenticity and innovative leadership, companies across the globe can achieve long-term profitability alongside sustainability.
The Social Impact Leaders of Tomorrow
In order to lead profitable enterprises that prioritize sustainability, business management will need a new type of graduate business education that grapples with these key issues. Dedicated to educating leaders in business, Glasgow Caledonian New York College (GCNYC) offers Master of Science degrees centered around social impact. Through a curriculum based on the UN Sustainable Development Goals, GCNYC students pursue graduate degrees in Business for Social Impact and Sustainability, Sustainable Fashion, and Risk, Resilience and Integrity Management.
These programs cater to the needs of working professionals and allow them to deeply delve into the systems thinking needed to solve social and sustainability issues through applied research and cross-sectoral collaboration. Distinguished faculty are leaders in social impact business so our students receive a dynamic, entrepreneurial education.
To learn more about GCNYC’s sustainability-focused degrees in Business for Social Impact and Sustainability, Sustainable Fashion, and Risk Resilience and Integrity Management, request more information.