Sustainable Development is Vital for Future Survival of any Modern Company…

Authors Avatar

Sustainable Development is Vital for Future Survival of any Modern Company…

The concept of sustainable development has received growing recognition, but it is a new idea for many business executives. For most, the concept remains abstract and theoretical. Protecting an organization’s capital base is a well-accepted business principle. Yet organisations do not generally recognize the possibility of extending this notion to the world’s natural and human resources.

If sustainable development is to achieve its potential, it must be integrated into the planning and measurement systems of business enterprises. And for that to happen, the concept must be articulated in terms that are familiar to business leaders.

The following definition of business sustainable development gives a clear understanding of this approach. ‘For the business enterprise, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and its stakeholders today while protecting, sustaining and enhancing the human and natural resources that will be needed in the future.’ (Business Council for Sustainable Development, 1996)

Sustainable development may now be in the spotlight, but switched-on business people will know that the term has been around for over 20 years. It first broke into the consciousness of many international policy-makers and multinational corporations in 1987, with the publication of Our Common Future, the report of the World Commission on Environment and Development. The Commission’s definition, since widely adopted, was: "Development which meets the needs of the present without compromising the ability of future generations to meet their own needs."

Growing environmental concerns, coupled with public pressure and stricter regulations, are changing the way people do business across the world. Industry is on a three-stage journey from environmental compliance, through environmental risk management, to long-term sustainable development strategies.

It has become a cliché that environmental problems are substantial, and that economic growth contributes to them. A common response is stricter environmental regulation, which often inhibits growth. The result can be a trade-off between a healthy environment on the one hand and healthy growth on the other. As a consequence, opportunities for business may be constrained.

However, there are some forms of development that are both environmentally and socially sustainable. They lead not to a trade-off but to an improved environment, together with development that does not draw down our environmental capital. This is what sustainable development is all about - a revolutionary change in the way we approach these issues.

The first step on the journey is compliance with regulatory measures. The introduction of new environmental regulations, both national and international, forces businesses to improve their environmental performance. But compliance often creates unexpected costs that threaten profitability. The most significant financial liabilities for companies are those associated with remediation, clean-ups and penalties for breaches of legislation. (Barbier, 1987)

Businesses can face difficulties if they fail to anticipate their environmental liabilities.

To comply with legislation and to avoid liabilities, businesses put in place remediation and abatement measures. However, this reactive approach often prevents them from establishing efficient cost control systems and growth strategies. Operating in 'compliance' mode, businesses commonly regard environmental protection as an unnecessary burden, a costly undertaking that decreases a company's competitiveness and adversely affects market performance and business results. Faced with the increasing burden of regulation, some businesses choose to go beyond compliance towards comprehensive environmental programmes and sustainable development. This long term move is far more successful and will allow for a company to work without the restrictions of environmental regulations.

Join now!

Environmental risk management is the next stage on the journey towards sustainable development. Liability, both corporate and personal - for the cost of environmental clean-ups and claims prompts business executives to adopt more proactive strategies in dealing with environmental issues. Driven by the need to minimize risk, some businesses adopt a precautionary approach which involves anticipating potential risks and preventing environmental hazards. This approach offers a greater flexibility of response than is available through regulatory compliance. (Barbier, 1987)

To improve their control of environmental performance, some companies conduct environmental health and safety (EHS) assessments, develop environmental policies, and ...

This is a preview of the whole essay