Principles for Sustainable Business

According to the authors of Sustainable Business: A Handbook for Starting a Business, published and distributed by New Zealand Trade and Enterprise, there are two types of principles for sustainable business: operational and strategic.  Operational principles were described as being practical and addressing the questions of what organizations do and how they do business on a day-to-day basis.  In contrast, strategic principles are used as guidance in setting the overall direction of the business of the organization and should be used to help make decisions about operational principles.

The key operational principles were described as follows:

Good Employer: The organization is committed to employee satisfaction, development and well-being.  The organization, from the most senior management level display and model fairness and equity in all aspects of employee relations and show no tolerance for discrimination, bullying or harassment. Workplaces are safe and healthy and employees are encouraged to provide input and participate.

Environmental Responsibility: The organization is respectful of environmental limits and operates in an environmentally efficient way in the design and delivery of its products/services. For example material/resource use is minimized, products are designed and manufactured considering the full life cycle of the materials and waste products. Environmental technology is invested in and/or used for example using solar panels to generate electricity.

Community Contribution and Fairness: The organization contributes to making the communities in which it operates better places to live and do business (e.g., sourcing materials locally) and employees are encouraged to become involved in achieving this goal. Often this will be at a local level, but there may also be opportunities to apply this at the national and/or global level.  All employees demonstrate honesty and fairness when dealing with stakeholders, including working closely with local community constituencies and empowering them in decisions that affect them.

Influencing Others: The organization actively encourages others such as suppliers, customers and its employees to improve their own sustainability performance.  For example, making it easy for customers to recycle the product and requiring that foreign material manufacturers must implement internationally accepted labor standards to ensure that forced or child labor is not used in the manufacture of materials or parts.

The key strategic principles were described as follows:

Integration of Sustainability into the Organization:  Sustainability is a business priority for the organization and is reflected in all aspects of the organization, including business processes (i.e., decision making, vision and performance management) to ensure that decisions are made with their sustainability effects in mind.  In addition, there is clear evidence of management commitment to sustainability.

Minimizing Risks and Maximizing Opportunities:  The organization addresses risks and uncertainty when making choices and takes a precautionary approach when making decisions that may cause serious or irreversible damage.  Organizations that adopt this approach do not lean on the alleged lack of full scientific certainty about climate change as a reason for postponing measures to prevent environmental degradation.

Transparency and Accountability:  The organization is transparent and accountable about its performance in matters that are important to others.

Meeting the Needs of Tomorrow with Innovation:  Considering the long-term (inter- generational) implications of all decisions and seeking solutions that are mutually reinforcing rather than accepting that a gain in one area, such as reduction of environmental degradation, will necessarily be achieved at the expense of another, such as profitability.  For example, recycling was material is not only good for the environment it will also save money for the organization by reducing the costs of removing rubbish.

The principles of sustainability outlined above, like many recommendations from the sustainability community, call on organizations to integrate sustainability into all aspects of their business processes to ensure that decisions are made with their sustainability effects in mind and ensure that there is clear and visible evidence of management commitment to sustainability. The following questions can be helpful in assessing whether sustainability has been integrated into the business of an organization:

  • What norms or policies exist to ensure integration?  For example, does the organization have a volunteering policy (i.e., providing employees with a certain amount of time off work to volunteer), environmental policy/goals and/or fair trade policy?
  • What certification systems are available for the organization’s business (e.g., an environmental management system or an industry specific standard)?
  • What membership organizations are available to join to increase the organization’s learning and profile in sustainability?
  • How do staff members know that sustainability is important to the business of the organization and how are they rewarded for integrating it into their roles?
  • What are the sustainability goals of the organization?  Do the stakeholders know what the goals are? Is the actual performance being measured? How does the actual performance compare with the goals and how is the business communicating its performance to its stakeholders?
  • How does the organization encourage its supply chain (e.g., suppliers, customers) to make sustainable choices and/or improve their sustainability performance? 

This post is part of the Sustainable Entrepreneurship Project’s extensive materials on Sustainability and Entrepreneurship.

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