Perspectives

Sustainability: gain a competitive advantage

Good sustainability practices help companies gain a competitive edge. Learn to tie sustainability to the core of your business.

By Chantal Rassart

Top performing ESG, (environmental, social, governance) or CSR (corporate social responsibility) organizations do not view sustainability as something that can be layered on to the organization. Instead, they make sustainability an integral part of their organization:

  • They build it into their business strategies
  • They integrate it into their brand
  • They tie it to their core business

It is also a key element in their decision-making, for example, by ensuring that their supply chain and other partners also have strong sustainability practices. When they measure and report their sustainability activities, they do so using recognized and measurable sustainability metrics. Among those are the ones developed by the Global Reporting Initiative (GRI), which helps ensure their practices are transparent and easily compared to those of other entities1.

Improve your sustainability performance with these 3 questions

  1. What is our definition of sustainability? Do we have a sustainability policy and is it accessible to the board, management and employees? Do we have a clear understanding of our stakeholders’ expectations around sustainability? How well does our definition of sustainability match that of our stakeholders?
  2. Do we consider sustainability to be philanthropy? Are our sustainability activities something we do in addition to and around our core business activities, or are they something that we’ve fully integrated into all of our strategies and ideas?
  3. How do we report our sustainability activities? Do we measure our progress using recognizable, comparable metrics? Are we confident that our sustainability reputation will meet the expectations of stakeholders who take time to scrutinize our practices?

Adopt ESG or CSR practices
Sustainability is not just environmental responsibility. Investors and others increasingly refer to “ESG” or “CSR.” Both of these terms suggest that sustainability includes ethical, social and governance factors like workplace and community relations, compliance and reporting — in addition to the organization’s impact on the environment. Organizations’ corporate social behavior is closely scrutinized from all corners of the marketplace — including investors, employees, regulators, competitors, customers and communities — and is factored into their investment, business, purchasing and employment decisions.

Studies undertaken by organizations such as Deutsche Bank2 and the Harvard University Business School3 have found that

Organizations with good sustainability practices tend to be better corporate performers and are able to access better financing rates.

strong sustainability performance alone is not enough to achieve these benefits. However, organizations need to communicate such information so stakeholders can include these sustainability commitments, activities and achievements in their decision-making.

Get the edge with sustainability
There are many ways an organization can gain a competitive advantage, such as the following:

  • Being an employer of choice for the most talented individuals
  • Being able to access the best financing
  • Having the highest quality supply chain partners
  • And, of course, being a supplier of choice for customers

Sustainability is an important factor in helping companies achieve — and maintain — the above key competitive drivers.

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Resources:

 

  1. The GRI G3.1 reporting guidelines are available at www.globalreporting.org.
  2. Sustainable Investing: Establishing long-term financial performance, DB Climate Change Advisors, Deutsche Bank Group, June 2012.
  3. Beiting Cheng, Ioannis Ioannou, and George Serafeim, Corporate social responsibility and access to finance, Harvard Business School, working paper 11-130, May 2012.

Chantal Rassart is the Assurance & advisory services knowledge management leader at Deloitte Canada.

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