Let us explain why corporate sustainability isn’t just a buzz word

“Nature is healing. We are the virus.”

One of the small comforts of the lockdowns put in place by governments around the world to curtail the spread of the coronavirus was the viral memes satirizing the calming effects of lockdowns on the environment. From fishes returning to canals in Venice to the Himalayas being visible in northern India for the first time in decades, a trend of people posting photos of pollution clearing up over major cities was started. 

These posts were more often than not accompanied with the words in the opening paragraph, suggesting that all along, human beings have been the villains in the circle of life. Thanks to proper fact checking, most of these posts turned out to be untrue, not to mention naïve considering that simply slowing down the pace of living isn’t enough to make sustainable changes on the environment.

But the message behind the posts is crystal clear. In order to create a more sustainable world, businesses simply cannot go back to the way things used to be done. The pandemic is presenting the world with an opportunity to hit the brakes and re-strategize on sustainability while considering the impact of measures that are presently obtainable.

Corporate sustainability describes business practices built around ethical, environmental, social and economic considerations. Still an evolving corporate management practice,sustainability is an alternative to the traditional growth and profit-maximization model. Corporate sustainability recognizes that growth and profitability are necessary. But they do not exist in isolation. Also important are the pursuit of societal goals, specifically those relating to sustainable development — environmental protection, social justice, equity and economic development.

According to the World Council for Economic Development (WCED), sustainability is development that “meets the needs of the present without compromising the ability of future generations to meet their own needs.”

In recent years, businesses have gradually embraced corporate sustainability. According to data, 180 organisations in Nigeria have spent about N50 billion in CSR and sustainability projects over the last 10 years, with highest investments coming from the oil and gas and telecoms sectors.

In 2015, Nigerian financial operators and regulators came together to discuss their role in sustainable development. Omobolanle Victor-Laniyan, head of sustainability with our client Access Bank, is in charge of delivering on her institution’s mandate. She outlines the bank’s efforts so far, “Our resource conservation programmes, in water usage, energy consumption, and waste recycling, are helping to cut down CO2 emission. Also, through our lending and investment activities, coupled with our procurement practices, we have indirect environmental impacts. With the understanding that climate change will have a social and economic impact on our customers, we ensure that we properly manage risk while capturing new markets.”

A healthy community is a wealthy one. As COVID-19 continued to spread in communities, Unilever Nigeria demonstrated commitment to sustainability by donating its food and hygiene portfolio brands across the country to complement government’s palliative efforts. Soromidayo George, Director, Corporate Affairs & Sustainable Business, Ghana and Nigeria explained, “As a purpose driven organisation, we understand the need for proper hygiene during a crisis of this nature. We are also aware that the restriction of movement has affected the livelihood of many, that’s why we are sending food and hygiene products worth 200 million naira to Nigerians who need them.” 

Automobile giant Mitsubishi has with the “Drive your ambition’’ tagline, emphasized an on-going commitment to the values and aspirations that are important to young people. Partnering with both The Future Awards Africa (TFAA) and the “Under-40s CEO” television show, Mitsubishi has helped encourage youth by highlighting the success of young Nigerians breaking new grounds.

How to take corporate responsibility serious: Two Nigerian companies show the way.

recent study by Harvard and London Business Schools found that corporations that voluntarily adopt sustainability policies have better organizational processes. It follows then that they perform better when compared to their peers that stayed unbothered. 

Here are some of the ways sustainable practices can improve the overall health of a business.

1). Improves financial performance

When the thinking used to be that businesses could have either profits or sustainability, never both, it is clear which way the scales tilted. Now it has been proven repeatedly that financial benefits can come from sustainability-related operational efficiencies. Investors and stakeholders can track the high performers. These results can then be analyzed and many have shown better financial performance.

For example, several companies have instituted a work from home policy that has saved up on operations costs. According to Global Workplace Analytics, employers in the US can save over $11,000 per half-time telecommuter per year, a significant figure considering that about 3.7 million employees currently work from home at least half the time. It is also a cost-saving option for small businesses who want to forgo on the hassle of renting office spaces, buying office supplies, and the overall maintenance that comes with acquiring a space. Data such as this informed RED’s pre-COVID-19 flexible work structure – which resulted in a steady spike on its proprietary ‘Employee Joy Index’ – and its recent decision to adopt an indefinite work from home policy post lockdown.

2). Promotesinnovation

Investing in sustainability can drive innovation. One example is Access Bank which initiated and led the process that culminated in the development of the Nigerian Sustainable Banking Principles. It issued the first certified corporate green bond in Africa, raising N15 billion (US$ 41 million) in the first quarter of 2019. Redesigning products to meet environmental standards or social needs also drives innovation and saves costs eventually. Access Bank utilizes LED lighting in all its facilities nationwide and has 311 branches powered by hybrid energy. Expanding the bank’s early closure policy has helped save energy consumption. Collectively, these approaches have helped reduce the bank’s CO2 emissions from electricity across Nigeria by 63.4 percent, and from diesel by 28.8 percent. 

3). Improves staff retention

Corporate sustainability initiatives can increase employee loyalty, efficiency, and productivity. Introduce these measures and watch HR statistics like recruitment, retention, and morale go up. Research has suggested that Gen- Y and Z employees focus more on organizational culture and work-life balance as opposed to salary packages and benefits. Companies that invest in sustainability initiatives tend to create sought-after work culture and engagement due to company strategy focusing more on providing value to society.  In addition, companies who embed sustainability in their core business strategy treat employees as critical stakeholders, just as important as shareholders. Employees are proud to work there and feel part of a broader effort. One study found that morale was 55% better in companies with strong sustainability programs, compared to those with poor ones, and employee loyalty was 38% better.  

4). Risk management

Climate change and poor labour conditions have been bad for business. In the largest study on climate change data and corporations involving 8,000 supplier companies, 72% reported that climate change presents risks that could significantly impact their operations, revenue, or expenditures. With this in mind, companies are adopting their practices to do better, greener business.

The Mitsubishi Corporation is one company working to address these potential impacts, while at the same time actively pursuing activities that facilitate the transition to a low-carbon society and reducing greenhouse gas (GHG) emissions. The company has also committed to stable, sustainable procurement and supply of resources, raw materials and other inputs in line with the needs of each country around the world including Nigeria.

Looking ahead

Thinking sustainably means thinking differently with an eye towards innovation and growth. This means companies can be more creative and intentional about products, services, processes and organizations. There is a whole world of opportunities out there for businesses willing to comply with the realities of a changing world.

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