INTEGRATING SUSTAINABILITY KEY TO BUSINESS SUCCESS
In the last half of the twentieth century, four key themes emerged in world politics: peace, freedom, development and environment. The peace that was thought to be secured in the post-war world of 1945 was immediately threatened by the nuclear arms race.
After most nations gained independence in the 1960’s, newly independent nations begun focusing more on economic development to provide basic necessities to their people and build their economies.
Fast forward to 1970s and 1980s, global conferences and international commissions were set up to link together the aspirations of human kind demonstrating how the pursuit of one great value required the others.
Sustainability, with its dual emphasis on the most recent concerns, development and environment is typical of such efforts.
The United Nations World Commission on Environment and Development (the Brundtland Commission) report in 1987 defines Sustainable Development as “Development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”
Broadly defined, sustainable development is a systems approach to growth and development and to manage natural, produced, and social capital for the welfare of their own and future generations.
In 2012, the United Nations Conference on Sustainable Development (Rio+20) calls on all countries “to secure renewed political commitment for sustainable development, to assess the progress to date and the remaining gaps and address new and emerging challenges.”
The United Nations Charter on the Millennium Declaration identified principles and treaties on sustainable development, including economic development, social development and environmental protection.
In the last decade we’ve seen a whole raft of social and environmental issues gain concern for governments, the media, and consumers alike.
Conversations between major corporates and multinational companies have taken cue with companies welcoming much more informed conversations about the different ways sustainability adds value.
Sustainability reporting makes the connection between corporate financial performance and corporate Environmental, Social and Governance (ESG) behavior transparent and traceable.
Investors who focus on Sustainable and Responsible Investment (SRI) are one obvious exception, as are those funds that follow sectors where sustainability issues are already having positive or negative financial consequences.
It is projected that in the near future, we will see more collaborative partnerships between companies and their investors on how they are preparing for a changing climate and shifting social and economic conditions.
There is more and more evidence that the real momentum for change will come from inside business, rather than outside. Businesses are already starting to shift from the tactical management of different corporate responsibility metrics to the deeper and more difficult task of integrating the principles of sustainability into corporate strategy and operational performance.
In Kenya, major corporates like KCB Group, Safaricom, Unilever are among the few entities that have been releasing their yearly Sustainability Reports with an aim of telling stakeholders about their sustainability journey. Even though many people have not yet embraced and understood what really sustainability encompasses, great strides have been taken by the individual corporates to tell their story.
The release of Sustainability Reports especially by banks is a signal that they are building capacity to take a market-based approach to sustainability. New products and screening tools will offer incentives as well as penalties to stimulate better sustainability performance by loan recipients.
As banks become more astute in assessing particular aspects of performance such as energy, water use, waste management and labour practices.
There is a growing spectrum of business benefits from improved sustainability. This include reducing resource costs, improving employee productivity, reducing absenteeism and staff turnover, avoiding business interruptions, strengthening relationships with suppliers, adding market share and protecting license to operate.
This has been hindered by the fact that for far too long, these aspects have not been measured and the business case has not been clear. Therefore, there is need by industry players and the regulator to adopt a comprehensive integrated reporting to allow for a much more informed conversation about the different ways sustainability adds value.
Even though more investors say they assess corporate environmental and social performance in their investment decisions, most companies are still unsure exactly what these key stakeholders want to know and therefore what and how to report.
Similarly, while leading banks increasingly apply environmental and social risk management in their lending practices, it remains unclear how this translates into competitive advantage for their corporate clients who boldly adopt innovative solutions to environmental and social problems.
Sustainability thus requires the participation of diverse stakeholders and perspectives, with the ideal of reconciling different and sometimes opposing values and goals towards a new synthesis and subsequent coordination of mutual action to achieve multiple values simultaneously with much