Chapter 1: Overview of Sustainable The supply and demand market is consumerist in
Business nature and modern life requires a lot of resources
every single day.
What is sustainability and why is it important?
2. Social Development
Sustainability is meeting “the needs of the present
without compromising the ability of future There are many facets to this pillar. Most importantly
generations to meet their own needs.” is awareness of and legislation protection of the
health of people from pollution and other harmful
Sustainability is the study of how natural systems activities of business and other organisations.
function, remain diverse and produce everything it
needs for the ecology to remain in balance. In North America, Europe and the rest of the
developed world, there are strong checks and
Sustainability and sustainable development focuses programmes of legislation in place to ensure that
on balancing that fine line between competing needs people's health and wellness is strongly protected.
- our need to move forward technologically and
economically, and the needs to protect the It is also about maintaining access to basic resources
environments in which we and others live. without compromising the quality of life.
Sustainability is not just about the environment. it's The biggest hot topic for many people right now is
also about our health as a society in ensuring that no sustainable housing and how we can better build the
people or areas of life suffer as a result of homes we live in from sustainable material.
environmental legislation, and it's also about
examining the longer-term effects of the actions The final element is education - encouraging people
humanity takes and asking questions about how it to participate in environmental sustainability and
may be improved. teaching them about the effects of environmental
protection as well as warning of the dangers if we
Three pillars of sustainability cannot achieve our goals.
1. Economic Development 3. Environmental Protection
This is the issue that proves the most problematic as We all know what we need to do to protect the
most people disagree on political ideology what is environment, whether that is recycling, reducing our
and is not economically sound, and how it will affect power consumption by switching electronic devices
businesses and by extension, jobs and employability. off rather than using standby, by walking short
It is also about providing incentives for businesses journeys instead of taking the bus.
and other organisations to adhere to sustainability Businesses are regulated to prevent pollution and to
guidelines beyond their normal legislative keep their own carbon emissions low. There are
requirements. incentives to installing renewable power sources in
To encourage and foster incentives for the average our homes and businesses.
person to do their bit where and when they can; one Environmental protection is the third pillar and to
person can rarely achieve much, but taken as a group, many, the primary concern of the future of humanity.
effects in some areas are cumulative. It defines how we should study and protect
ecosystems, air quality, integrity and sustainability of
our resources and focusing on the elements that
place stress on the environment.
Primary goals of sustainability • Differentiation of product or services
and brand.
• The end of poverty and hunger
• Drive toward innovation to create new
• Better standards of education and healthcare
products and serve new markets.
- particularly as it pertains to water quality and
better sanitation Example: Seventh Generation developed new
products to address environmental concerns of
• To achieve gender equality
households and positioned themselves as the leader
• Sustainable economic growth while in that market, sustainable consumer household
promoting jobs and stronger economies products.
• All of the above and more while tackling the • Improvement of company image and
effects of climate change, pollution and other reputation with consumers- particularly the
environmental factors that can harm and do increasing numbers of consumers who are
harm people's health, livelihoods and lives. concerned about the environment and their
own impact on the environment.
• Sustainability to include health of the land,
air and sea. • Enhancement of investor interest.
Increasing numbers of investors take into
What Does It Mean to Be Green and Is That the Same
consideration company sustainability
as Sustainable?
practices when they make their decisions
Green is a term widely used to describe buildings, how to invest.
products (of all types, including cars, food,
computers, etc.), and services designed, Companies that act with concern for social and
manufactured, or constructed with minimal negative environmental matters operate at lower risk and their
impact on the environment and with an emphasis on future growth rates can be positively affected. Both of
conservation of resources, energy efficiency, and these are positive factors for investors.
product safety. Being “green” can help to preserve • Increase attraction and retention of
and sustain society’s resources. employees who care about the environment
Benefits from pursuing sustainability: and sustainability.
• Reduction of energy and materials Internal factors
use and waste and the costs associated with • Maximization of profits
these.
• Beliefs and personal values of management
Example: McDonald’s reducing the packaging with and employees- owners, managers, and
hamburgers and French fries is an example of this. employees believe that sustainable business
• Lowering of legal risks and insurance practices are the moral and ethically right
costs- thing to do.
For example, BP, with some investment in safety External Factors
features to protect against environmental disaster, • Governmental laws and regulations
could have avoided huge liability costs that will be
associated with Gulf of Mexico oil spill. • Consumer and investor interests and
expectations.
2
These external factors are strongly influenced by -Hewlett-Packard
societal trends and values, demographics, new
Walmart
knowledge and the media.
The fact is sustainability at Walmart isn’t a stand-
The Role of Government Policies in Sustainable
alone issue that’s separate from or unrelated to our
Business
business. It’s not an abstract or philanthropic
Government policies, such as a carbon tax (a tax on program. We don’t even see it as corporate social
pollution), can address externalities by having responsibility. Sustainability is built into our business.
companies and consumers internalize the costs It’s completely aligned with our model, our mission
associated with what were externalities. This can and our culture. Simply put, sustainability is built into
help move private companies focused on profits to our business because it’s so good for our business.“
activities that better reflect their net social
Sustainability 360 is the framework we are using to
contributions.
achieve our goals and bring sustainable solutions to
How Do Businesses View Sustainability? How our more than 2 million associates, more than
Important Is It to Businesses? 100,000 suppliers and the more than 200 million
customers and members we serve each week.
There is significant variance in how deeply and
sincerely companies are committed to their mission Sustainability 360 lives within every aspect of our
and in how much the value statements influence business, in every country where we operate, within
actual company practice. However, just that the every salaried associate’s job description, and
statements are made and made public for all to read extends beyond our walls to our suppliers, products
suggests that sustainability is an important issue for and customers.
an increasing number of businesses.
--Walmart 2009 Global Sustainability Report
Hewlett Packard (HP)
The learning curve
Environmental sustainability is one of the five focus
The learning curve refers to a graphical
areas of HP’s global citizenship strategy, reflecting
representation of learning. The curve represents the
our goal to be the world’s most environmentally
initial difficulty of learning something and how there
responsible IT company. This commitment is more
is a lot to learn after the initial learning. In the case of
than a virtuous aspiration—it is integral to the ongoing
learning about sustainable business practice,
success of our business.
managers often quickly learn enough to be interested
Our drive to improve HP’s overall environmental in it, but then the learning curve is high (steep), and
performance helps us capitalize on emerging market there is a lot to learn to ensure that the sustainable
opportunities, respond to stakeholder expectations practice serves the interests of the business entity.
and even shape the future of the emerging low-
The learning curve on sustainable business practices
carbon, resource-efficient global economy.
is steep, and it often entails significant risks and
It also pushes us to reduce the footprint of our uncertainty.
operations, improve the performance of our products
Any change in company practice involves taking on
and services across their entire life cycle, and
some risk and uncertainty, and this is heightened
innovative new solutions that create efficiencies,
when taking on something for which the benefits are
reduce costs and differentiate our brand. “HP
not clear and are dependent on changing laws,
Environmental Goals,”
regulations and consumer values and interests.
3
The risks of failing to act decisively are growing. • A closed system does not interact with its
environment. It does not take in information and
Three of the major barriers that impede decisive
therefore is likely to atrophy—that is, to vanish.
corporate action
• An open system receives information, which it
• Lack of understanding of what sustainability is
uses to interact dynamically with its
and what it means to an enterprise
environment. Openness increases the likelihood
• Difficulty modelling the business case for of survival and prosperity.
sustainability.
• Sustainable business practices require an open
• Flaws in execution (even after a plan has been systems perspective and consideration of how
developed). business actions impact not only internal
operations and outcomes (such as costs, sales,
What Is Greenwashing?
and profitability) but also external outcomes—
• The term used to describe insincere engagement that is, the environment and the sustainability of
in sustainable business is greenwashing. the natural and social systems that businesses
are part of.
• It was first used by New York environmentalist
Jay Westerveld who criticized the hotel practice of • Sustainable businesses require a systems
placing green “save the environment” cards in perspective.
each room promoting the reuse of guest towels.
• The systems perspective enables businesses to
• The hotel example is especially noteworthy understand their position and relationship in the
given that most hotels have poor waste larger environmental and social system, including
management programs, specifically with little or their dependence on inputs and how their output
no recycling. and use of resources affects the overall system
and the elements of the system.
• The term greenwashing is often used when
significantly more money or time has been spent • Without a systems perspective, businesses
advertising being green rather than spending would not be able to understand their impact on
resources on environmentally sound practices or society and the environment.
when the advertising misleadingly indicates a
product is more green than it really is.
• For example, a company may make a hazardous
product but put it in packaging that has images of
nature on it to make it appear more
environmentally friendly than it really is.
• System Approach-a a set of things that affect
one another within an environment and form a
larger pattern that is different from any of the
parts. When viewed from a systems perspective,
organizations engage in the continual stages of
input, throughput (processing), and output in an
open or closed context.
4
Chapter 5: Life Cycle Management and • LCM can occur at the product or service level or
at the entire company level. For example, a
Sustainability
company may be interested in managing the life
• Sustainability involves taking a holistic cycle of one of its products to improve
perspective to understand the true short-term sustainability, or it may take a more
and long-term impacts of a business activity. comprehensive look at the portfolio of activities
that it engages in as part of a more far-reaching
• Life cycle thinking has emerged as a useful tool in approach to sustainability.
sustainability to consider the total impacts of an
activity, product, or service from its origin to its • One of the key benefits of life cycle management
end. is that it can alert management to potential “hot
spots,” or areas that may be ecologically or
• This differs from conventional business practices socially problematic.
in which the focus has traditionally been on more
immediate factors, such as cost, quality, and Example 1
availability in the supply chain. Life cycle thinking
• If a company is selecting raw materials for the
still takes into account these factors but
production of a product, they may have several
considers them over a product’s lifetime.
material options to consider. The company can
• While conventional business practices have have a goal of choosing materials that have a
given limited consideration to disposal costs, life higher degree of sustainability, meaning less
cycle thinking considers the impacts of disposal negative societal impact or greater positive
to be an important part of the overall process of societal impact.
product or service provision.
Example 2
Cradle to grave perspective- starts by considering
• If a product could be produced with three
the impacts of raw material extraction and other
pounds of plastic material or two pounds of
inputs. It considers transportation of inputs to the
wood material, which material selection would
organization and the impacts of the transformation
result in lower pollution emissions per unit of
process into a useful product or service that occur at
product produced? Which would use less water?
the organization. It then considers transportation
The impacts may vary depending on what other
from the organization through the use of the product
materials are required; for example, wood may
or service up to the ultimate disposal. Each step in
require paint, while plastic would not. What
the life cycle features a specific focus on inputs and
about the quality of labor conditions for where
outputs, such as raw materials and waste.
the wood is harvested versus where the plastic
Life cycle management- The management was produced?
philosophy that integrates a comprehensive life cycle
approach for organizations in managing their value
chain.
• LCM is a systematic progress of organizing,
analyzing, and managing of sustainability
impacts throughout the entire life cycle of a
product, process, or activity.
• A value chain is the connected activities that an
organization undertakes in providing a product or
service, with each interconnected activity adding
value.
Phases Of A Life Cycle (Key Components Of A Life Different types of life cycle management include the
Cycle) following:
• Cradle to grave includes the whole product life
cycle from beginning to disposal.
• Cradle to gate focuses on the phase from input
extraction through the organization output, but
not downstream impact.
• Cradle to cradle specifically focuses on the end-
of-life step being recycling. This type of life cycle
management is becoming more in focus where
considerable attention is paid in designing
Cradle is the resource extraction or impacts of elements products so that they can become part of
that serve as inputs to the process. Throughout the another beneficial use and not be disposed of as
business activity or process, there are inputs and waste.
outputs, including water, energy, emissions, and waste.
Life cycle of a cheeseburger
Gate -Upon completion of the activity, the finished
output of the activity is at the gate. The gate is the defining Upstream
point when a business output activity is completed and it • There are economic, social, and environmental
moves beyond the organization to the next step in its life impacts associated with the harvesting of the
cycle. wheat, vegetables, and beef required as inputs to
For example, the gate at a factory that produces tablet the burger.
PCs is when the manufactured tablet is boxed and ready • Other impacts would be associated with the
to be shipped from the factory. Between the gate and up napkins, packaging, condiments, and other
until the grave is the active use phase of the output of the supplies.
organization, with the grave being the ultimate disposal of
the output. • There are also impacts associated with the
transportation of these inputs to the restaurant
Two terms that are associated with the life cycle are trash or recycle bin.
upstream and downstream processes.
Downstream
Upstream refers to activities occurring before the
organization (supply chain). • As part of the transformation process, inputs—
such as water, electricity, and raw ingredients—
Downstream refers to activities occurring after the are required.
organization (product distribution and product use and
disposal). • Waste is generated in the process of producing
the burger and pollution emissions are
Upstream and downstream can also be in reference to a generated—for example, carbon dioxide and
specific point in the life cycle. For example, a company other forms of air pollution are generated
might be interested in the impacts of all activities depending on the type of power plant that
“upstream” of a specific supplier. While business life generated the electricity.
cycles frequently are focused on products or tangible
goods, it can also apply to services. • The gate would be the customer receiving the
burger at the checkout counter.
6
• The useful life of the burger would be the The Scope Of Carbon Footprint Emission
customer eating the burger and the grave would
be the disposal of the packaging for the burger in
to a trash or recycle bin.
Carbon Footprint
• A carbon footprint measures all greenhouse gas
(GHG) emissions associated with the life cycle of
a product, service, or business operation,
including carbon dioxide, methane, and nitrous
oxide.
The GHG Protocol Corporate Standard Considers
• To help organizations, standards have emerged
Three Different Scopes.
to assist with the complexities of calculating
carbon footprints. As carbon footprints involve • Scope one consists of direct emissions from an
the complex interaction of organizations, supply organization’s operations.
chains, retail activities, and consumers, there is
• Scope two emissions are emissions from energy
often imperfect data and uncertainty in the total
purchased by the organization that are generated
emissions impacts of a business activity. These
outside of the organization. Typically, this would
standards help provide organizations with a
be the emissions from power plants for the
consistent way of reporting and addressing
electricity used by an organization.
common problem areas, such as the double
counting of emissions and system boundaries. • Scope three emissions are emissions from
sources outside of the organization but related to
Organizations are calculating their carbon footprints
an organization’s business activities. Supplier
to:
emissions and emissions related to
• forecast future emissions, transportation not directly owned by the
organization would fall under scope three
• provide data for allowances management to
emissions.
allow organizations to manage voluntary or
mandatory emissions trading programs, • The water footprint is an indicator of water use
• provide data for carbon offsets and clean energy
projects,
• provide sustainability information to their
stakeholders, including customers.
Greenhouse Gas Protocol (GHG protocol)
• Most widely used international accounting tool
for government and business leaders to
understand, quantify, and manage greenhouse
gas emissions.
• GHG Protocol Corporate Standard focuses on that looks at both direct and indirect water use. A
the accounting and reporting of emissions. product or corporate water footprint is the first
step toward identifying the processes and
activities, which significantly influence an
organization’s water use.
7
• The water footprint of a product (good or
service) is the volume of fresh water used to
produce the product, summed over the various
steps of the value chain.
• The water footprint of a business consists of its
direct water use for producing, manufacturing,
and supporting activities plus its indirect water
use—that is, the water used in the business’s
supply chain.
• As freshwater becomes an increasingly scarce
resource—especially in some parts of the
world—companies that are able to understand,
measure, and manage their water footprints and
water scarcity risks can gain competitive
advantage over those organizations that do not.
A water footprint has three components:
• Green water footprint. Use of rainwater stored
in the soil as moisture.
• Blue water footprint. Use of surface and ground
water.
• Grey water footprint. Use of freshwater required
to absorb pollutants based on water quality
standards.
Applications of a water footprint are as follows:
• Measurement of corporate water use and
wastewater discharge both in direct operations
and in the supply chain
• Assessment of local and regional water
resources
• Water risk assessment to map vulnerable
watersheds, ecosystems, and communities.
8
