achieving competitive edge
achieving competitive edge
the business case
The core mission of any given economic entity (business) is to generate value. A successful company is characterised by generating products or services that costumers want to buy, whilst controlling operational costs and managing risks and uncertainties. Embedded in an increasingly competitive and globalised business environment where economic, environmental and social issues are interwoven, businesses are facing challenges beyond classical financial and market indicators.
In order to remain profitable, companies need to anticipate future trends and risks, both internal (in terms of operational management) and external (in terms of market and technology developments). Sustainable corporate management is therefor not a revolution - it is a natural evolution in an increasingly complex business environment.
Companies that fail to define timely business answers to the new challenges will face higher cost and lower customer acceptance, i.e. lower sales and may ultimately be forced out of business. Early adopters can gain competitive advantage both in terms of cost structure and product/service development, i.e. market acceptance and increased sales.
A coherent and fully integrated corporate sustainability strategy, based on a long-term approach offers bottom-line benefits and competitive advantages (sustainable competitiveness) while contributing to the well-being of the wider society and the environment:
Reducing operational costs
Increased eco-efficiency directly translates into lower operating costs (lower energy bills, raw material costs, reduction of hazardous waste disposal costs, recycling, etc.). In addition, enhancing life-cycle assessment and optimization of processes lowers costs of adapting to future tightening environmental legislation.
Awareness for, and screening of non-financial risks and opportunities coupled with higher motivation of staff and open engagement with diverse stakeholders allows businesses to anticipate and set new trends, driving innovation. sustainable corporations gain competitive edge through the capability of capitalizing on new trends, and turning challenges into opportunities.
Through pro-active management of sustainability issues and incorporation of non-technical and non-financial risk assessment as well as engaging in partnerships with diverse stakeholders, sustainable corporations are able to minimize business-related risks and future liability costs.
Higher brand value, improved reputation and corporate identity
Systematic management of non-financial issues distinguishes the brand value and helps to improve the corporate reputation with customers, consumers and other influential stakeholders, thus strengthening the market position of a company.
Improved workforce motivation
A coherent sustainability strategy enhances identification of staff with the company, thus increasing workforce motivation and satisfaction, which in turn is positively linked to customer satisfaction.
Access to talent
Organisations known for adapting sustainability practices into their business operations are preferred employers for talented professionals. In addition, a coherent sustainability strategy enhances identification of staff with the company, thus increasing workforce motivation.
Improving financial creditability and access to capital
Investment decisions, project-specific lending and calculation of insurance premiums are increasingly subjected to sustainability assessment. A coherent corporate sustainability strategy, sustainability risk assessment and transparent reporting increases the creditability with financial institutions and insurance companies, enhancing access to capital and lowering capital costs.
Increasing investor confidence
Analysts are increasingly looking at non-financial risks of companies, and sustainability issues have become a part of mainstream investor assessment methodologies in Europe and North America . Transparency and a solid strategy focusing on value creation including environmental and social indicators, is helping to enhance investor confidence.
Enhanced stakeholder relations
Systematic stakeholder engagement, including with host communities and civic groups (e.g. NGOs), is the best guarantee to retain the “license to operate” through minimising potential for conflicts, ultimately leading to reduced costs through faster project approval and delivery. Moreover, stakeholder engagement reduces the potential for consumer boycotts and serves as a tool to identify future business opportunities.
Conventional management paradigm vs. sustainable management
Evolvment of management paradigm: managing beyond quarterly financial indicators is paramount for sustained business success
Fully implemnted sustainable management throughout all divisions of a corporate allows for cost reduction, increased reputation and customer aceptance, leading to higher sales and ultimately profitability: sustainable competitiveness