Transforming a Firms Competitive Landscape by Understanding and Using Sustainable Business Practices

Transforming a firms competitive landscape by understanding and using sustainable business practices

By Ziska Fields

Abstract

The purpose of this paper is to provide information to South Africa firms and its leaders regarding the need for and use of sustainable business practices. The paper is based on a review of relevant literature. Various strategic options are highlighted as well as important legislation regarding sustainability. The Equator principles serve as an action plan to enable firms to enhance their sustainability efforts. Seventh Generations are then used to illustrate what firms can do to ensure sustainability. The information shared in this paper can be practically applied to any firm in South Africa. The paper uses relevant information to highlight the importance of sustainability now and in the future and shows that existing business models and thinking need to be challenged and new thinking regarding a sustainable future is required to remain competitive and profitable. This will require constant focus from firms and its leaders to enhance their business operations and practices.

1. Introduction

The world is being shaped by unprecedented global trends like population growth, emerging markets and climate change. These global trends are pushing the world to the limits of its ecological system and are changing the competitive landscape in which countries and businesses operate.

Climate change research indicates that the world is highly polarized between heavy greenhouse gas-emitting countries and resource-poor countries. The rich countries of the world are predominately responsible for climate change, while poor countries bear the brunt of its impact. This polarization is due to the fact that many modern business practices have their roots in the Industrial Revolution which led to practices causing extreme destructive to the environment (Anarchist Writers, 2008:1).

The impact of climate change is already visible in treats like increased water stress, food insecurity resulting from droughts, new health risks and deaths, and the increase of extreme weather events. Poor countries seem to suffer more than rich countries at this point in time.

South Africa has one of the highest levels of per capita emissions of green house gases among developing countries (only slightly below the average for industrialized countries) due to its dependency on coal as an energy resource and is one of the five major developing countries discussed but not ranked in the G8 Climate Scorecards. South Africa holds the number 11 spot on the top 20 greenhouse gas emitters list, contributing 1.8% of global emissions and is responsible for 42% of Africa's emissions (Ecofys, 2005: 30)

South Africa as a country and companies operating in South Africa are realising that their survival hinges on how well they respond to environmental, social and governance (ESG) issues.

Sustainable development has become the most critical business driver for most companies and has become an increasingly powerful factor in corporate competitiveness and profitability. Investors are considering investment in companies that can prove their commitment and actions towards sustainability and responsible corporate behaviour.

"Sustainability performance is fundamental for business success in the 21st century," said Mindy S. Lubber, president of the investor coalition Ceres. "If businesses deepen their efforts to solve social and environmental threats, it will position them to innovate and compete in the fast-changing, resource-constrained global economy. It is no longer enough for companies to have special projects or initiatives. Comprehensive sustainability strategies are expected." (Ceres, 2010:1)

"Integrating sustainability is not just good for business; it is essential if we are to continue to grow economies and create jobs in a world of increasingly constrained resources," added Hannah Jones, Vice President of Sustainable Business & Innovation at NIKE, Inc. (Ceres, 2010:1)

This paper will examine the need for sustainability, examine driving forces and barriers to sustainability and provide some recommendations that can assist a firm in its journey to sustainability.

Looking ahead, the ability for companies to manage environmental and social issues is likely to become increasingly vital to their long-term competitiveness and financial performance – and perhaps even to their survival.

2. Literature review

2.1 Defining sustainability

The basic notion of sustainability refers to taking future generations into account while living with the awareness that