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Build Capital Through Sustainable Development

Build capital through sustainable development. Chart a course for growth and profitability that will benefit your brands and society.

Learn how sustainable development can positively impact society, the environment, and the strength and reputation of your business. Institutionalize sustainable business practices by embracing corporate social responsibility and by integrating social ethics into corporate philosophy, core values and daily business decisions.

Integrate Ethics & Stewardship Into Core Values

When contemplating business decisions involving brand strategy, consider management’s fiscal responsibility toward shareholders along with the company’s broader responsibility to stakeholders. Integrate social ethics and environmental stewardship into corporate values and daily business decisions across all functions and operations.

Commitment to “sustainable development” is good for the long-term viability of businesses, communities and our environment. Sustainable development is more than a philosophy; it is a way of doing business. Sustainable business practices take into consideration community, environment and business concerns by demonstrating concern for “people, planet and profits.”

Social and Environmental Costs

The true cost of doing business extends well beyond the financial remuneration paid for resource consumption by corporations. There are social and environmental costs to society. Consumers are becoming less tolerant of businesses that don’t accept responsibility for recognizing and paying for these costs. Customers are also becoming more demanding and less supportive of companies that cause harm to people and the environment in the course of doing business. I am referring to harm resulting from unfair trade practices, violations of labor and human rights, environmental harm, financial fraud, corporate greed, cyber theft and more. Companies that profit at the expense of society are likely to get shunned with increasing frequency in favor of socially conscious brands made and marketed by companies that practice sustainable development.

People have taken to the streets and public parks across America to protest of what they consider to be irresponsible business behavior and corporate greed on the part of commercial enterprises and those at the helm. Therefore, expect purchase behavior to shift toward socially conscious brands. Watch for more customers to move away from irresponsible companies toward brands perceived as responsible. This emerging trend suggests that socially conscious customers are willing to pay a premium for the brands that they trust.

It is not enough to give lip service to, or even practice sustainable development; businesses are advised to measure the impact of their efforts and communicate results to stakeholders. If people are unaware of the good a company is doing, how can they respond by showing their support through the purchase of the company’s brands?

Resource Consumption for Capital & Wealth Creation

Wealth creation consumes resources in order to build capital and shareholder value. Companies need resources to grow. The more a business grows and the more profitable it becomes, the more resources it is likely to consume. Businesses, as corporate citizens, owe a debt to society for resources consumed. At the same time, businesses add value to society and stimulate the economy. They generate capital through the development of human resources; they create intellectual property, make investments, and provide products and services.

Below is a list of the various types of capital generated and consumed by businesses, and a listing of commonly associated resources.

Human Capital – human resources are needed to create economic value through the employees’ skills, knowledge, creativity and sweat equity.

Intellectual Capital – knowledge and resourcefulness are used to produce physical and intellectual property assets.

Structural Capital – organization, process, operations and technology provide the underlying support for the business.

Social Capital – formal and informal relationships create value and strength between economic institutions, stakeholders and community.

Spiritual Capital – core values, beliefs and attitudes establish a moral and ethical foundation for the business.

Political Capital – the ability to influence and gain support from government staff with political standing over business interests assists business growth.

Natural Capital – vital earth resources and raw materials such as plants, energy and water are needed to operate the business and to produce products.

Financial Capital – monetary resources such as equity investments, debt capital and access to vendor capital underwrite operating and administrative costs, and provide nourishment for business growth.

Exercise Care & Concern

Businesses must become aware of the social, environmental and economic impacts of their decisions and communicate the positive aspects to stakeholders. They can minimize harm and help replenish scarce resources by adopting sustainable business practices.

By demonstrating care and concern, the brand message could become synonymous with a message of corporate social responsibility. Corporate social responsibility can provide businesses with distinct competitive advantages in the marketplace, advantages that favorably impact bottom-line results in measurable ways.

Improve Bottom Line Performance

Performance measures in commercial businesses traditionally look at return on investment in terms of profit and loss. Bottom line results can be measured as gross revenue less expenses, less taxes, equals the net profit generated by the business at fiscal year-end. Owners and management also look at the return on equity (ROE). ROE is a measure of how well the company is doing in relation to the equity invested by its shareholders.

Businesses that practice sustainable development have learned to measure their success by more than return on equity.

The return on investment for owners of sustainable businesses is both tangible and intangible. Brand distinction and corporate goodwill generated from successfully instituting sustainable business practices can have a positive effect on gross sales revenue and brand equity. These are measurable. A company practicing sustainable development has the ability to influence both the environment as well as society. This has intangible value.

Acting in an environmentally responsible manner must be economically sound and beneficial to people and the planet in order for more businesses to embrace these standards. For example, rather than deplete the earth’s resources, companies can save money by reducing commercial waste. And they can make money by converting waste products into useful materials through recycling.

Cause marketing is another way draw attention to and provide support for social and environmental concerns. When cause marketing campaigns strengthen brands by building customer loyalty and repeat business, they generate incremental revenue for the business.

Measure Economic, Social & Environmental Impact

There are international standards for measuring the social, environmental and economic performance of a business. The method is commonly referred to as “triple bottom line” performance standards. TBL is a shift away from conventional accounting methods because TBL measures more than financial performance alone.

Internationally accepted standards for metrics and methodology for reporting on sustainability can be found online through organizations like Global Reporting Initiative. GIR Standards and G3 sustainability guidelines  provide a framework to monitor and measure an organization’s significant influence, impact and performance in three areas: (1) social, (2) environmental and (3) economic.

Sustainable development can be expensive. It can also produce cost savings and generate incremental sales and give socially responsible companies distinct competitive advantages in the marketplace.

 

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  © 2012 Anne Wall, All Rights Reserved.

 

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