Monday, October 27, 2014

The Business of Sustainability: A Frame for Analysis and an Antidote to Short Term Thinking

Sustainability can offer businesses a map of the terrain, a method by which to navigate and a capitalization strategy. By assessing information through the lens of sustainability, business leaders are able to make better decisions that position their organizations for success. Sustainability is no long a niche approach, it is now flourishing into a strategic imperative. In fact it is becoming inextricably linked to due diligence and financial value. Quantitative approaches to sustainability can be key success factors that buoy the bottom line. Analyzing, reporting and benchmarking data can increase revenue, strengthen brands, minimize costs and manage risk.

Engaging sustainability is not just to placate shareholders or even preempt the activities of government regulators. Employing sustainability analysis is a forward looking strategy of corporate governance that can offer beneficial outcomes for companies, shareholders, governments and societies.

Short term planning (short-termism) is one of the biggest hurdles impeding long term growth. Looking at the world from a sustainability perspective expands time horizons and forces leaders to look at the longer term.

Sustainability projects that cut emissions or reduce energy consumption have life spans that are commonly a decade or more, and so they demand a willingness to invest for the long term. Far from being a liability, stepping outside the narrow confines of short term-termism adds value.

While investors commonly demand immediate returns on their investments, their is a growing understanding in the investment community of the risks associated with ignoring the long term view.

In the final analysis, sustainability is about being able to capture, create and deliver more economic value. However, to succeed in this endeavor firms must be able develop long term plans. They must connect and communicate these plans across their entire organization, as well as to their value and investment chains.

Analyzing business operations from a sustainability perspective can lend itself to an approach that integrates tactical elements into a cohesive long term strategy.

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