Sustainability and the Bottom Line

Free market capitalism has played a major role in increasing the economic prosperity of developed nations and their citizens over the last hundred years. Today, capitalism is coming to terms with, and starting to accept a much more holistic and complex mission- to sustain and save our planet.

The focus on corporate social responsibility (CSR), sustainability and environmental management is no longer seen as an awkward afterthought in an organization’s annual report or advertising/PR campaign.

Concepts and terms like sustainability, CSR, corporate citizenship are becoming embedded in the corporate culture as well as business media. The above-mentioned terms encapsulate and encourage responsibility over climate change and environmental awareness, as well as corporate social interests in poverty reduction, consumer and employee safety etc.

Previously, sustainability was a reaction after wrong decisions had been made regarding the environment or community relations. Today, sustainability is a way of thinking and acting when key decisions are being made.
Organizations are constantly faced with the paradox of trying to balance and manage their social performance for making the planet a better place to live while still trying to improve their financial/economic performance (the bottom line) to satisfy their shareholders.

This in turn pushes organizations to develop information and measurement systems to identify opportunities in the sustainability space to find areas of opportunities. Firstly, innovation can facilitate organizations to think from a unique perspective and develop new and sustainable methods that can increase revenues and reduce costs.

Ultimately, organizations operate from a free market capitalism perspective whereby profit maximization is the main goal. Hence, providing higher profits through reduced costs can motivate executives to push some of the profits into more sustainable/environmental investments.

Finally, an organization ultimately needs to understand the cost-benefit analysis/ratio of its sustainability initiatives as this method involves analytics and models similar to those used in performance management.

An organization can improve its financial performance if it can understand and improve its cost-benefit ratio on its sustainability initiatives and investments.

This Article is Written by “Kaushik Sridhar” Guest Author At “Envirocivil.com“