How to Evaluate Long-Term Sustainability of Market Opportunities

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Sustainable practices benefit consumers, employees, executives, and the community at large.

 

The word “sustainability” usually brings to mind ecologically “green” solutions that cut down on waste and use renewable resources in every aspect of business, from manufacturing to distribution. But sustainability as a concept extends beyond environmental goals into the realm of sustainable business models and economies as well.

California Dairies, Inc. is an example of a company, or rather a cooperative, that is implementing sustainable economic, environmental, and social practices successfully. According to California Dairies’ Sustainability Report, employees are actually co-owning cooperative members who work together for a common goal, reaping the benefits of their hard work through higher profits.

In addition to their economically sustainable model, the cooperative also employs environmentally friendly practices, recycling programs, water management systems, and energy-efficient technologies to reduce its environmental footprint. Finally, California Dairies, Inc. also partakes in the National Dairy FARM (Farmers Assuring Responsible Management) Program, which sets forth guidelines for humane animal care.

This focus on sustainability at multiple levels is spreading across industries. Graduates of an online executive MBA program may find themselves in management or executive positions at companies that want to move toward sustainable goals that satisfy all stakeholders. As with California Dairies, tomorrow’s executives will need to focus on short-term solutions and profitability as well as long-term sustainable practices that benefit consumers, employees, executives, and the community at large.

Environmentally Sustainable

“Sustainable businesses are redefining the corporate ecosystem by designing models that create value for all stakeholders, including employees, shareholders, supply chains, civil society, and the planet,” sustainable business authorities Tensie Whelan and Carly Fink explain in their Harvard Business Review article, “The Comprehensive Business Case for Sustainability.”

“A company with a sustainable agenda is better positioned to anticipate and react to economic, social, environmental, and regulatory changes as they arise,” they add.

Among the challenges Whelan and Fink examine, the environment is the one most immediately recognizable when discussing sustainability. Environmental risks—some of which can be avoided by careful use of resources and others that are acts of God—will always present a challenge to manufacturing and distribution capabilities. Companies will be better prepared to face those challenges if they adopt sustainable practices, according to Whelan and Fink.

For example, water use, as in the case of California Dairies, is one major environmental challenge, especially in areas prone to droughts. Developing and enacting more efficient practices to conserve water can make a business more sustainable in the long run while benefitting the environment.

A company that wants to adopt effective, environmentally sustainable practices, procedures, and resources should develop a framework for evaluating sustainability approaches. To help with this process, State Street Global Advisors (SSGA) has developed guidelines for incorporating sustainable practices into a business’s long-term strategies. SSGA’s framework involves 3 questions:

  • Step 1: Have you identified environmental and social sustainability issues relevant to the business?
  • Step 2: Have you assessed and incorporated those issues into your long-term strategy?
  • Step 3: Have you communicated your approach to sustainability issues and the influence of these factors on strategy?

The framework can also be used to evaluate vendors and other businesses with which you may be considering partnerships or contracts. Evaluating vendors may be important for companies that not only want to be sustainable themselves but also enter business relationships with other sustainable companies.

Sustainability Beyond the Environment

Environmental sustainability is not the only issue businesses should consider, however. Economic and social measures are just as crucial to running a truly sustainable business as environmental considerations are.

Economic sustainability must account for the ability of employees to make a living. One measurement of this is the poverty threshold, which is an important metric for all nations, from developing countries to the United States or members of the European Union. In developed nations, the poverty level or threshold is accurately defined as the level of “preferred minimum standard of living,” according to Thwink.org’s “Economic Sustainability” webpage.

As more jobs are automated, however, the concept of sustainable national economies—with workers above the poverty threshold—becomes more difficult to maintain. As a result, many companies are involving their employees more and even offering stock options and ownership stakes in the corporations.

“Broadening capital ownership will prevent people from becoming subjugated to the machines taking their jobs,” economic theorist Eliza Riley says in “Own the Robots: Turning Citizens Into Masters, Not Victims, of Technology” on the Center for Economic and Social Justice website.

“With bold, innovative thinking,” Riley continues, “there are available means and realistic strategies to give current and future generations of people an equal opportunity to gain a share in the limitless technological growth frontier.”

Additionally, investing in sustainability can present new business opportunities for a forward-looking company. Tesla and SpaceX CEO Elon Musk exemplifies the concept of market opportunities analysis in the arena of sustainability, according to Robert Ferris’s CNBC report, “Musk Sees Tesla’s Future: Trucks, Transit, and Solar in a Push to Sustainability.”

Ferris points out that Musk sees sustainability as opportunity. The result is that Musk’s products are designed from their foundation to be fully sustainable. In fact, Tesla is not only designing electric cars, but also actively improving the production of the factories that make the cars. For Musk, a factory doesn’t just make a product—it is itself a sustainable product, designed to make other sustainable products.

Washington State University’s EMBA Degree Program

Working toward market sustainability requires an understanding of business strategy and organizational leadership. Washington State’s Online Executive MBA offers coursework that aids students in strategy formulation and organizational design as well as managerial leadership. Developing skills in these intricate business operations can prepare graduates to lead companies toward profitable, efficient solutions.

Contact Washington State for more information.

 

Recommended Reading:

3 Reasons an Ethical Business Leads to Profits

Five Best Industries for Entrepreneurship

4 Leadership Tips From Renowned Business Professionals

 

Sources:

Sustainable Dairy – CaliforniaDairies.com

Business Case for Sustainability – Harvard Business Review

Incorporating Sustainability into Long-Term Strategy – SSGA.com

Economic Sustainability – Thwink.org

Own the Robots – CESJ.org

Musk Sees Tesla’s Future – CNBC.com