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Essay: Advantages and disadvantages of sustainability in business

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Sustainability can be considered to be important to business as it can provide many advantages to a firm but also some disadvantages may arise from a business trying to become more sustainable, for example they may incur extra costs of production but they may gain a positive reputation and good public image if they become more sustainable. Business sustainability can be defined as creating long-term value by adopting a business approach that is equally mindful of economic, social and environmental implications (Caprar, D.V. & Neville, B.A. J Bus Ethics (2012). Business sustainability has grown in the past number of years and has become more important as there has been an increase in the pressure for firms to broaden their accountability from economic performance for shareholders to sustainability performance for all stakeholders ( Carin Labuschagne, Alan C. Brent, 2005). Due to this increase in pressure on companies and industries to become more sustainable, the importance for firms and industries to become more sustainable may have grown over recent years. This may only have occurred in certain areas of the world or in several different industries and therefore some firms/industries may be more sustainable than others.

Sustainability may be considered important by some companies, as the pressure from stakeholders to operate ethically has been increasing over recent years. This rise in pressure from stakeholders to operate more ethically could be due to the increase in the awareness of climate change and global warming. The rise in awareness of climate change and global warming has already led to several companies and industries implementing changes to help reduce their own impact on the environment through methods such as implementing technology to reduce the emission of harmful greenhouse gases into the atmosphere. This is evident by the developments in the automobile industry with firms such as General Motors, who were involved in a $140 billion pledge involving numerous other companies such as Google, Apple and Microsoft, to help reduce their carbon emissions (A. Harder, 2015, The Wall Street Journal). This is an example of how the pressure external stakeholders has managed to influence the decision of several firms as this was part of a new Obama administration initiative leading up to the United Nations climate-change summit (A. Harder, 2015, The Wall Street Journal). Therefore sustainability could be considered to be important to some companies such as those mentioned above as they are willing to invest large amounts of financial capital into changing how they operate to reduce their carbon emissions as they want to reduce their impact on the environment, therefore showing that they are equally mindful of their environmental impact as well as their social and economic implications.

On the other hand some firms may not see sustainability as very important as they may not be willing to invest large amounts of financial capital to change the way they operate and therefore may not be equally mindful of their environmental, economic and social implications. This may lead to some firms finding cheaper alternatives to appear to the public as though they are a sustainable firm, for example Volkswagen in 2015. Volkswagen installed a software into some of their cars which were sold in the USA and Europe which detected when they were being tested and therefore changed the performance of the engine to appear as though it was producing less C02 emissions than previously when in fact they were still producing high levels of emissions (Russell Hotten, BBC, 2015). The development of the software used in the cars would have required less financial capital than if Volkswagen were to research and develop a legitimate piece of technology which would actually reduce the emissions of the cars, but in using the software they have “broken the trust of our customers and the public” (Russell Hotten, BBC, 2015) which may have a long-term negative affect on the performance of Volkswagen. This shows that some companies may not value sustainability as much as other companies or competitors, as if Volkswagen valued sustainability as much as General Motors did then they would have invested financial capital into a legitimate technology or process to help reduce their carbon footprint. Therefore some firms don’t see the importance of sustainability as much as other firms.

If a firm decides to become more sustainable then they may decide to bring in a sustainability framework. This can help to “broaden the concept of the business to include stakeholders as legitimate actors, and provides a negotiating frame to manage negotiations for the trade-offs that need to happen” (Colbert, Barry, Kurucz, Elizabeth – 2007). Therefore with the inclusion of stakeholders, a wider range of ideas and diverse opinions can be brought forward and put in to a consistent framework, which helps to lead to discussions about decisions that will be made in the business. This in turn could lead to a greater success of decision-making and also could lead to a increase in communication throughout a firm which in the long term could lead to a greater efficiency within the firm. A greater efficiency within the firm could lead to a reduction in the production costs for the firm, which could mean that they are able to reduce the price of their goods to gain a competitive advantage over any competitors in the market. For example, Coca Cola have implemented a sustainability framework into their operations which has led to Coca Cola being able to implement other sustainable practices into their operations, such as, Sustainable packaging for their products which now makes their bottles 100% recyclable, and also 2020 commitments, which is a set of sustainability targets including factors such as reducing the amount of water they use in production (Andrew L. Shapiro, 2010, Forbes). This highlights that the use of a sustainability framework can be important in the process of becoming more sustainable as it can help to bring ideas together and improve communication throughout the entire company. Therefore this can lead to several benefits from the improvement in communication and could lead to the company becoming more competitive in the market. This shows that sustainability is important to business.

Alternatively, some companies may not be able to invest in becoming more sustainable as they may not have the financial resources to be able to invest in becoming more sustainable. Therefore if they are not able to invest in becoming more sustainable then they may not see the importance of sustainability to business as they may be more focused on other goals and objectives such as expanding the business. This may be because they want to gain the financial resources first before they decide to invest into becoming more sustainable as they may see the financial performance of the company being more important than the sustainability of the operations of the company. Therefore in the short term sustainability may not be that important to a small company that cannot afford to invest in more sustainable practices, however in the long term the company may have goals and targets related to becoming more sustainable and improving their operations and practices as they know that they are unable to achieve an improvement in sustainability in the short term as they may lack the financial capital to invest. For example, the wine industry in USA, which is primarily occupied by small to medium size companies, was found to be more accepting to adopting environmentally friendly policies (Miller, J. L. (2010). However these voluntary environmental policies had to be proportionate to the size of the companies, as they need to be “modest and affordable while grand-scale plans for solving environmental concerns are appealing, they lack financial feasibility for most small and medium sized companies” (Miller, J. L. (2010). Therefore, despite these small-medium companies being willing to take on the voluntary environmental policies, they are unable due to the lack of financial resources available to them within the business to invest into these desirable policies. This means that the policies have to be adjusted relative to the size of the company willing to take them on, otherwise every company would want to employ a grand scale scheme which “would lack financial feasibility for most small and medium sized companies” (Miller, J. L. (2010). Therefore, sustainability may be considered important however the small-medium companies may not be able to employ a sustainable process which will influence the world enough to make it financially feasible which may reduce the importance of sustainability to some companies.

In conclusion it can be argued that sustainability is important to business however some companies may struggle to see the feasibility of implementing a sustainability framework which may not have the intended affect upon the external environment. Therefore, small-medium companies may not see the importance of sustainability in the short term, however they may still have long-term aims and objectives related to sustainability. On the other hand, large companies which do have the financial capital available to invest may only invest in sustainability due to the pressure from stakeholders forcing them to invest into becoming more sustainable due to the increasing awareness of climate change and global change, therefore they may not see becoming sustainable as important and may only do it to please their stakeholders. Other large companies may try to appear more sustainable to their customers to retain loyalty but in fact they may not be doing anything different and therefore may not be any more sustainable than they were before, for example the Volkswagen scandal. Overall sustainability is important to business and will continue to become more important as the business world changes and as consumer preferences change over time.

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