The concept of sustainability has received growing recognition in international business environment in recent decades and there are different views on sustainability. For many, it still remains abstract and theoretical therefore multinational companies fail to incorporate sustainable development into the policies and processes of a business.
Sustainable business has minimal negative impact on the global or local environment, community, society, or economy. It is a business that strives to meet the triple bottom line, which comprises three dimensions, such as economic, social and environmental.
The primary goal of any business is to maximize shareholder value while generating sustainable economic performance. Economic performance does not reflect only the effectiveness and profitability but it also refers to that economic impact of firms has on those communities in which those are operating.
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Economic impact consists of indicators such as job creation, impact on wages, tax flows, investments in disadvantaged areas, impact on public works and social services systems. Sustainable business ensures that all these indicators are positively contributed to economic growth while maintaining corporate profitability.
The social dimension of business operations is ensures that business activities throughout the supply chain are socially responsible and ethical. The social dimension consist of business practices and policies related to working conditions, diversity in hiring, opportunities for advancement for women and minorities, lack of discrimination, and the provision of affordable health care and other necessary benefits. It also comprises of wages, breaks, adherence to employment laws, safety, training, and other specific labor practices.
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Environmentally sustainable performance refers to the effective management of physical resources. The environmental performance can be seen both internally and externally. Internally, the environmental performance of a business is usually measured by the use of natural resources, waste, toxicity, and pollution. It has been generally considered that manufacturing companies has bigger environmental impact and more efforts as well are needed to reduce waste, toxicity, and pollution during the manufacturing process. Externally, the sustainable business is taking into account the environmental impact of its suppliers in terms of products and services as well as transportation of goods.
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A sustainable business searches suppliers that are environmentally friendly such as, generate less waste, intend to be less toxic and create the least amount of pollution during manufacturing and transportation processes. Many sustainable businesses also favor so-called green procurement policy. It means that they favor producers whose products and services are most environmentally friendly.
Responses to Sustainability challenges:
1. Corporations respond to uncertainty and changing demands in different ways. The first corporate strategy is innovation and technology. It aims to produce company ́s products, services and overall business activities in the most sustainable way by taking advantage of newest innovation and technology. Businesses have also increased the technology utilizing to control travel and other expenses, saving substantial time, money, and energy in comparison to travel-mediated business.
2. Greening the Supply Chain strategy is related to sustainable procurement, which is important for any sustainability strategy, as a company ́s impact on the environment is much bigger than the products that they consume.
3. The third sustainable business strategy is collaboration. It means the formation of networks with similar or partner companies to facilitate knowledge sharing and propel innovations. The company has collaboration networks within its own industry but also with other industries when relevant.
4. Fourth corporate sustainability strategy is Process Improvement. It means that companies are continuously surveying and seeking ways to produce existing processes for more sustainable way.
5. Fifth one is sustainability reporting strategy, which means periodic reporting of company performance in relation to goals. These goals are often incorporated in to the corporate mission.
Conclusion:
Sustainability is essential for international firms and there are several reasons why all businesses should choose sustainability. Through sustainability practices, companies can improve their brand image and gain competitive advantage. The improvement of brand awareness through “doing good” is crucial for companies who eager to be successful. Sustainable companies attract good employees, and investors.
Firms linked to ecological disasters or social welfare scandals are unfavorable and will be ignored. Well managed sustainable actions increase business ability to comply with regulation. Central and State governments are enacting regulations to protect the environment. By integrating sustainability into the business strategy, companies can meet these changing regulations in a timely manner. Sustainability can increase profits and it is proved that companies with high ratings in environmental, social, and governance factors have outperformed the market in medium and long terms.
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