You are on page 1of 4

Business Sustainability

Published Online in Sustainability Company (www.sustainabilitycompany.net)

What is Business
Sustainability?

Lecture: 1
By Giovanni Tordi - Sustainability Company CEO

Business & Environmental Sustainability, Lecture for Luiss


University, Rome – 2009/2010

In a definition nowadays commonly approach in their organizations and


recognized from 1987 Brundtland have started to request annual
Report, sustainability is defined an social responsibility reports. Often,
“Equilibrium between the fulfilment in these reports, public evidence
of present requirements without was given (and is still so nowadays)
compromising the possibility, for of all the initiatives not strictly
future generations, to satisfy their connected to business that
own objectives. companies where achieving, mainly
for surrounding communities, in a
Or even better, in the company’s social and environmental ambience.
dimension, “a pro-active approach
to ensure the long-term viability These concepts, even though useful
and integrity of the business by in the progressive cultural growth of
optimizing resource needs, business organizations, do not really
reducing environmental, energy or correspond to an advanced concept
social impacts, and managing of sustainability integrated in
resources while not compromising business. It was rather a way to
profitability”. support the image and generate a
positive attitude towards the
In other words, if we refer this company informing about initiatives
definition to a company, this would and contributions through
imply a responsible growth for the sponsorship and donations to other
company, a medium and long-term organizations.
development able to satisfy
shareholders and stakeholders This represented one way more in
without compromising resources line with corporate communication
useful for future generations. rather than with sustainability as
Between the 80’s and the 90’s the such.
concept of CSR (Corporate Social
Responsibility) has taken place. It Standards were lacking to inflow
was a first cultural wave of this information to be usable. The
responsibility of the business world. methods of writing these reports
were different among organizations.
Many CEO have declared they are
willing to introduce a responsible
What is Business Sustainability?

One must say however that for the This is why, to be sustainable means
scientific International community: something different from “informing
making charity or sponsoring an about undertaken charity
event having image as objective, initiatives”. It naturally means
does not mean being really operating in one’s core business
sustainable. respecting above mentioned
principles; it means pursuing the
Proof is that on the last years we increase of profit protecting
have seen the failure of important interests of shareholder and
corporations. These were considered stakeholders with the application of
until then solid and central realities medium and long term policies
in the economy world. These were which should not negatively affect
organizations like Enron, Worldcom, future generations and consequently
Arthur Andersen, which used to the environment.
employ thousands of employees and
without doubts were sponsoring This approach to sustainability is a
charity initiatives in favour of guarantee of growth and reduces
surrounding communities, besides risks of the enterprise. In other
CSR budgets. words it supports a medium–long
range growth improving governance
Another acceleration in the direction of company’s risks.
of defining new paradigms and new
rules for a sustainable economy was Even though in the last 7-8 years
determined more recently in 2008 we have watched the failure of
by the financial crisis deriving from international Organizations like
an uncontrolled policy of loans Enron, Worldcom, Arthur Andersen,
granting in the USA. This gave Lehman Brothers, which evidently
origin to a crisis in real economy had not assimilated the importance
which could not be imagined at that of this concept or, even worst, were
time. Particular emphasis must be operating through their own
given to the failure of rating management in an illegal manner.
systems - Moody’s, Standard & There are many organizations
Poor’s, Fitch - which assigned nowadays which are indulging in the
positive scores even to realities like adoption of a sustainable approach.
Bear Stearns, Lehman Brothers, They are operating now to really
AIG. But besides the failure of rating integrate this approach in the
systems we have remarked a failure business through dedicated
in the rules of markets and in the structure. MBOs (objectives used to
control system. measure performance of managers)
are starting to integrate
In order to be effective the above sustainability parameters; their
evidences the extent to which the sustainable objectives have an
concept of sustainability must be influence in their remuneration
integrated in the core business and plans.
in the company’s DNA.
Giovanni Tordi, CEO Sustainability Company

Even from the point of view of professionalism, universities plays a


reporting, positive steps have been main role in preparing the young
taken with recognized standards generation to an extraordinary
(global reporting initiatives) able to useful job in the world of
make more readable and enterprises.
comparable results in terms of
company sustainability. It is important to say that
One talks about “triple bottom line”; sustainability should not be
key areas of sustainability have approached with the primary intent
been identified, considering of generating reputation because, if
integrated and connected the communication dimension
economics, social and environmental prevails over the facts, the result
results. One talks about “people, could be even more harmful to the
planet, profit” like paradigm of the company. As international level, in
triple bottom line. these cases one talks about
“greenwashing”, i.e. an instrumental
Nowadays, there are sustainability utilization, in communications of
models for the different sectors, and sustainability concepts applicable to
quantification metrics for results. A the enterprise without a
sound example above all on the corresponding real integration in the
subject of metrics, for its up-to- way of realizing products,
datedness tied to global warming, is processes, services.
measurement (unimaginable until a
few years ago) of CO2 emissions Although not finalized to simple
effects made by various reputation, sustainability has a
organisations in their typical decisive relevant impact upon it. Not
activity. only through traditional
communication but mainly through
There are ethical Ratings (DjsI, the network.
FTSE, 4GOOD, Aspi), which give the This not only for real achieved
same in terms of sustainability to innovations but also because of the
companies quoted in the stock possibility of verifying information
exchange. On the basis of these on the network.
scores individual investors and other Today, the possibility for consumers
may decide to orientate their to verify through Internet in a more
portfolio holdings and invest in the punctual and independent manner
surest manner. shows any aspect tied to product
and mainly to the experience of
Finally, from the old approach to other consumer that makes the
CSR we have gone to an market more free. The Blog is an
unmistakable discipline of element that we must always keep
sustainability integrated in business. in mind as a key factor of coherence
This being a discipline which calls and transparency in statements and
today for an ever growing specific declaration made by companies.
professionalism equal to other
company’s function. In this
What is Business Sustainability?

Even under an organizational profile


mainly in the Anglo-Saxon world,
companies are aware of the
strategic importance of this function
for CEO and executives. That is why
they have started to define roles like
the sustainability officer with direct
link to the CEO or to the strategic
committee. This because one has
evidently understood that business
sustainability allows an
improvement in business and a
reduction of risks, mainly those
having to do with the reputation of
the company. To these risks
companies would always be
exposed, and this cannot be
underestimated in the creation of
profit for the shareholder.