Building a Sustainable Business: How & Where to begin?

We have seen a lot of corporations embracing and adopting sustainable business approach in line with ESG – Environment, Social and Corporate Governance. According to World Economic Forum , only 0.2% of companies were discussing about sustainability during their board meetings before 2010 compared to 18% in the 2020. We saw a breakthrough of investments towards sustainability and ESG initiatives with key project announcements such as NEOM in Saudi Arabia, NOVA Innovation’s Tidal Energy project in Sweden and Tyre Collective’s project to provide Zero-Emission in Mobility. Most of these projects can be considered carbon offsets – to understand what carbon offset projects are, read our article on Carbon Trading - https://www.dhirubhai.net/pulse/what-carbon-trading-navin-shetty/

How does these projects impact an organization?

In future, companies will be required to attain Carbon Neutrality, either by taking sustainability and green approach or through buying carbon credits from any such carbon offset project. The current carbon credit rate is below $40-80 per metric ton but grey market rate can rise up to $350 to $400 per metric ton depending upon the outsourced project, that is why many corporations are taking the sustainability approach to avoid or have less dependency in buying carbon credits. But where do we begin with? Below are key criteria to build a successful roadmap for environmental Sustainability for businesses.

Sustainable Procurement

Sourcing is one of the key factor for any business, whether you are manufacturing rubber or steel or any other commodity. Sourcing involves a ton of activity and depletes the environment in many ways either by burning fossil fuels or drilling down the deserts to source crude. Corporations need to take sustainable procurement approach in carrying out sourcing activities without depleting resources or having a harmful impact on the environment. Sustainable procurement means to make decisions and adopt strategies that support a wider social, economic and environmental factors. Corporations need to have less emphasis on the value for money and more towards the society and environment. Sustainable sourcing will help businesses achieve long-term efficiency, reducing impact on pollution with an efficient and effective way to use natural resources.?

Waste Management?

Reducing waste is a critical goal for any business whether its in-line with production or service, optimizing resources natural or human to core maximum is very important. Waste is produced by default in any industry, but identifying the reason, and minimizing the waste production is crucial. Waste management involves regular collection, monitoring and processing of waste materials. The best approach is to identify the waste materials that can be used by any means to optimize the current production line, though such a change incurs massive capital and structural change in the business but saves a considerable amount of money and can also prevent environmental damage. Corporates are dependent on 3rd party waste management auditors and service providers such as Dulsco , WM to identify opportunities of savings and how to apply the insights to reduce overall waste spending by 30 to 40 percent.?

Circular Economy

A circular business approach represents different ways of producing and consuming goods and services for a business that drives transition towards a more resource efficient and circular economy significantly reducing environmental pressure from business process and economic activities. Circular business model is very different from Recycling as it expands the resource churning process again and again to a notion of no waste or bare minimal waste. In a recent study by Gartner , it states supply chains will not be allowed to produce waste, as customers and governing bodies will find it unacceptable by 2029. By 2030, waste materials needs to be an asset and a circular business model enables partial or total elimination of waste and pollution by using only renewable, recyclable or highly renewable resources in the production process. 3 strategies that can be taken into consideration while designing a circular business model – Retain Product Ownership (RPO) being responsible for products after the customer’s consumption, Product Life Extension (PLE) building products that lasts long with, Designing for recycling (DFR) maximize recoverability of the resources for use in new products.

Responsible Consumption

As stated under SDG12 , Achieving economic growth and sustainable development requires that we urgently reduce our ecological footprint by changing the way we produce and consume goods and resources. Though there is a rise in consumer’s awareness towards responsible consumption but how much are you willing to spend? Corporates tend to charge a premium on sustainable goods and services as they incur significantly high cost in procuring sustainable resources and building an eco-friendly product, on the other hand is a consumer willing to pay the premium price for consumption? For example: Is a person purchasing a Lamborgini worth millions of dollars accepting the fact that leathers used in the car is part of its Upcycled Leather Project ? (Upcycling is a process of turning low-value items or waste products into high-value items). This success is only possible with a change in the mind-set not only while procuring but also by consuming. Few thinks to keep in mind that can be shared by both corporates and consumers while purchasing any goods or services – what is the environmental impact? Is the product non-toxic? Does the goods give back locally? Is the product morally or ethically driven?

Debating to incorporate sustainability in business approach is long over, and value-driven sustainable approach is vital for long term success for any business. Having a sustainable business approach does not mean minimizing or reducing profits but building a long lasting future with profitability and growth. In today’s millennial way – It is a trend that isn’t going away!